The day eCommerce and bricks-and-mortar store owners have been waiting for has finally arrived!
The day we can finally pass along the cost to accept a Visa or MasterCard to the consumer is here.
We can thank a legal settlement between credit card issuers and merchants for giving us the option to charge customers a 1.5 – 4% credit card surcharge, or checkout fee, every time they use their Visa or MasterCard. No more do we have to absorb the fees credit card processors charge us on each time we process a card.
Prior to Sunday, merchants who accepted Visa or MasterCard were not allowed to pass on these charges to their customers. Gas stations got around that by exercising a loophole that allowed them to offer a cash or credit price not by charging more to customers who choose to pay by plastic, but by offering a “cash discount.” Tax collections agencies have been charging what they term a “convenience fee” if you opted to pay your taxes with a credit card for years. But who is going to fight City Hall? Certainly not the credit card companies who spend billions lobbying lawmakers.
Now we can join the tax man and the gas guy by passing on the cost of doing business to the consumer. If the Edwin Hawkins Singers were here, I’d ask them to sing “Oh Happy Day” in celebration.
If I’ve got you pumped up enough that you’re ready to start surcharging your customers, great! Part of the deal is that you need to post a notice on your store’s homepage and at the checkout letting customers know that their order is subject to an additional transaction fee. To save you some time, I’ve provided some sample copy below that you can modify and use on your own site:
January 28, 2013
Dear Customer,
Thank you for shopping at [insert store name here]. We certainly appreciate your business and look forward to having you join our long list of satisfied customers who save money every time they shop with us.
Beginning today, we will be charging you an additional [insert number between 1.5 and 4 here] % on your purchase should you choose to use a Visa or MasterCard. This is in addition to shipping and handling and is calculated on the total order, including tax. By charging you more, we can keep our costs down while still providing you with the convenience of using your favorite credit card.
Again, thank you for shopping with us.
[insert your name here]
[insert your company name here]
By now I hope you know my post is in jest. I’m not aware of any merchant, on- or off-line, who is going to take advantage of this. In fact, most of the major retailers including Walmart, Macy’s, JCPenny and more have already pledged not to charge the fee to customers, and you should too.
Walmart issued a statement saying, “We are not interested in surcharging customers in order to allow credit card companies to continue charging unfair fees. The proposed modification to the no-surcharging rule for Visa and MasterCard provides no benefit to customers or merchants such as Walmart.”
You work awfully hard to get a customer to either walk in your front door or start clicking through your online store. Why turn them off when they hit the checkout and see you’re going to knock them over the head with a fee for shopping with you?
I’d be surprised to see any business actually take advantage of this opportunity. I know I wouldn’t be shopping at a store that did and I’m sure I’m not alone in that thinking.
It’s just bad business.
If you really want to save money, shop around for the best rate on credit card processing just like you shop for the best auto or home insurance rate. If your eCommerce platform has credit card processing built-in through their “preferred” provider, chances are you’re paying a much higher rate than you should be so a commission can be paid back to the cart provider. If you’re a bricks-and-mortar store and process cards through your local bank, you’re also probably paying more than you should be. The merchant service industry is extremely competitive, so you should take advantage of that and get the best rate you can.
Please note: Only 40 states have agreed to the settlement. It remains illegal to charge a credit card surcharge in California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas. The checkout fee is only applied to Visa and MasterCard transactions run as a credit card. Debit cards transactions are exempt. The checkout fee cannot be charged to Discover or American Express cards.