Many years ago, I worked on the "big iron" that ran the largest VISA processor in the country. We worked ceaselessly to 1) ensure the network was up and running 24/7 and 2) maximize profit. Consequently, I have always been interested in just how lucrative credit card processing can be.
Until late in 2010, merchants were over a barrel if they accepted credit cards. They had to pay both a transaction fee and a percentage of the sale. The rates were set by the card companies and if you didn't agree to it, you couldn't accept the card. The most troublesome part of this merchant "agreement" was that merchants couldn't promote other forms of payment or discourage use of the card. Because the states and federal government finally went after the card issuers, that part of the agreement is now gone. A merchant is free, in principle at least, to add a "credit card fee" to a bill. [Typically, $.35 + 3-5% of the total.] However, most merchants are afraid that such charges would discourage business.
Also, since 2014, debit card fees have been capped at $.21 per transaction (which provides a huge profit for the banks).
Final analysis, if a restaurant decides to accept credit cards, they may need to increase their prices by about 5% just to cover the banks' cut. Accepting debit cards is much cheaper, although significant if the average check is small.
Of course, don't forget that banks charge a per check fee for deposits. Some also impose a charge for cash deposits. If your cash deposit is over $10k, you need to file federal forms. [If your cash deposit is regularly just under $10k, the feds may seize your bank account and charge you under the "criminal banking" statutes.]
My conclusion is that if you are running a successful cash business with small margins, you need to think long and hard before taking 5% off your gross income.
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