Apply a Service Charge with Square for Restaurants
Please note: Service charges may be considered a taxable surcharge. For specific tax questions related to your business, be sure to consult with a tax professional.
With Square for Restaurants Plus, you can enable a fixed percentage service charge to apply to bills manually, automatically, or based on party size.
To enable this from your online Square Dashboard:
1. Click Devices > Service Settings.
2. Click Automatic Gratuity > Allow Automatic Gratuity.
3. Enter the service charge amount (e.g. 20%).
4. Choose to apply the service charge on a per-bill basis, to all bills*, or based on party size.
5. Choose to add or not apply tax to the service charge.
6. If you do not wish to apply tax to service charge, choose to calculate service charge before or after taxes.
7. Press Save.
*Applying automatic service charges to all bills will only apply to Square for Restaurants Point of Sale version 5.35 and higher. Please update your Square for Restaurants POS to use this feature.
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 automatic service charge is applied to the bill by default. Note: This is a Restaurants Plus feature.
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, simply tap Actions > Service Charge and toggle on the applicable service charge.
Keep in mind, automatic service charges may be considered a taxable surcharge. For specific tax questions related to your business, be sure to consult with a tax professional.
Important Notes About Surcharges
If you do apply service charges at your business, here’s what you need to know:
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 all of 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.
Calculating Service Charge Fees
Square’s fee is taken out of the total amount of the transaction, including tax, tips, and any added surcharges.
Service Charge Reporting
You can view and export a report of transactions with service charges applied:
Visit the Reports tab of your online Square Dashboard.
Click Service Charges.
Select your date range.