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Is Credit Card Surcharging Right for Your Business?

Credit card surcharging is a system created to help business owners compensate for interchange fees. These fees are associated with credit card processing. This is when the merchant combines the processing fees from credit cards to the customer’s total. This is not to be mistaken with the usage of debit cards. It was prohibited by MasterCard and VISA until 2013 and is still not legal in every state.  


The guidelines you follow are pertinent to the credit card company you process through, though there are some staple guidelines you need to remember to be compliant:  

  1. Your surcharge cannot be over 3% of the total 
  1. You cannot surcharge debit cards  
  1. It has to be correctly documented on the receipt under its own line 
  1. You cannot favor certain brands over others 
  1. You must have signage at the entrance to the store, your point of sales system and on your company website  


The biggest question you need to ask yourself is, “is this right for my business?” Like any situation there are pros and cons to surcharging your customers and there are always alternative methods to help you compensate for interchange fees. Best practices, software solutions and cash discounts are all examples of possible solutions to help price down expenses. Besides that, it really comes down to how you prefer to run your business and the type of clientele you have.  

Asking yourself what kind of business you have and who your customers are is your first question. If you primarily deal with ecommerce and department store transactions, then you are going to see an influx of credit cards in your business. This is compared to if you are a local food joint that may see an equal amount of cash and card. What you do not want is the addition of credit card surcharges to decline the usage of credit cards.  


How can this help you? 

  1. You can reduce your expenses while still allowing your customers a choice for payment type 
  1. Customers can see the cost required behind using credit cards, if they pay with cash or a with debit card there is no fee 
  1. Allowing credit cards lets you offer additional convenient payment methods 


How can this hurt you?  

  1. Some customers will not be willing to pay that extra fee  
  1. There are a plethora of rules and regulations that need to be followed to execute this properly  
  1. Surcharging raises your effective prices after the surcharge is accounted for 


If you do not think surcharging is right for you there are other alternatives that can help you meet the same end goal. You can require a minimum cost to check out using a credit card or you could even change the way you accept cards all together. Maybe it’s time you talk to your processor or consider switching to a new one. You can also consider using payment integration to automatically lower costs or consider changing your pricing model. But if you have decided not to accept credit cards at all because of interchange fees you can offer your customers cash discounts or promotions. There are a lot of different methods you can use to find the right path for you.  

If you are unsure of your next step, that is ok! You can give us a call at USB, (410) 828-4286, and we will have our team walk you through the process step by step to help find the best solution for your business. At the end of the day, we want to help you. Lets find the system that works best for you and your customers.