card payment costs

How to minimise card payment costs when offering digital ordering

It’s long been recognised that card payments are the most convenient form of transacting with a business. For the consumer, carrying a single card – or paying through an NFC enabled device is lighter and less of a risk than cash. Pennies, pounds and notes are easily misplaced and are difficult to track (unless the person is very organised), and in a world impacted by COVID-19, are considered less ‘clean’ than card and digital payments.  

For businesses, cash comes with the risk of counterfeiting; in 2019, around 427,000 counterfeit Bank of England banknotes with a face value of £9.8 million were taken out of circulation. Cash handling can also be time consuming; counting and balancing tills at the end of each shift and depositing with the bank or meeting the Cash in Transit company.  Card payments remove these challenges. 

If there is any drawback to taking card, it is the associated fees. Every payment processing company charges differently – and it can take some research to find the set-up most suited to a brand.  

While the benefits to taking digital and card payments clearly outweighs the negative, fees can add up as a business grows and takes manages more transactions. Most businesses will expect to increase the percentage of card payments they take in coming years; throughout the pandemic, the number of brands adopting technologies to allow for ordering and paying from the customer’s seat/table has increased dramatically.  

As the pandemic passes, this ‘new’ approach to dining on-site will become the standard for many. However, the way people order, starters and main courses first, maybe some drinks in-between, then deserts, and then, perhaps, a round of coffees, is unlikely to evolve anytime soon. Consumers don’t like to be forced to decide the path of their dining journey in one moment, whether they want to continue ordering will be decided by the experience they have during the initial courses. For them, it’s little effort to pick up their mobile, order and place another payment – especially when the platform has stored their payment details. For the business, every fresh order will result in another round of transaction costs. That’s not ideal. 

For food operators that commonly see this pattern of food ordering, finding an alternative ordering platform, one that rounds all the orders into a single payment and transaction, could lead to significant savings over time.  


Restaurant A: Card payment costs

Its card processing company charges: 

Transaction fee : 1.5%.  

Authorisation fee : 2p 

Interchange fee :  0.2%. 

Customer group A orders a starter and dessert with three drinks at a cost of £30. They pay immediately and the business passes 53p of that money onto the card processor. 

The group then orders three desserts and another drink at £22. This time the business passes 39.4p to the card processor.  

The group finishes its meal with a round of coffees costing them £15. The business passes 27.5p to the card processor.  

Total fee to the processor is: £1.20. 

Restaurant B: Card payment costs

Customer group B orders a starter and dessert with three drinks at a cost of £30. They pay don’t pay yet. 

The group then orders three desserts and another drink at £22. They still don’t pay. 

The group finishes its meal with a round of coffees costing them £15. They then opt to close their digital tab and settle the final bill of £67. The restaurant passes £1.16p to the card processor. 

Total fee to the processor is: £1.16. 

The difference on this one table is 4 pence. By itself, that may not seem much. But multiply that 4 pence difference by 60 tables a day at a single site business, open 6 days a week, 51 weeks of the year and the difference grows to £734.40. A European enterprise food chain with 150 sites may turn 3000 tables a day and open every day of the week throughout the year. Over the course of 12 months, that 4 pence swiftly becomes £43,800 – or $58,423 USD. That’s before you consider gateway fees that rise with the number of transactions (more transactions equals higher cost).

In short, the larger the business, the more tables it turns, and the more individual orders placed by a table, the higher the card payment costs. 

Ordering technologies that offer brands an ‘open tab’ approach to online ordering and payment are not yet commonplace, but if it’s a route your brand would like to explore, you can contact Theravada to discuss the options available, today. We offer customer journeys to support every business, whether that’s ordering ahead, ordering to a customer’s table on-site and paying upfront, or ordering and opening a digital tab for the customer to pay at the end of their experience.