Have you ever wondered how much a fast food shop pays in credit card processing fees?  I have, since transaction size tends to be small (one component in the calculation of fees is transaction size). Since healthy sandwich shops seem to be the craze, let’s examine a sandwich shop.

So for an example, let’s look at Jimmy John’s, which has about $850,000 in revenue per store. About a quarter of that is collected in credit card and debit card sales according to the 2008 Hitachi Consulting Study of Consumer Payment Preferences (for fast food restaurants).

The average interchange rate that FeeFighters expects such a restaurant to have is in the neighborhood of $0.1255 + 1.56% for transactions greater than $15 and about $0.04 + 1.60% on transactions less than $15.

If we assume that 50%  transactions are < $15 that the average size for such a small transaction is $7.50 while the average size of a transaction > $15 is $20 (which means that this restaurants overall ticket size is about $14) then the average interchange rate for this restaurant is about 2.16%.

FeeFighters’ proprietary software has read thousands of customer bills, only to find that the average restaurant pays around 0.75%+$.20 markup above interchange, meaning this is about 2.2% for a sale of $14.

If we apply the overall rate of 4.36% (2.16% + 2.2%) to the 27% of this restaurant’s $850,000 in sales we can calculate that this restaurant will pay $10,006 per year in credit card processing fees.

Yikes!

Restaurant owners can get the best deal on credit card processing by comparison shopping for a processor using FeeFighters. Start an auction now to keep more of your hard earned money!

Image thanks to http://www.flickr.com/photos/28233229@N00/1407449118/