Apply a Service Charge with Square for Restaurants
Please note: Service charges may be considered taxable. Be sure to consult with a tax professional for specific tax questions related to your business.
With Square for Restaurants, you can enable a fixed percentage service charge to apply to bills manually or automatically. If you're subscribed to Restaurants Plus or Premium plans, you can also add service charges to bills based on party size for large groups.
Enable Service Charges
To enable service charges for Restaurants POS from your online Square Dashboard:
Click Settings > Devices.
Click Service settings > Service Charge.
Toggle on Allow Service Charge.
Enter the service charge amount, then choose your service charge type.
Select applicable tax settings.
Click Save to add your new service charge.
Note: Applying automatic service charges to all bills will only apply to Square for Restaurants Point of Sale version 5.35 and higher. Be sure to update your Square for Restaurants POS to use this feature.
Service Charge Types
If you select based on party size, auto-service charge is controlled by the number of seats at a table. If Seat Management is enabled, the number of required seats will determine if an automatic service charge is applied to the bill by default.
If you seat a table with fewer party members than necessary to automatically trigger your service charge, you also have the option to manually apply the service charge. From the open bill on Restaurants POS, tap Actions > Service Charge and toggle on the applicable service charge.
Keep in mind, automatic service charges may be considered taxable. Be sure to consult with a tax professional for specific tax questions related to your business.
Important Notes About Surcharges
If you use service charges at your business, refer to ACCC’s guidance on surcharging:
Merchants in Australia are responsible for adhering to all regulations regarding imposing a surcharge on consumers when a card is used for payment. New regulations set out by the ACCC have banned businesses from applying excessive surcharges for accepting different payment types.
Surcharging is allowed, but must not be excessive.
Service or handling fees are not a workaround.
A business is not able to bypass the new ban by instead charging a “service” or “handling” fee on some card payments. This is still effectively applying a surcharge.
The ban does not prevent you from changing your prices.
When deciding on the prices for your products and services, consider your operational costs and ensure you have a sustainable profit margin. Just like any business expense (including rent, storage or staff costs), payment processing fees should be taken into account when determining the best pricing model for your business.
Service Charge Reporting
You can view and export a report of transactions with service charges applied for open and closed bills. To do so:
Go to Reporting > Reports from your online Square Dashboard.
Click Service Charges.
Select your date range, location, or any other filters.
Calculate Service Charge Fees
Square’s fee is taken out of the total amount of the transaction, including tax, tips, and any added service charges.
Disclaimer: This guidance is general in nature and does not constitute legal, tax or any other type of professional advice. If you are unsure about your tax obligations or where to find the relevant information, we suggest you consult a professional.