Are you worried about the way credit card fees are cutting into your business profit margins? As a small business owner, it can be stressful to keep the company running and manage your profitability. It’s not reasonable to only accept cash payments from your customers. So, what can you do to cover the percentage that is paid for merchant services?
How Credit Card Surcharging Works
You have the option to add the credit card fees to the customer’s bill. Previously, surcharging was against the law in many places in the US, which meant that you would be facing fines by passing the fees to the customers. The laws have changed, and most states allow surcharging now. If you choose this solution, then you need to be clear about the policy and have the information posted, so it is visible at the time of the transaction.
But this practice is a little complicated, so you need to understand the potential consequences. For example, some customers don’t like the feeling that they are being “nickeled and dimed” with extra fees and costs. Customers dislike the practice of passing the surcharges onto the buyer!
Alternative Option: Cash Discount
One solution that you might consider is to enact a surcharge policy, but give customers the options to choose a cash discount. If the person chooses to pay with cash or a debit card (which is usually cheaper than a credit card transaction), then the savings are passed onto that customer in the form of a discount. Give the person 3 – 4% back since you didn’t need to pay the transaction fees.
As a business owner, you can legally charge your customers the surcharge fees. But you need to know that this extra fee could be costing you business. Consider your options and choose the solution that will work best with your payment policies. Then, make sure that you are consistent with the implementation of that policy, so there is no risk of discrimination or other issues.
If you are looking for solutions to reduce your payment processing costs, then we invite you to talk to our experienced team for more information. We’re here to help!