Did you know that as of January 27, 2013 it became acceptable for merchants to impose checkout fees on credit card purchases made by their customers using Visa and MasterCard credit cards? The decision was a result of a class action law suit, and the idea is that it allows merchants to offset the cost of their credit card processing fees by passing a percentage (in the form of a surcharge or checkout fee) through to the consumer.
Is this the right move for your business?
There are advantages and disadvantages to implementing a checkout fee.
The basic advantage is pretty clear. You may improve your bottom line by passing a percentage of the processing fee to the customer as a surcharge or checkout fee.
The disadvantages should be weighed carefully, however. With credit card use so prevalent, additional charges for their use may turn your customers away, especially if your typical transactions are higher dollar amounts. As an example, a consumer may not think twice about a 4% surcharge on a cup of coffee, but if they are purchasing a vehicle or paying for a pet surgery it's a different story entirely.
Even if your typical transaction fees are lower dollar amounts, consumers using credit cards tend to spend more per transaction than those paying with cash. If you incentivize customers to pay with cash, you may offset the credit card processing fees but your total sales volume may decrease.
Know the Laws & Requirements
It's important to know State laws, as well as requirements set by VISA and MasterCard if you do decide to implement checkout fees in your business.
If your business operates in CA, CO, CT, FL, KS, ME, MA, NY, OK, TX, state laws prohibit checkout fees on credit card transactions. If you operate your business in multiple states, you can surcharge the credit card transactions in those states where the practice is not illegal only. More states have legislation pending banning checkout fees, so be certain you know the current law for each state in which you operate.
Additionally, VISA and MasterCard have their own requirements of merchants who intend to charge checkout fees. You must notify both VISA and MasterCard of your intent, as well. Both require 30 days advance notice. It's important to know and understand all requirements.
Ask for Help
Novera Payment Solutions is a leader in the credit card payments processing industry. If you are unsure if surcharging is a good move for your business, don't hesitate to contact us. A possible alternative to surcharging is to take control of your credit card processing costs and take steps to reduce them.
Novera Payment Solutions is well known as a leader in the credit card payments industry and is committed to helping businesses improve their bottom line by providing significant savings on credit card processing fees through our innovative flat fee pricing model.
Novera Payment Solutions Advantange
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Novera Payment Solutions' consultative approach allows us to thoroughly educate our clients, equipping them to better understand this complicated industry.
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We take the mystery out of the credit card processing business.
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We work with all types of businesses across the country.
Contact Novera to learn more about how we work with businesses to provide the most fair and transparent pricing structure available on the market today for credit card processing.
