Surcharging & Other Ways to Offset Costs

Rising operating costs, from ingredients to rent, have put a huge strain on the restaurant industry. As these costs continue to increase, many restaurant operators are looking for ways to improve revenue, and many are shifting to implementing guest-facing fees. Restaurant operators have a few different options they can consider when implementing guest fees to offset costs. It’s critical that restaurant operators understand the differences between these options because some may be better suited for a restaurant than others. Additionally, there are various card brand rules and requirements, as well as laws and regulations, that may result in significant financial penalties or other liabilities if not adhered to. Each merchant should carefully and objectively weigh the different cost offsetting options at their disposal, including how each might impact guest behavior.
 

This content is provided for informational purposes only and is not intended as legal, tax, or other professional advice. You are responsible for your own compliance with applicable laws and regulations, including card brand rules. You should contact your attorney or other relevant professional advisors for advice specific to your circumstances.
 

In this Article:

• Options for Offsetting Costs
• Compare Options
• Additional Resources

Options for Offsetting Costs

• Credit card surcharging: A credit card surcharge is a percentage (%) fee that is only added to a check if the guest uses a credit card instead of another form of payment, and it must follow specific rules set by card networks and applicable laws. See the article in Toast Central to learn more about how Toast’s Credit Card Surcharging product can help maintain compliance with the applicable rules, requirements, and laws. Credit card surcharges can not be applied to debit card transactions. Debit card transactions are identified by bin number by Toast when utilizing our compliant Toast Credit Card Surcharging product. 
  • Please note that Toast Credit Card Surcharging is only available to merchants that meet certain eligibility requirements, and merchants are responsible for ensuring compliance with applicable laws and card network rules. See to learn about Toast’s product solution, if you are eligible.
• Service charges: A service charge is an additional fee (can be a percentage or fixed/flat fee) added to a check in addition to the sale of goods and services provided and is not specific to the payment method used by the guest. Service charges must apply to all payment methods equally (including credit cards, debit cards, gift cards, and cash). See the  article in Toast Central to learn more.
• Cash discounting: A cash discount is when only one price is presented to the guest, and if the guest pays in cash, they are offered a discount from that advertised price. Wherever menu prices are listed, a merchant must show the price applicable for non-cash payments for each item, whether on the menu or any other locations where prices are posted (e.g., receipts, promotions, and elsewhere), not solely the discounted cash price. A merchant may choose to couple its cash discount program with an overall increase to its menu/advertised prices that incorporates certain operating costs (such as card processing fees) it wishes to recover, but this is not a requirement. See the  article in Toast Central to learn more about cash discounting rules and requirements. 

Compare Options