As a merchantA business that accepts credit cards for goods or services., you will need to provide customers with a surcharge disclosure, also known as a checkout fee, when including additional fees for accepting a credit card. Essentially, surchargesAny additional charges to a merchant's standard processing fees. They are a result of non-qualified transactions of different communications methods. help your business recoup some expenses incurred during card processing.
Surcharge disclosure signage should be clear, concise, and unobstructed to ensure that customers are fully aware and informed of your business policy.
Additionally, there are various factors to consider before going ahead with a surcharge initiative. For example, in the US and US territories, surcharging only applies to credit-based (i.e., no debit or pre-paid cards allowed) transactions. Also, your surcharged fee should never exceed the cost of acceptance for a credit card, which refers to the amount required to receive payment.
Customer trust is a crucial component for successful businesses. According to an Edelman market report, 81% of customers shared that they needed to trust brands to purchase from them. A carefully implemented surcharge disclosure provides customers the much-needed transparency and understanding to trust your merchantA business that accepts credit cards for goods or services. services despite increased prices.
Types of Surcharge Disclosures
There are two main types of surcharge notifications that you should include for your business: point of entry and point-of-sale or transactionAn act between a seller and a cardholder that results in either a paper or an electronic representation of the cardholder’s promise to pay for goods or services received from the act. The action between a cardholder and a merchant that results in financial activity between the merchant and cardholder’s account..... With these strategically placed notifications, you can effectively inform customers of surcharging policies as they enter your business premises or right before making a transactionAn act between a seller and a cardholder that results in either a paper or an electronic representation of the cardholder’s promise to pay for goods or services received from the act. The action between a cardholder and a merchant that results in financial activity between the merchant and cardholder’s account.....
Surcharge disclosures should apply to e-commerce and brick-and-mortar merchant accounts. All instances of your surcharge disclosure should immediately alert customers. Therefore you should use big and distinct font for your disclosure messages.
Surcharge Itemization
Aside from conspicuous signages, you should ensure that customers have a clear view of surcharged fees on their receipts/invoices. You should consider displaying the final surcharged sum separately on a receiptA hard copy of the description of the transaction that took place. for easy reference. The bill should show the exact dollar amount of the surcharge.
You should be extra careful with surcharge itemizations and ensure that they meet compliances at all times. Customers have the right to report miscalculated fees (i.e., amounts exceeding legal limits).
Examples of Customer Notifications
There are no fixed templates for your surcharge disclosure signages, and notifications should work if they meet surcharging and relevant state law requirements.
For example, a point-of-entry disclosure could read as: “We impose a surcharge on credit cards that is not greater than our cost of acceptance.”
In a point-of-sale scenario, your signage might display specific charges, such as: “We impose a surcharge of X% on the transactionAn act between a seller and a cardholder that results in either a paper or an electronic representation of the cardholder’s promise to pay for goods or services received from the act. The action between a cardholder and a merchant that results in financial activity between the merchant and cardholder’s account.... amount on Mastercard credit card products, not greater than our cost of acceptance.” For greater clarity, you could state that your business does not extend surcharge to debit or pre-paid cards.
In Summary
While surcharging can help your business reduce the toll of credit card processing fees, it compromises the overall customer experience. However, you can enable seamless surcharge campaigns with carefully planned disclosures. Your customers deserve to know where their money goes when they make a transactionAn act between a seller and a cardholder that results in either a paper or an electronic representation of the cardholder’s promise to pay for goods or services received from the act. The action between a cardholder and a merchant that results in financial activity between the merchant and cardholder’s account...., even if they are essentially penalized for using a specific credit card.
The best long-term solution for your business may involve negotiating rates with payment processors and avoiding a significant surcharge if possible. According to population research, the average American holds three credit cards. Additionally, credit cards generated $37.74 billion in purchases within the first quarter of 2021, an 11% increase from the previous year.
Credit cards will remain a preferred mode of payment for customers, mainly due to their speed and accessibility of use. You will need to ensure that your business provides straightforward guidelines and surcharge disclosures that offer customers peace of mind as they make fuss-free purchases.
NMA – Optimize Payments Processing with an Industry Expert
NMA is a specialized partner and advocate dedicated to helping small and mid-sized businesses navigate the biggest challenges in payments processing.
We will help you reduce the processing expenses incurred in your merchantA business that accepts credit cards for goods or services. operations by optimizing the steps in your transactions (i.e., implementing seamless surcharge campaigns and choosing suitable payment gateways).
Credit card acceptance should significantly improve the cash flow of your business. As such, we believe that unreasonable processing fees should never compromise your credit card transactions. By partnering with us, you can access customized payments tools and strategies to drive your business for the best outcomes.
About NMA
NMA is a merchantA business that accepts credit cards for goods or services. advocacy group dedicated to reducing or eliminating the unnecessary fees associated with accepting credit card payments. Since 2004, NMA’s payment processing solutions have delivered tailored solutions, best-in-class customer service, and high-quality service offerings for businesses across multiple industries. Whether it’s high-risk or low-risk, brick-and-mortar or e-commerce, NMA will create the best processing experience for your company. For more information, visit us at our legacy.nationalmerchants.com or by calling (866) 509-7199