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What the Emergence of Transparent Credit Card Surcharging Means for Merchants

As a small business owner, your bottom line is to be protected like the last slice of pie.

Running a business is challenging enough. If you’re operating with a lean budget, you likely can’t afford to worry about rules concerning credit card transactions and fees. You also need to save money without fear of triggering a regulatory tripwire.

Credit card companies like Mastercard and Visa charge you, the merchant, every time a customer uses their card. In the U.S., each state has laws that govern what small businesses can and cannot do regarding credit card processing fees.

Changing Landscape for Surcharging in the U.S.

As of July 1st, 2022, you can leverage surcharging to mitigate these charges in 48 U.S. states.

That’s because Governor Jared Polis signed a law that moves Colorado into the large category of states that expressly permits credit card surcharging. Leaders in the surcharging compliance space, like CardX Founder/CEO Jonathan Razi, testified in support of the new law.

Razi explained that the reality of the state’s antiquated anti-surcharging law led to price hikes for ALL customers to offset the increasing costs of credit card processing fees.

“Anti-surcharge laws are often defended by unfounded claims that surcharges are deceptive to consumers,” says Razi. “These arguments were truly speculative.”

It’s important to note Colorado’s new law does not allow a free-for-all in surcharging. There are very specific rules and regulations that dictate how it must be implemented.

Previously, the state’s two choices were to prohibit the use of credit cards, which is bad for the customer experience, or force merchants to eat these costs, taking a chunk out of your bottom line.

As Razi wisely puts it, “the thing that’s truly top of mind for merchants is how do we change this ever-increasing trajectory of rising credit card costs?”

Unfortunately, most small businesses cannot commit adequate resources to ensure their business is compliant. For many business owners, it makes the most sense to leverage surcharging technology with automated compliance.

What Is Credit Card Surcharging Exactly?

Chances are you’ve heard the term “convenience fee” and recognize it as the cost of doing business with customers who prefer to pay with credit.

Because many credit cards provide rewards for various transactions, customers are often incentivized to engage credit as a payment option.

Put simply, it is an additional fee you can charge a customer to cover the costs of credit card processing. The customer can essentially pay for the convenience of using their credit card or choose another form of payment such as a debit card.

How a Credit Card Surcharge Program Can Benefit Your Business

Here are two concrete ways that credit card surcharging can benefit your small business:

1) Meaningful revenue boost

If your business is small and growing, every dollar matters; the extra savings can be a lifeline if you struggle to stay afloat. Surcharging will allow you to take back the revenue you usually lose to credit card interchange fees, a win for your business and its bottom line. No more absorbing payment processing fees to pay the big credit card companies.

2) Expanded payment options

The consequences of neglecting credit card surcharging may go beyond daily savings. Some merchants increase their prices to reduce the cost of accepting credit or refuse to accept it altogether.

Going cash-only to avoid credit card processing is like using duct tape to fix a leaky pipe. It’s a temporary solution that can have larger repercussions. Giving customers the ability to pay with credit allows them to take full advantage of reward opportunities, culminating in a better customer experience.

The Help You Need to Set Up a Credit Card Surcharge Program

While businesses now have an opportunity to keep more of the revenue they’ve generated, they must remain cognizant of state laws and credit card brand rules or face stiff penalties.

Razi puts us inside the mind of a merchant merely looking to save:

“Merchants are trying to figure out: ‘We took in X amount of surcharges, we paid out Y amount of processing costs to our provider. Does this really balance out? Did I come out ahead? Did I eliminate my transaction costs?’”

Some business owners might not fully understand the nuances of state laws or credit card brand rules. For instance, they may not realize that Visa and Mastercard require an “advance written notice of their intention to surcharge prior to implementing a surcharge,” or that compliance violations can result in fines ranging $5,000 to $100,000 per month.

The decision to implement surcharging is an easy one for most business owners, but choosing a reputable payment processing provider is mission-critical. Your reputation and profitability are on the line. Fortunately for merchants, the leader in credit card surcharging is the same company actively changing legislation to allow credit card surcharging to be more widely implemented.

CardX was founded in 2013 to provide businesses with powerful automated surcharging compliance. The CardX platform is powered by patent-pending technology that instantly identifies the card type in every environment, even online, at the highest level of accuracy in the industry. CardX technology tracks card issuers, card types, customer locations, and the ever-changing state laws to ensure that applicable regulations are met and that businesses are not only saving money on payment processing but are completely compliant. No matter how a business accepts payments, whether through a physical terminal, a virtual terminal, or a Lightbox on its own site, CardX can power the payment processing and automatically pass the processing fee to the customer on any compliant transactions.

CardX CEO/Founder Jonathan Razi has worked with government leaders and testified in front of lawmakers, impacting surcharging laws in states including Kansas, Colorado, and Oklahoma. In addition, CardX was the only solution provider to contribute expertise to a surcharging case filed with the U.S. Supreme Court. Because CardX is leading the charge in changing all surcharging laws, our technology can adapt and automate any new compliance needs as soon as new regulations go into effect.

To learn more about the new law and how to stay compliant, visit: