Credit Card Processing Surcharging – What to Know

Credit card processing surcharging, also known as “checkout fees,” is a practice where merchants charge customers an additional fee for using a credit card as a form of payment. This fee is typically a percentage of the total purchase amount and is added to the customer’s bill at the time of checkout.

The practice of surcharging has been around for many years, but it wasn’t until recent changes in legislation that it became more widely accepted. In 2013, a settlement between credit card companies and merchants allowed merchants to surcharge customers for using credit cards as long as they followed certain guidelines. These guidelines include disclosing the surcharge to customers in advance and only surcharging the same amount as the merchant’s actual cost of accepting credit card payments.

There are several reasons why merchants may choose to surcharge customers for using credit cards. One of the main reasons is that credit card processing fees can be quite costly for merchants. These fees typically include a percentage of the total purchase amount, as well as a fixed transaction fee. For businesses with high-volume sales, these fees can add up quickly, eating into profits. By surcharging customers, merchants can recoup some of these costs and maintain their profit margins.

Another reason merchants may choose to surcharge is that it can encourage customers to use alternative forms of payment, such as cash or debit cards. This can help merchants avoid the high fees associated with credit card processing, while also making it easier for customers to budget for their purchases.

However, some customers may view surcharging as an unfair practice, as it can make it more expensive for them to use credit cards as a form of payment. Additionally, some businesses may choose not to surcharge due to the potential negative impact it may have on customer satisfaction and loyalty.

In conclusion, credit card processing surcharging is a practice that can be beneficial for merchants, but it may not be well received by customers. It is important for merchants to consider the potential impact on customer satisfaction and loyalty before implementing surcharging. Additionally, merchants must follow the guidelines set by credit card companies and disclose the surcharge to customers in advance. Ultimately, it is up to each individual business to weigh the pros and cons and decide whether or not to implement surcharging as a part of their credit card processing strategy.