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 check 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.

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, 249k) and Visa's How-To's for Restaurant Owners and Managers (PDF, 520k).