Visa USA reports an increase in the number of compliance cases against restaurant merchants resulting in fines and penalties. Visa rulings regarding "estimated authorizations" prohibit merchants other than lodging and car rental merchants from requesting an authorization for an estimated amount. Over half of the 66 billion dollars generated from restaurant transactions in 2004 were from debit product transactions. Debit card users are more likely to frequently review their available funds instantly available online, at an ATM, and at some POS locations. If you have software that authorizes for an estimated amount to include tip, you should obtain updated software to be compliant.
Restaurant merchants should request an authorization for the transaction amount presented to the cardholder. Restaurant customers may continue to enter a tip amount and restaurants will continue to settle and be funded for the total amount of the purchase including tip.
Global Payments restaurant applications support 0% tip authorization and will provide merchants with upgraded software. Please contact us at 888-876-4093 if you are a restaurant merchant. If you have an integrated software solution at your establishment, you should contact your vendor for steps to update your authorization amount to remove tip overage and authorize for 0% tip.
