Credit Card Surcharging: A Recipe for Savings
You may have a small business or enterprise venture that does lots of online transactions. Maybe you’re a wholesaler looking for ways to control business costs. Even better, maybe you have customers who want to pay with a credit card because it means they can spend more with your business or take advantage of their rewards.
Unfortunately, accepting credit card payments comes at a cost, and credit card processing fees are only going up.
So what do you do? You could decide to accept only debit, cash, or check; but that could mean losing a ton of business. You could try incentivizing cash payments, making your customers less likely to choose credit. But that could leave some customers with a bad taste in their mouth. Fortunately, credit card surcharging allows you to serve your customers with numerous payment options and still keep the whole pie.
As you’re probably painfully aware, credit card companies want a piece of the action every time your business takes payment by credit. The average credit card processing fee can carve out anywhere from 1.5% to 4% of each transaction’s total. Especially in today’s post-pandemic world, many small business owners are operating with razor-thin margins. Yet credit card companies want a slice of the pie. None of us can afford this kind of death-by-a-thousand-slices.
Fortunately, a simple credit card surcharge strategy can give you a way to have your cake and eat it too! Credit card surcharging gives you a way to keep what you’ve earned while paying the credit card companies what they want. With the right support, you can accept payment with any credit card without losing money on the deal. It’s a perfect recipe for savings that will protect your bottom line!
Ingredients for Greater Savings With Credit Card Surcharging
· Pricing transparency for your customers · Fully compliant surcharging · Passing off the credit card processing fee to the customer · Acceptance of any debit or credit card · Multiple payment options · Secure transaction technology
Serves: any small business owner or enterprise venture who wants to keep the entire payment for their services or merchandise without credit card processing fees eating up their profits. Cooking Time: rapid turnaround on implementation so you can get back to the business of doing business without waiting.
Preparation: The Right Credit Card Surcharge Strategy Could Save You Thousands
Credit card surcharging is a way to pass the cost of credit card processing fees to the customer at the point of service. It should usually be listed as a line item on their receipt, with a full disclosure ahead of time as to why the surcharge is being added and ways the customer could avoid the surcharge by choosing another payment method, like debit or cash.
When incorporating credit card surcharging into your business strategy, you have to do your research to know that you’re getting the best guidance when it comes to credit card surcharge law. For example, do you know what states allow a credit card surcharge, or what the requirements are for following the laws/regulations for surcharging in those states?
Sometimes you need to know when to call in reinforcements. Fortunately, there are experts who can help you with all aspects of payment technology for your business. CardX Founder and CEO Jonathan Razi put it like this: “[We can] take care of everything from the proper disclosure to charging the proper fee, to ensuring how it settles to the merchant’s bank account, how it’s reported to the customer, et cetera, et cetera.” Surcharge support providers can streamline the entire process and provide the technology you need for secure transactions. With the right support, credit card surcharging is a recipe for huge savings on your business expenses. Like any great recipe, credit card surcharge strategy takes some preparation.
Step 1: Make Sure You’re 100% Compliant with Credit Card Surcharge Laws
On its surface, credit card surcharging seems simple enough: you just tack on a little extra to credit card transactions to offset the processing fee, right? Unfortunately, it’s a little more complicated than that. Credit card surcharge laws can be complex, and there’s a lot of fine print. The precise rules vary from state to state, and some states don’t allow credit card surcharges. Regulations may also be different if you make online sales where your customer is in a different state than you!
Do-it-yourself strategies for offsetting the cost of accepting credit cards typically don’t follow credit card surcharge laws. For example, did you know “convenience fees” attached to credit card transactions actually don’t comply with the law? Most so-called “cash discount” programs also don’t comply with regulations. Not only do you need to ensure that your strategy is legal, but you also need to avoid running afoul of the particular rules of each credit card brand. The laws and rules that apply to surcharging sometimes seem like they’re intentionally complicated. Who has the time to learn all the ins and outs of credit card surcharge laws, plus the rules for each specific credit card brand? All while trying to run your business, of course.
When it comes to credit card surcharging, compliance is king. Fortunately, you don’t have to go it alone. Partnering with experts like CardX protects your business by ensuring complete compliance with each card brand and the laws for your location and the location of your customer. “So for example,” Jonathan Razi offers, “if you have a customer based in Colorado, [which has specific credit card surcharge laws that differ from other states,] that’s automatically going to come up. You don’t need to worry about that. You don’t need to know about that with us.” Your surcharge service provider should ensure you’re 100% compliant with no extra work on your side, so you can focus on doing what you do best.
Step 2: Find Credit Card Surcharging Support That Trims Down Your Processing Costs
Due to the pandemic, many businesses had to evolve to incorporate more digital payment options. Still, accepting credit cards can cost too much. Razi identified payment processing fees as a major business cost. “For many businesses,” he says, “it is one of their largest operating expenses after payroll and rent.”
Whether you’re involved in business-to-customer (b2c) sales or business-to-business (b2b) sales, such as a wholesaler, your transactions are likely subject to an array of credit card processing fees. However, in many cases, b2b fees can far outstrip those for b2c. Not only are the rates higher in many cases, but the transaction amounts are typically much larger, making b2b credit surcharge strategies even more important.
Financial technology has evolved by leaps and bounds in the past few decades—even the past few years. Customers now have more options than ever before for sending money, and making purchases. Unfortunately, it also leaves business owners in a sticky situation with the rising cost of doing business. According to this year’s Nilson Report, merchants across the US paid 25% more in processing fees over the previous year.
Surcharging is a great strategy to help offset a potentially disastrous drain on your profits. When choosing a credit card surcharging provider, you need to be sure it won’t cost so much that it cancels out your potential savings. Some providers charge an arm and a leg for surcharge support. That’s why Jonathan built his approach around truly zero-cost surcharging.
Credit card surcharging also isn’t the ideal solution for every business. Jonathan puts it like this: some businesses operate with huge profit margins. So even if they have to pay a processing fee, “they’re still coming out way, way ahead. So that’s a space where it doesn’t make sense to surcharge. It really depends on the dynamics of the business. And I would also say surcharging is not as good a fit if the ticket size is very small, like a convenience store, [or] if debit cards are much more common than credit cards.” CardX considers each business’s particular needs when structuring their payment strategies.
Step 3: Implement Your Credit Card Surcharge Strategy
When doing business, lag time is not acceptable. You need quick implementation and seamless integration, especially when it comes to taking payments. When you’re ready to add credit card surcharging into your business model, you need to be sure it won’t leave you stuck. Integration should be quicker than the time it takes to warm up an oven. Ok, maybe not that fast, but you get the gist. That’s why it’s essential to enlist a completely turnkey surcharging solution. Too many credit card surcharging solutions out there add to the already heavy administrative burden of running your business. You need a system that will work immediately without putting extra work on your plate. CardX, for example, takes care of “reconciliation, cash application, how this shows up on invoices and receipts, how you’re going to put this into your own online checkout. All of that is super simple.” The company will supply you with a payment terminal already set up with all the compliant software you need. You’ll get appropriate signage, an implementation guide, and even the cables and printer paper. Folding in the cheese has never been any clearer!
Enjoying the Savings on Processing Costs
Once credit card surcharging has become part of your business, things should start to heat up! Whether you’re using b2c or b2b credit surcharging, the right implementation will empower you to keep the full price of whatever you sell, be it wholesale cleaning supplies, plumbing services, or custom widgets. Most businesses will save thousands every year by passing the cost of credit card processing along to their customers. However, great financial technology goes beyond setting you up for surcharging.
As a business owner, you know things can go wrong. If you’ve ever had your card reader fail in the middle of a sale, you know the dread and frustration of possibly missing out on business because of technical difficulties. You need ongoing, reliable, responsive support to keep business hot and ensure you never end up frozen. You also need any speed bumps to be resolved so business can flow.
Part of that responsiveness comes from great customer service from your credit card surcharging provider. Part of it comes from well-designed, dependable technology. But ongoing support to keep you cooking with gas means everything from troubleshooting to restocking your receipt paper whenever needed. The whole point of credit card surcharging is to help control the cost of doing business and empower you to take any payment type your customers want to use. Your payment and surcharging provider should be prepared to keep your sales flowing and your business red-hot.
Your Credit Card Surcharge Presentation Makes a Difference
So surcharging sounds like a great strategy, right? Now we just need to get your customers onboard. While it might seem tempting to camouflage your surcharge policy under a little garnish, credit card surcharge laws dictate that your policy must be made clear in various ways. Like many things, the right presentation can make all the difference in how your customers feel about it!
Credit Card Surcharge Laws Require Transparency
Fully compliant credit card surcharging requires transparency. Your customers need to be informed in clear terms at multiple specific points that they will be paying a surcharge. Some merchants and business owners hesitate to implement surcharging for that reason. After all, won’t it make the customers mad? Nobody likes to be nickel-and-dimed, right?
This is where presentation makes all the difference. Credit card surcharging isn’t a scam to squeeze extra income out of your sales. It’s a legitimate way to serve your customers by accepting more payment types. It also means you can avoid raising prices across the board to compensate for the extra overhead, making it a win-win all the way around!
Ideally, your credit card surcharge strategy should make more payment types accessible without taking anything off the table. Some surcharge providers limit your options to certain credit card brands or make it difficult for your customers to select other payment types. Ultimately, your customers want versatility and choice when making purchases, and your surcharge strategy should support that. That’s why you should focus on finding a provider who can support any debit or credit card and allows multiple payment options. After all, you want to make it as easy as possible for your customers to make their purchases.
The Right Presentation Makes Credit Card Surcharging More Palatable
Full transparency about your credit card surcharge policy gives your customers the respect they deserve. Feedback CardX has received indicates that customers are fine with accepting a surcharge if it’s adequately explained in advance. When they understand how it helps you stay in business and keep providing the goods and services they love, they’re generally quick to adopt it. Well-implemented surcharging will also give them the option to choose a different payment method to avoid the fee if they so choose, which is why it’s so important that your surcharge service provider can support multiple payment types.
Whether most of your sales happen in person, online, or through a virtual terminal in an office setting, CardX has you covered. For online sales, your payment software should tick a few boxes: · Attractive · Easy to use · Completely secure
For businesses that opt to partner with CardX, that’s where Lightbox comes in. Their payment software was designed to work seamlessly with your online store without redirecting potential customers away. Every additional click, every extra window that needs to load, is a chance to lose a sale. By meeting customers where they are, your payment software can help close the deal without letting customers down. Similarly, the software you implement for a terminal or virtual terminal should be as easy for the customer to use as it is for you to add into the mix for your business.
Get the Whole Pie with Credit Card Surcharging!
If you think credit card surcharging might be a good fit for your business, reach out to CardX to set up a chat with one of their surcharging experts.