Should restaurant owners encourage customers to pay by credit cards?
A recent discussion on LinkedIn prompted this post. There is a noticeable and growing trend to charge customers paying by credit card an additional fee. Yesterday, the restaurant I had lunch at, had a 4% surcharge if you paid by credit card. Last week, a popular barbecue place I visit, had a printed menu with two price columns: one for cash and the other for credit card payments. The difference was 11.75% - guess which column was more expensive!
Restaurant owners and business owners of any size should encourage their customers to pay via credit and debit cards, not discourage them.
Here is why:
- Alienating 88% of customers: less than 12% of payments in the United States today are cash payments. This percentage will drop to less than 10% by 2027. By imposing a mandatory credit card payment surcharge, you are punishing 88% of your customers. See the Extinction of Cash graphic below.
- People tend to splurge more when paying by credit card. Back in the day, when I worked with American Express, we did a study which proved that point: people paying by credit card splurged 30% more than people paying cash.
- Bigger tips: When paying by credit card at restaurants people tend to leave bigger tips, which will greatly be appreciated by your employees.
- Cash is expensive, since handling it requires special oversight to prevent theft, securing it in safes, contracting with a Brink’s type of a cash management company, etc.
If I were a restaurant owner, I would introduce a surcharge for payments in cash!
No wonder Sweden removed cash as a payment option in the whole country!
