What Is Credit Card Surcharging?
March 5, 2023 | Merchants | Dustin
Credit card surcharging is a fee that merchants tack onto sales to cover their credit card processing fees. When merchants choose to accept credit cards, a processing fee is charged per transaction. For merchants, these processing fees can add up. So, merchants can implement credit card surcharging and pass on the processing fee to the buyer. For each transaction, the buyer pays a credit surcharge or processing fee. Charging fees for credit card transactions results in zero cost credit card processing for merchants.
As a merchant, processing fees can add up. A credit card company decides the surcharge fee in advance. If the charges are higher, this could take out a substantial chunk of merchant’s profits. But with surcharging, merchants forward this fee onto customer’s orders. Now, credit card payment processing can be little to none of an expense for merchants!
For buyers, a surcharge is like a tax. In addition to product costs, sales tax, and shipping, buyers may see a “transaction fee” on their receipt. The transaction fee would be the surcharge. Merchants charging a credit card processing fee must ensure they are transparent. As a result, merchants clearly state that a processing fee will be charged before the order has been placed. This ensures customers are aware of the extra charge and cannot dispute it.
Credit Card Surcharging VS Cash Discounts
The opposite of surcharging would be merchants offering cash discounts. A cash discount is an incentive provided to buyers for paying in cash. To implement this discount, merchants post the credit card payment price on their website or in their store. Then, when a customer decided to make a purchase and offers to pay in cash, he or she receives a discount. The discount is for the cash payment method. With cash payments, merchants are not charged a credit card processing fee. So, the cash buyer receives an incentive in the form of a cash discount.
For example, a CBD merchant using cash discounts may sell a vape pen and juice starter kit at $50.00. The price displayed is the credit card price. So, when a customer decides to buy something using cash, the cash price maybe $47.50. This new price reflects the cash discount applied since credit card processing was not used.
Both surcharging and cash discounts aim to alleviate the credit card payment processing fee that merchants must pay. These programs offer different benefits for different types of merchants. To find out whether credit card surcharging or cash discounting would benefit your business, fill out the SurchargePro form, and get an answer in as little as 48 hours!
Surcharging Offers Merchants Many Benefits
Unfortunately, credit credits with no processing fees are hard to come by. Merchants can end up spending hundreds to thousands of dollars a year on credit card processing. But with surcharging, merchants can now forward that cost onto buyers. Merchants who have implemented surcharging have reported saving up to 96% on credit card payment processing. The money merchants save on payment processing fees is increased revenue for their business.
Additionally, implementing a surcharge program is no cost to merchants. So as merchants save money, they do not incur any additional fees with surcharging. Surcharging is simple to integrate into your checkout process. Establishing your surcharging program with a company like SurchargePro ensures that your program is set up correctly. The experts at SurchargePro make sure your plan is in compliance and transparent to customers.
Passing your credit card processing fees off to customers will not result in a loss of sales. There is no evidence of checkout abandonment linked to surcharging. Surcharging will keep your customers retained and happy. With transparent checkout fees, customers will not even hesitate to complete their purchase.
Strict Regulations on Surcharging
Surcharging does come with some rules and regulations to follow. Each credit card company, a merchant chooses to process with has its own set of varying rules. The more cards a merchant decides to accept, the harder it can seem to navigate. Not complying with a credit card company’s standards for surcharging could result in fines. In the worst-case scenario, the credit card will no longer do business with the merchant, and the merchant account could be closed.
Significant companies like Visa and MasterCard have a lot to say about cash discounting rates since it negatively impacts their company. Visa allows discounting. However, they have certain regulations. According to their policy, the cash discount price may not be explicitly shown next to a higher card payment price. The merchant must only have one price visible. Lastly, upon a customer checking out, they should have an optional cash discount if they choose to pay in cash.
SurchargePro Powered by PayKings
PayKings is excited to launch SurchargePro, a surcharging and cash discount program. Merchants with a valid account looking to lower their payment processing fees can enroll in SurchargePro. SurchargePro can save merchants up to 96% of their payment processing fees with zero implementation costs for merchants.
SurchargePro offers two unique programs designed to save merchant accounts money on payment processing fees. The Merchant Account Cash Discount Programs helps merchants easily save money on payment processing fees. With cash discounts, merchants will find their customers wanting to pay in cash every time.
Alternatively, merchants looking to assign their payment processing fees to customer orders can enroll in the Credit Card Surcharge Fee Program. This program helps merchants to transfer their processing fees to customer orders. The Credit Card Surcharge Program results in zero fee credit card processing for merchants. SurchargePro makes zero cost credit card processing possible. Fill out a quick form so that PayKings can get to know a little bit about your business and how you already process payments. Then, in as little as 48 hours, SurchargePro will start saving you money!
March 5, 2023 | Merchants | Dustin