Credit card surcharges –– the small fees credit card companies charge merchants when a customer pays with plastic –– have pros and cons. Though many business owners view them negatively, it’s important to look at surcharges from both angles.
By doing so, you’re able to evaluate your strengths and weaknesses as a business owner. I recommend writing a list of the pros and cons and then making a plan on how you can capitalize on both.
If you get stuck, feel free to reach out for advice. With more than 20 years of experience in payment processing for the oil and propane industry, I’ll be able to find the right solution for your needs.
Now, let’s take a closer look at the pros and cons of credit card surcharges:
Pros
- Merchants cannot apply a surcharge to debit card transactions. I suggest encouraging your customers to use a debit card whenever possible to help avoid extra charges. You can also encourage your customers to pay with cash by offering a small cash discount.
- Consider passing merchant fees onto your customers. With this strategy, you’re not responsible for the expense of surcharges and your customers can use their payment method of choice.
Cons
- Consumers aren’t willing to pay a fee to use credit cards, according to a recent study by creditcards.com. Be careful with your strategy here because it’s possible that your customers will flock to your competitors who can save them money.
- Business owners are prohibited from profiting off of surcharges since you cannot charge more than the processing fees.
- You must post signage to inform consumers of surcharges. Writing and printing out signage requires a lot of time and effort and could result in lost business.
- Surcharges are prohibited in Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, and Texas, according to business.com.
Although the list of cons looks daunting, don’t let it scare you. With the right messaging and strategy, your target audience will continue to grow.
If you choose to start surcharging, I highly recommend tracking sales data before and after your surcharge to make sure your customer base is still interested. If the surcharge is scaring your customers away, evaluate your business and find different ways to save money.
Stay tuned for more expert tips like these and don’t forget to visit my website for more information about scheduling a consultation session. I can’t wait to work with you!
