Restaurant Adds 4% To Bill For Using A Credit Card: Smart Business Or Taxing The Cashless?

The age-old battle between cash vs. credit lurches onward. First, some establishments wanted to go cashless. Then, those places received backlash, saying that cashless venues discriminated against people who might not be able to secure a debit or credit card for whatever reason. Now, a restaurant in Lafayette, Louisiana is getting called out for adding a 4% "non-cash charge" to a customer's bill. As KPEL reports, the user pointed out the additional fee in a Facebook post, asking, "How closely do you read the bottom of your restaurant receipt? After tonight's experience at Uncle T's Oyster Bar in Scott I will carry enough cash to cover my bill!!" The new policy at the restaurant was explained to the customer as "If a customer doesn't pay with cash, and only 20% of their customer base pays with cash, then they must pay to use a Credit Card."

So 4% seems high, but how high is it? Michael Ciapciak, owner of Bang Bang Pie & Biscuits in Chicago, explains that his shop uses "Squareup.com, so our fees are a little bit higher than most credit card processors, between 2 and 3%."

But here's the difference, though: Bang Bang (or a service like Square) isn't charging you more for using your credit card. "If you pay with cash, we get $10," Ciapciak explains. "If you pay with a credit card, we get $10 minus the credit card fee."

Sounds pricey for the business, so why doesn't Bang Bang go cash-only? From Ciapciak's perspective, both sides have their pluses and minuses. "Everything has a cost associated with it. Cash is better for the bottom line, but you gotta pay someone to count the cash, go to the bank, there's always user error. There are opportunity costs to both."

And if you go all-one way or the other, then "someone might not go to your restaurant if it's only cash or only credit... I don't know how much money you leave on the table by not accepting credit."

4 Star Restaurant Group owner Doug Dunlay, however, has a clear preference: "We prefer if customers pay in cash over credit card, as there is no fee associated with it. However, more than 90% of customers use a credit card." While the credit card is much more common, it comes at a cost. "We pay on average 3% of each transaction in credit card fees. The credit card fees range from 1.9% to 3% and each rewards credit card (Southwest Rapid Rewards Visa, United Milelage Plus Card, Delta Skymiles Card, etc) charges an additional 50 cents fee per transaction. It adds up as the majority of our transactions are with a rewards credit card," adds Dunlay. On average, he says his restaurant group pays over $800,000 a year in credit card fees.

Still though, 4 Star is eating that cost, not adding a 4-percent credit card fee on to the customer at the end like Uncle T's Oyster Bar did. But that may be another hint that cashless establishments are not about to take over the restaurant world just yet.