Why Surcharge Doesn’t Have to be a Four-Letter Word

With increasing pressures on financial performance, companies continue to look for ways to improve – or even keep steady – their operating margins.  And in some sectors, many companies are now embracing surcharges on credit card payments as a way to address those pressures.  Or more simply put, many businesses are now passing along the cost of the transaction to the buyer when a credit card is used for payment.


It’s not a new process.

There is always a cost to any transaction.  Those costs can include many resources – including time, people, and money.  And someone has to cover the cost.  It can be the buyer, or the seller, or split between both parties.  When buying a home or a car, the “closing costs” have long been paid by the buyer, and sometimes will be used as a negotiating tactic.  But there’s still a cost – to be paid by one or more parties.  “Buyer-paid” closing costs have been around practically forever, and people generally expect to pay those costs for those types of purchases.


People – and companies – are resistant to change.

Some companies continue to be cautious about implementing a surcharge on credit card payments for their goods and services.  And yes, there is some slight resistance among buyers about having to cover the transaction cost in other places beyond their home-buying and car-buying experiences.  But in a recent PYMNTS.com survey, results indicate that the negative reaction is less than 1-in-10 of all respondents who had a negative impression about paying a surcharge in places like restaurants and retail shops.  And those results are skewed to be more negative among older populations.  This is somewhat predictable, in that as people get older, they are typically more firm in their mindset and their daily activities, and are simply resistant to change.  But the younger generations typically are more accepting of covering these transaction costs, as the convenience of using a credit card is far greater than a small fee associated with their purchase.


Taking care of your customer is always the priority.

For companies looking to change how they manage payments and their financial performance, the key to success remains the same priority that all businesses should have – focus on the customer.  Taking care of customer needs and doing everything possible to delight them with your product and support is the real reason why people become loyal customers to any brand.  And that mindset as a business owner should hold true when contemplating a surcharge to be applied on credit card payments.  It’s essential to inform the customer upfront, and explain why this change is being implemented, and then do everything possible to answer their questions as well as offer other payment options that are less costly to them – and to your business – as alternatives for remittance.  With that mindset and that approach, your business will continue to thrive and perform for your customers and for you.


Learn how Transaction Services can help you with innovative payment solutions for your business.  Contact us today.