It drives me nuts when small businesses don’t accept credit cards.

In this competitive environment, how can you not offer as many payment options as possible for your customers?

As a small business owner, your job is to make your customer’s experience with your business as pleasurable and seamless as possible.

Some merchants and restaurants still don’t get this.

Worse, there are others who do accept credit cards, but then have the audacity to charge an extra fee as a penalty to those customers who choose not to pay cash.

There should be a law!

Wait, now there is. In the U.K., that is.

According to this report from NPR, soon British retailers will no longer be allowed to levy a surcharge when customers pay with their credit card.

This is why England is considered such a civilized society.

Apparently, the surcharge has been pretty widespread there, with retailers charging as much as 20% extra when plastic is used instead of cash. “Rip-off charges have no place in a modern Britain,” a government official said.

Hear, hear!

The practice also is not allowed by 11 states here in the U.S., but many businesses in the remaining parts of the country still do this and some — to skirt the law — then offer “discounts” for using cash (instead of a surcharge for using credit).

Tomato, to-mah-to.

There’s still a lot of debate. According to the NPR article, the Supreme Court gave a “partial victory” earlier this year to those challenging the New York State ban on surcharges because it could be interpreted as “regulating free speech,” and sent the law back to the lower courts for further argument. Free speech indeed.

I say, your business must accept all forms of payment!

Credit cards, mobile payments, PayPal, Apple Pay, cash, Bitcoin. OK, maybe not Bitcoin — yet.

Your number one priority is customer service, and in today’s world, customers want their transactions to be easy, pleasant, and fast. Making me run out to an ATM machine to pay for my dinner will motivate me to never dine in your restaurant again. Charging me extra just because I have the audacity to want to use my credit card is a further insult.

Sure, credit card fees are high, and you’re the one shouldering the burden with each transaction. So here’s my advice. Do what the bigger and smarter companies do — push the costs down to your customers.

If the extra 2.5% charge is too much to bear, then figure out what these charges are costing you during the year as a percentage of all of your revenues (it will be less than 2.5% because of your cash customers), and then just increase your prices by that sliver.

Trust me, I’m not going to notice (or quibble over) the $14.50 lasagna after you’ve raised the price by 36 cents. And if your lasagna is as good as you say it is, then I’ll gladly pay!

There shouldn’t have to be a law against charging your customers extra for using a credit card any more than there should be a law prohibiting people from doing dopey things. But in this case, it’s pretty much the same thing.

Do you accept credit cards at your small business? Why? Or why not? Tell us in the comments!

(Visited 303 times, 1 visits today)

3 Responses to "Should You Charge Customers Extra When They Pay with a Credit Card?"

    • Diana | December 7, 2017 at 2:12 pm

      We’re insurance agents and we don’t accept credit cards because we don’t set our prices, we would never get reimbursed. I’ve heard other agents charge back to the credit card fee to the customer when the policy is agency billed, we even have a premium finance company that does the same, and we love them for it. Most premium finance companies that we’ve used don’t accept credit cards. Some business startups would rather pay with a credit card and pay the fee than pay with a checking account. Sometimes paying by e-check even comes with a flat fee. We would love to accept credit cards, but we don’t pass the charge along in brokers fees or anything because 99% of the time we don’t charge brokers fees, so we have no way to recoup the costs. The demand for credit card payments is also so minimal, the monthly fees and per transaction fees would never be recouped. I’m curious how other agencies handle this, if they accept credit cards for agency billed policies and how they recoup the costs.

    • D G | December 7, 2017 at 5:08 pm

      Well, this may be true when you sell lasagna and your profit is between 100 to 200 percent, or when you sell sushi with the profit of a 1000 percent.
      But when you sell insurance, and your commissions are 10%, shedding off 2.5% (which is in my case between 3.2 to 3.7 percent) equals a third of my income. So we’re left with nothing else but surcharge for credit card payments.
      And when insurance carrier decides to absorb the cost credit card transaction – then we can talk about accepting credit cards.

    • Jenna Roberts | December 12, 2017 at 5:47 am

      We are a non-profit child care facility and started “charging” for credit cards a year ago. We also haven’t raised our child care tuition for 2 years. Rather than raise our rates, we chose to save money by not spending it, one way was credit card processing fees. Our clients can pay with cash, credit card or local check. If retailers/fast food, etc. could give an option of lower prices with credit card convenience fees, some of us would appreciate it and would just pay cash. The reward cards that “pay back” customers take a hefty chunk (via increased processing fees) out of the money businesses are supposed to make, etc., I could go on and on….

Leave a Reply

Your email address will not be published. Required fields are marked *