Can I add a surcharge on credit card payments to offset my loss?

There are many businesses and organizations that ask me if they can add a surcharge or "convenience fee" if someone decides to pay them with a credit card. The answer is PROBABLY AND MAYBE!!

Over the years, organizations have stayed away from credit card processing due the "perceived" high cost. But today organizations that require cash or checks ONLY are finding it hard to stay afloat! Many merchant processing reps advised their merchants to add a "Cash Discount Program" instead of adding a surcharge to credit card purchases. This method rewards cash buyers but can ultimately end up alienating credit card purchasers. And the potential risk that one customer complains about surcharge fees or posts a negative review can be VERY harmful to a business' reputation. Besides the fact that laws and regulations regarding surcharges are unclear and even differ from state to state, you could have a legal issue to deal with!

Less than 10 years ago, our financial gurus were saying that Americans would be using more cash for payments and stop using credit cards. However, statistics are indicating that more people use credit cards for purchasing today than cash and many people don't even own checks!!

"The trend toward using credit cards as a sole method of payment has increased in recent years. The percentage of people who use their credit cards as their sole payment method (rather than to finance purchases) has risen dramatically. More than half of all credit card holders use their cards for everyday spending. According to the FINRA 2016 Investor Education Foundation's National Financial Capability Study, 52 percent of respondents reported always paying their credit cards in full in 2015, representing an increase of 11 percent compared to the same study in 2009. http://www.creditcards.com/credit-card-news/payment-method-statistics-1276.php 

Until current court cases are decided, merchants will only be able to impose surcharges where there are NO laws banning this practice. Surcharging is essentially wide open at this time, as long as the merchants comply with the card brand rules. Merchants who do business in undetermined states are doing so with all the inherent risks.

A good credit card company should work with its merchants to help them consider all the ways surcharging could positively or negatively impact the customer experience, as well as the damaging results on the customer experience could have on their business. (Check "Yelp" and other online Review Services)

• Surcharge or Cash Discount Program
• Does the surcharge add so much cost it makes it unbuyable?
• Are your prices still competitive?
• Are your customers upset with the surcharge and go elsewhere to purchase?
• Has the fact you are surcharging for credit card purchases leading to a bad reputation?
• Is your state an anti-surcharging state? What are the penalties if your business is caught?

Would you like to sit down with a TEAM of professional merchant advisors? Merchant Processing Solutions Inc. can help you decide what is best for your company in the payment acceptance industry! Call us Today 954-938-2420!