We often get asked if it is possible to set up credit card surcharging in a restaurant. The answer is yes! Below you will find a breakdown of how the cardholder and the business owner get charged to run the transaction:
The 4% is charged to the bill amount, not the total sale with tip amount. Here is an example on a $100 sale.
This means the $100 sale will be charged $104 to the cardholder. If they add the $20 tip the total charge to the cardholder is now $124.
Because the 4% surcharge for the tip is not taken from the cardholder the merchant covers it which means the deposit they receive will be the $120 minus the 4% charge on the $20 tip ($0.80 fee). The merchant will receive $119.20.
CARDHOLDER PAYS:
$100 bill
+$ 4 surcharge cardholder pays
$104 bill + surcharge
+$ 20 tip entry
$124 bill + surcharge + tip
MERCHANT PAYS:
$20.. tip amount
-$0.77 surcharge merchant pays 3.846% surcharge
$19.23 remaining after surcharge on tip amount
TOTAL DEPOSIT TO MERCHANT:
$124 total charge to cardholder
-$4 surcharge drawn back for fees
-$0.77 surcharge drawn back on tip amount
$119.23 deposited to merchant bank account
As you can see the business owner pays a small percentage on the tip amount only - while still saving a ton of money on the total transaction!