While credit cards rank among the most commonly used payment methods, 50% of SMBs forgo POS systems because they don’t think they can afford them. Processing fees directly cut your profit margins, after all. Fortunately, the best approach is to adjust your current pricing plan to accommodate the extra costs and maintain fair margins.
Merchants compensate for credit card processing charges by adding surcharges and convenience fees or enforcing minimum purchase requirements. However, you should explicitly state the costs right from the get-go. Moreover, certain states prohibit surcharges and convenience fees altogether to prevent businesses from tricking their customers.
Here’s a brief introduction to how merchants can compensate processing fees through extra charges.
Important: The states that prohibit surcharges and convenience fees include Texas, Oklahoma, New York, Massachusetts, Maine, Florida, Connecticut, Colorado, California, and Kansas.
Overall, the key is transparency. Whether you reinforce a minimum purchase requirement or add credit card surcharges, explicitly state your intentions right from the get-go. Never mislead customers. Doing so not only compromises your business reputation but also puts you at risk of a lawsuit.
Are you unsure if your business can afford a payment processing system? Processing Card has you covered! Read our comprehensive explanation on merchant credit card processing fees for more information.
Wilbur Graham has been writing about mobile payments and POS systems since 2012. He got his degree in Marketing at California State University.
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