Passing on swipe fees to servers

Passing on swipe fees to servers


Can I pass on swipe fees to servers?

– Peter Medellin, Manager, Vinny’s, Alpharetta, GA


Last week we addressed whether it is legal to pass on credit card swipe fees to guests so of course it follows that the next question would be whether that cost can be borne by servers. The answer is yes, for tips only, in most states.

First, any charges to servers for credit card swipes can only be applied to the tipped portion of the bill. For example, if a bill is $100 plus a $20 tip, the swipe fee on the $100 (say 4 percent or $4) must be paid by the restaurant. However, when paying out the server, you can allocate $19.20 since you can charge the server 4 percent or 80 cents to recover the swipe fee on the gratuity.

That said, there are a couple of things to keep in mind:

  1. The charges to the server cannot exceed the actual credit card charges you pay. You can’t “mark up” the fee.
  2. The reduced tip cannot cause the server to fall below minimum wage.

According to Wiser Waitress,  Alaska, California, Colorado, Idaho, Montana, Nevada, New Mexico, Oregon, and Washington “prohibit deductions from credit card tips for processing fees.” In addition, some municipalities like Philadelphia have passed similar legislation.

Finally, keep in mind the internal marketing of assessing the fee and how you apply it. Is it industry standard practice in your location or do you risk surprising, angering and alienating servers?

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