The oft-uttered phrase “Sometimes the best move is the one you don’t make” can ring true in many situations, including whether or not merchants pass credit card processing fees on to their customers.
U.S. businesses are now permitted to do so in order to recoup some of their transaction costs. But just because you can collect surcharges doesn’t mean that you should. Here are a few reasons why you should never charge customers for using credit cards.
Customers Despise Surcharges
Perhaps the most important reason to eschew credit card surcharges is because they are wildly unpopular with customers.
A poll conducted in August by CreditCards.com reveals that 65 percent of Americans who use credit cards would pay another way if any fee was charged, no matter how small. Only 2 percent of respondents indicated that they would pay an extra fee (and even then they’d only do so if it was capped at 2 percent or less of their purchase’s price).
The results of this poll mirror those seen in other countries. In Canada, 95 percent of credit card shoppers surveyed indicated that they would be encouraged to switch stores if they were forced to pay a 3 percent credit card surcharge. A similar restriction on surcharges was lifted in New Zealand in 2010, and 90 percent of shoppers there said that they would leave the store rather than shell out 3 percent more money for using plastic.
To Surcharge or Not to Surcharge
Based on these findings, customers who are turned off by credit card surcharges may react either by choosing not to frequent your business or by limiting their purchases to reflect the amount of cash they have on hand or in their bank accounts.
It would not be surprising if these customers also expressed their displeasure with the sheer inconvenience of the practice to others, either verbally or on web-based review sites. This negative publicity could contribute to your business being saddled with a reputation of being stingy.
On the other hand, deciding not to levy surcharges on your customers’ credit card purchases may be a wise choice in the long run. It may behoove you instead to make some adjustments to offset your merchant services expenses (like cutting overhead or raising merchandise prices slightly).
Another option: Check out GoPayment, which provides merchants with an affordable means of accepting credit card payments.