Top 6 Credit Card Surcharging Myths

Posted on May 03, 2019 at 22:45 PM

Surcharging is still a relatively new concept in the United States, and like all new things, there are a lot of misconceptions about it. In order to help separate fact from fiction, we dispelled the top six most common myths around surcharging.

MYTH 1: I’LL LOSE CUSTOMERS IF I IMPLEMENT A TRANSACTION FEE.

Surcharging Myth #1

In business, the name of the game is profit, so this idea of a potential loss in sales is probably the biggest deterrent for merchants and one of our favorite myths to dispel. In a scientific A/B test run of over 60k unique visitors with around 1,200 transactions, our customers reported a change in conversion rate of 0.12%. That was only 6 total units. The payback between what we recovered versus what they lost on those six sales was over 3,000%. Does that look like a loss to you?

Using our unique conversation rate calculator merchants can calculate how much SurchX can help their business recover by passing these fees on to their customers. And, the calculator can even show the breakeven abandonment rate to help decide if surcharging is a good financial decision.

Research in the United States and extensive real-world credit card surcharge fee data from Australia, a country where surcharging has been prevalent for years, reveals that customers either opt to pay the surcharge fee in order to, for instance, earn credit card reward points, or use a different payment form that doesn’t incur a surcharge. So, the good news is that they don’t just stop buying things.

 

MYTH 2: MERCHANTS MUST CHANGE PAYMENT PROCESSORS AND/OR

Surcharging Myth #2

SHOPPING CARTS IN ORDER TO APPLY A CREDIT CARD SURCHARGE.

Not true. While other surcharging entities do require special equipment or changes to shopping carts, SurchX is a fully compliant, completely agnostic credit card surcharge solution that seamlessly integrates with shopping carts and payment processors. You don’t have to change a thing. SurchX walks merchants through the integration process and helps every step of the way, making it as seamless as possible.

 

MYTH 3: CREDIT CARD SURCHARGING REQUIRES EXTENSIVE STAFF RETRAINING.

Surcharging Myth #3

Not at all. In most cases, employees have little to do with the credit card surcharge process. Unless the merchant’s sales process utilizes a call center—for which SurchX has a specific solution—there is no training required whatsoever. Customers use their credit cards as usual, and our customized SurchX surcharge solution DOES ALL THE WORK. Each SurchX customer credit card transaction is processed with a fully compliant and 100% accurate surcharge fee detailed on every customer receipt.

 

MYTH 4: CUSTOMERS WON’T UNDERSTAND THE SURCHARGE FEE.

Surcharging Myth #4

As surcharging becomes more and more prevalent among merchants (and after seeing the outright success Australia’s businesses have encountered with surcharging, it will be), customers will become accustomed to surcharging fees with the use of credit cards. In fact, most Americans have been paying surcharging fees for years when filling up at the gas pump. Service stations and convenience stores have been surcharging for the purchase of gas since around 2009 when the entire industry decided to charge an additional fee for paying at the pump with a credit card as opposed to walking in the door and paying by cash at the counter. SurchX recommends a tool tip on your check-out page to inform customers about the fee. And, as mentioned earlier, a surcharging fee, according to our scientific A/B studies, will not deter the bulk of customers from converting into a sale.

 

MYTH 5: IT’S ILLEGAL TO APPLY A CREDIT CARD SURCHARGE FEE.

Surcharging Myth #5

While this is still true in a few lagging states (though we predict not for much longer), in most of the US, businesses ARE legally allowed to apply a credit card surcharge as long as said business complies with all federal, state, and local laws and meets all credit card company requirements. These compliance laws are always changing, and keeping up with the regulations can be cumbersome and costly for an individual business on its own. That’s where SurchX comes in. It’s our job to keep you in compliance AT ALL TIMES. SurchX even offers a compliance guarantee.

 

MYTH 6: SURCHARGING IS UNFAIR TO CUSTOMERS.

Surcharging Myth #6

This is probably one of the most common myths we come across here at SurchX, but in fact, surcharging is far fairer than the alternative.

In order to cover the costs of credit card processing fees, companies often mark up the retail price of the products and services they sell, and therefore force ALL of their customers, even cash paying customers, to pay this fee without even knowing it.

What this means in today’s market is that customers who don’t pay with a credit card are subsidizing those who do. Put another way, cash and debit card customers are essentially helping to pay for other people’s credit card rewards. Now that is unfair.

When surcharging is enabled by merchants, customers have the option to avoid all surcharge fees yet still purchase the desired good or service by paying through other methods, such as cash, a debit card, a pre-paid card, or even ACH transfer.

 

The Infographic

6 Credit Card Surcharging Myths

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