Cover Transaction Costs With Credit Card Surcharging
What is Surcharging?
Credit card processing fees have plagued businesses for years. Regarding small businesses, transaction fees can consume a significant chunk of earnings, affecting their bottom line. But there’s a way to combat this. Companies can partake in credit card surcharging to counteract these fees.
Surcharging is when businesses “exact an additional charge or payment from” customers to offset credit card processing fees. While this may sound drastic, there are two easy ways to surcharge customers that offer a fair way to reduce credit card processing fees for your retail business.
Cash discounts enable merchants to recover customer processing fees by adjusting their pricing strategy. Merchants increase the advertised standard price and offer discounts for cash payments or other designated payment methods, such as writing a check. Typically, the discount amount is calculated as a percentage reduction from the retail price, representing the price customers pay when using a credit card.
Dual pricing entails presenting two distinct prices for a product: one for credit cards and another for alternative payment methods like cash. You can easily create merchandise labels or shelf tags that display both prices to ensure transparency for your customers. With Artisan, you can edit these prices on an individual item or category basis, allowing you to set different retail and cash price percentages as needed.
Benefits of Surcharging
Surcharging effectively enables businesses to recoup a portion or all expenses linked to credit card transaction processing.
Promote greater price transparency and fairness by clearly indicating the cost associated with using specific payment methods.
Alternative Payment Methods
Incentivize customers to choose lower-cost payment methods, which can be more cost-effective for your business.
What You Need To Know Before Getting Started
Surcharging programs come with specific laws and regulations that vary by state, so it’s crucial to ensure compliance with local laws and ordinances before proceeding. Additionally, there are essential prerequisites to address before setting up Point of Sale (POS) credit card surcharging:
- Notification to Credit Card Companies: You must notify the credit card companies you accept (e.g., MasterCard, Visa) at least 30 days before implementing surcharging.
- Surcharging Limits: It’s crucial to understand that there are limitations in place to safeguard consumers. Surcharges must not exceed your actual processing costs and are currently capped at 3% by Visa.
Finally, it’s vital to note that surcharging is legally permissible only for credit card users and cannot be applied to debit card transactions.
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If You’re Ready to Reduce Credit Card Fees with Your Point of Sale, Then We’re Ready to Help!