Your business has to accept credit card payments to maximize your sales and revenue. Sometimes, though, the fees you pay to process those payments can get frustrating. Refusing to take them isn't a good option, and raising all your prices may be unpalatable. A creative solution is to add a surcharge to credit card payments. Done correctly, this gives you a way to recover those fees without alienating your customers.
What Is a Surcharge?
A surcharge for credit card payments is a fee you add to cover the cost of processing a credit card payment. Instead of bumping up your sticker price for your products or services, you simply add a percentage or dollar amount to each card transaction you process. Over the course of a year, this can offset thousands of dollars in fees that you have to pay for card purchases.
Legal/Regulatory and Practical Issues
Before you set up your processing system to apply surcharges, you need to make sure the way you do so is legal where you do business. A standard limit is that the surcharges must be revenue neutral, so you cannot charge more than the processing fees would cost you. Different states or countries set limits on the amount you may legally charge to your customers. Laws and regulations in place might also dictate the disclosures you have to give at the point of sale or on payment receipts. Take the time to understand the rules under which you operate before you implement any surcharge program.
Outside of legal restrictions, consider the implementation of a surcharge program. Your processing partner should be able to help set up the technical side of this, but you know your business and your customers. Finding a way to build the surcharge into your business model will determine whether it works for you.
Communicating to Customers
A communication strategy should serve as your difference-maker. Outside of your legal disclosure requirements, you should be proactive in identifying the surcharge and why you apply it. Further, you should clearly state that it applies to credit card payments, but not to cash or debit payments. This provides your customers both a way to avoid the surcharge and an appreciation for its purpose. Both of these work to foster communication and understanding between your business and the customers you depend on to survive and grow.
When you do it effectively, building a surcharge into your credit card payment acceptance can save you thousands of dollars per year. It allows you to price your products and services more competitively and still achieve a healthy margin on your sales. Work with your processing partner to create the right strategy and protect both your customer relationships and your bottom line.
Nuvei's Partners can offer merchants the freedom to control their processing costs like never before, thanks to our surcharge program. Click to learn more.