Here's something most business owners don't realize: when a customer leaves a tip on a credit card, you pay processing fees on the tip amount — not just the sale.
A $50 restaurant check with a $10 tip costs you processing fees on $60. A $120 salon service with a $24 tip costs you fees on $144. The tip wasn't your revenue — it's your employee's income — but your processor takes a cut anyway.
How Tip Processing Fees Add Up
A restaurant doing $60,000/month in card sales is paying over $4,300/year in processing fees just on tips.
Network Offset Pricing and Tips
With Network Offset Pricing, the card price offset applies to the service or product price — not the tip. When the card price covers the processing cost on the menu item, the fee on the underlying sale is eliminated. Tips are processed as a standard addition.
The result: your total processing cost drops to near zero on both the service amount and the tip, because the card price already accounts for the network processing cost on the transaction.
Staff tips are completely unaffected. The pricing model changes how the base price is displayed — not how tips work.
Robert T. writes about the financial impact of payment processing on small business profitability. With an MBA and experience in small business lending, he quantifies how processing fee structures affect margins, tax deductions, and bottom-line performance.
$10,000+
in potential annual savings with optimized payment processing.
Get Started
The first step to reducing your processing costs is understanding exactly what you are paying today. Request a free statement analysis and we will show you a side-by-side comparison of your current costs versus what you could save with Network Offset Pricing.