Processing Restaurant Gratuities
Best practices for restaurants – advice on processing gratuities
Credit and debit card use at restaurants is becoming increasing popular among restaurant goers. According to recent Visa statistics, nearly 60% of the 70 billion dollars generated from restaurant transactions in 2005 were made with Visa Debit cards. Because debit cards are connected to cardholders’ checking accounts, improper processing practices can create customer service issues both for your business and card issuers.
- A restaurant check is for $100, but staff has authorized an estimated tip for $120.
- The Visa cardholder’s bank deducts $120 from the available funds/credit.
- The transaction amount was $115 ($100 + $15 tip).
- The customer leaves the tip in cash so the transaction amount is $100.
- When a customer views their account activity and sees a $120 hold against their account, they may think the restaurant has overcharged and decides never to return to the establishment again.
Keep your customers happy
To help ensure high customer satisfaction and loyalty, merchants should only submit an authorization request for the known check amount, excluding an estimated tip. Visa’s operating regulations do not allow merchants to estimate authorization amounts.
To stay in line with Visa requirements, restaurants should:
- Make sure terminals, systems, software and back-office processes are set up to authorize without adding an estimated tip amount. Call your merchant provider or processor for more details.
- Train your staff to use proper authorization procedures, entering only the amount of the ticket.
You are protected
Many restaurants submit higher authorization amounts because they think that it protects them from chargebacks. To protect your business, Visa ensures that restaurant authorizations are valid for the amount plus 20 percent, so there is little or no chargeback liability when a tip is not included in an authorization request.
For more information on handling Visa card transactions at your restaurant, download Visa Tips for Restaurant Staff (PDF, 1mb) and Visa’s How-To’s for Restaurant Owners and Managers (PDF, 829k).