Chapter 26 — Further Reading

Grouped by the three tiers used throughout this book. Tier 1 is material we are confident exists and can stand behind. Tier 2 is real industry practice whose exact citation we have not pinned down — attributed honestly, given as ranges. Tier 3 is constructed teaching material, ours, labeled as such.

TIER 1 — Verified canonical

Regulation II and the Durbin Amendment (Federal Reserve). The Federal Reserve maintains public material on Regulation II, which implements the debit-interchange provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (2010). Go here rather than to a processor's explainer if you want to understand what is actually regulated: the cap applies to debit interchange at issuers holding \$10 billion or more in assets, it does not touch credit, and the Board has proposed revisions that remain contested. The same statute is the legal basis for a merchant's right to offer discounts for cash and to set a minimum for credit-card transactions.

Visa and Mastercard published interchange rate schedules. Both networks publish their U.S. interchange schedules. They are long, granular, organized by merchant category and card product, and revised periodically. You do not need to read them cover to cover; you need to have seen one, once, so that the phrase "our rates are competitive" stops meaning anything to you. Find your merchant category and look at the spread between regulated debit and premium rewards credit. That spread is your card mix risk.

PCI Security Standards Council. The body that publishes the Payment Card Industry Data Security Standard (PCI DSS) and the self-assessment questionnaires. The SAQ relevant to a small restaurant depends on how cards are captured; the council's guidance for small merchants is written for non-specialists and is the correct starting point. Completing the annual questionnaire is also how you stop paying a non-compliance fee.

The EMV chip-card liability shift (United States, October 2015). Documented industry change under which liability for certain counterfeit-card fraud moved to whichever party — merchant or issuer — has the less secure technology. The practical instruction is one sentence: use the chip reader, use contactless, and do not swipe.

Fair Labor Standards Act (FLSA), and U.S. Department of Labor guidance on tips. Charged tips, declared tips, and tip-pool distributions come out of the POS and are wage-and-hour records. Chapter 20 covers the substance; the technology consequence is that these must be configured correctly at setup, because reconstructing them afterward is close to impossible.

Americans with Disabilities Act (ADA). Chapter 8 covers the dining room and the restroom; the technology-relevant surface is your website and online ordering flow, which has been the subject of substantial litigation. Treat accessibility as a specification you give your web developer, not an afterthought.

In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation (multidistrict litigation, U.S. District Court for the Eastern District of New York). The long-running merchant antitrust case against Visa and Mastercard. Public dockets and reputable trade-press coverage will tell you where the rules portion currently stands — a proposed rules settlement was declined by the court in 2024 and the question remains open. Basis of Case Study 26.2.

The Credit Card Competition Act. A bipartisan bill, first introduced in 2022 and reintroduced since, that would require the largest credit-card issuers to enable an additional routing network for credit transactions. Not enacted. Worth tracking through your state restaurant association rather than through a vendor.

The COVID-19 dining-room closures (2020) and the delivery-commission-cap ordinances that followed. Well-documented public record. Several major cities capped third-party delivery commissions during the emergency, commonly at 15% for the delivery portion, and several later made those caps permanent. Basis of Case Study 26.1; the delivery economics belong to Chapter 28.

Roger Fields, Restaurant Success by the Numbers. The natural companion to §26.9. Fields is good on where costs actually sit on a restaurant P&L and on the discipline of building a budget from lines rather than from percentages.

Brown and Rowe, The Restaurant Manager's Handbook. General operational reference; useful on POS selection criteria and on the front-of-house workflows that §26.1 and §26.3 depend on.

Danny Meyer, Setting the Table. Read alongside §26.5's guest-record discussion and §26.7's tipping-screen section. The chapter's over-the-shoulder test for guest notes and its position on tip prompts are both downstream of Meyer's distinction between service and hospitality.

Your state restaurant association, and the National Restaurant Association. The practical source for what surcharging law is in your state this year, which is genuinely a moving target, and the route by which independent operators participate in the interchange fight at all.

TIER 2 — Attributed, specifics unverified

Technology as a percentage of sales. Practitioner and consultant guidance generally puts the software portion of an independent full-service stack somewhere between roughly 1% and 3% of sales and payment processing between roughly 2% and 3.5%, making an all-in figure of about 3.5% to 6% unremarkable. No published study is being cited. Treat as orientation; a low-check or off-premise-heavy operation will run higher. Bellwether's 4.73% sits mid-range.

Effective processing rates in full-service restaurants. Commonly reported in the 2.4%–3.2% band on card volume, varying with card mix, average ticket, card-present share, and pricing model. Given as a range in §26.7. No decimal is asserted as a benchmark. Bellwether's 2.50% is a modeled plan assumption, not a market figure.

Interchange rate levels by card type. The table in §26.7 is illustrative and simplified. Real schedules are far more granular, differ by merchant category, and change. Use the shape — regulated debit is very cheap, premium rewards credit is very expensive, and you do not choose which your guests carry.

POS, reservation, and online-ordering pricing. Subscription tiers, per-terminal fees, per-cover fees, and commission structures all exist and vary enormously by vendor, market, volume, and negotiation. This book quotes none of them, deliberately: a number in a book becomes a false anchor and will be wrong by the time you read it. Get three current written quotes for your own volume.

Tip-prompt design effects. Operators broadly report that changing the default percentages, the computation base, or the prominence of the no-tip option moves average tip meaningfully. No controlled study is cited and no magnitude is asserted, because none transfers across concepts.

Downgrade incidence in full service. Presented as a documented mechanism (late settlement, tip adjustment above authorization, keyed transactions) with an illustrative 4%-of-volume example. The incidence at any given restaurant is knowable only from that restaurant's own interchange category detail.

The small-ticket effect of the debit cap. The pattern described in Case Study 26.2 — that small-ticket debit interchange rose toward the regulated maximum after Regulation II — is widely reported by merchant groups and in trade coverage. Presented as a documented pattern without a figure.

Post-2020 off-premise share. Off-premise settled structurally higher than its pre-2020 level and has not returned to 2019 patterns. Directional only; no percentage asserted.

TIER 3 — Illustrative / constructed

Bellwether and every number attached to it. The \$1,550,000 of year-one sales, the 90% card share, the illustrative 7% sales tax and 18% tip assumptions, the \$1,743,750 of card volume, the 17,100 transactions, the \$43,573** processing cost, the thirteen-line software budget totaling **\$29,700, the \$73,273** all-in figure at **4.73% of sales**, the **\$17,800 of hardware capital, and the allocation of the \$217,000 other-operating line. Constructed, internally consistent, arithmetically verified, and not a real restaurant's records.

All illustrative rate structures. The interchange blend (1.713% + \$0.119), the assessment structure (0.140% + \$0.03), the 0.35% + \$0.10 markup, the \$75-a-month fixed fees, the card-mix table, and the flat-rate and tiered comparators in Figure 26.7. Constructed for teaching. Do not quote them to a processor.

Figure 26.2, "The proposal." A constructed POS proposal, including the equipment finance agreement on page 3. Assembled from patterns common to the category; not any vendor's actual paperwork, pricing, or contract language.

Figure 26.8, "The merchant statement." A constructed October statement for Bellwether, arithmetically consistent with the chapter's model.

Figure 26.4's boundary costs (227.5 hours, \$6,643), the inventory-software payback (169 hours, \$1,656 net), **the switching-cost model** (\$14,294), and the first-party ordering channel cost (\$2,925 on \$31,200, 9.4%). Constructed estimates built from stated assumptions.

The composite operator in Case Study 26.2 who surcharges and recovers roughly \$26,000. Assembled from patterns common to independent operators; not a specific restaurant, and the review and retention effects described are qualitative.

Every restaurant in the exercises and the quiz, including the \$980,000, \$2,240,000, and \$3,400,000 operations and their statements.