How To Add A Service Fee For Accepting Credit Card Payments

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.

Ways to Add Service Fees on Credit Card Payments

Here’s a brief introduction to how merchants can compensate processing fees through extra charges.

  • Credit Card Surcharges: A surcharge is an additional fee that customers shoulder to pay via credit card. Merchants cannot impose surcharges on debit and prepaid card transactions.
  • Convenience Fees: The difference between convenience fees and surcharges is that the former can be applied to other non-traditional payment methods, such as mobile payments and crypto.
  • Minimum Purchase Requirements: Calculate how many extra units you would need to sell to recover your profit margin loss. However, keep the volume to a minimum.

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.

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