No Longer do businesses have to pay processing fees to accept credit cards.
Some business owners pay as high as 4% in processing fees to accept credit cards. That is why specific industries don’t accept credit cards as a form of payment. Credit cards are a burden for many businesses, especially ones with single-digit profit margins. However, the rules have changed, and the business owners no longer have to pay the fees.
New Rules are in Favor of Business Owners, allowing them to surcharge credit card fees
According to the new rules, business owners can pass on the fee of the credit card to the customer. For example, if the business charges $100, they receive $100. The customer pays the credit card processing fees. This new rule allows companies to eliminate the costs to accept credit cards. The new rule allows businesses to pay 0% in credit card processing fees, improving the bottom line by eliminating their current merchant processing fees. It also allows businesses who don’t accept credit cards the ability to offer a new payment option without hurting their bottom line.
100% Compliant Solution for businesses to pass on the credit card processing fees to the customer
The universities and governments had long been doing this as they were exempted from this fee. In 2013, the rules changed and it was possible to pass on the fees to the customer. Even a court in the US declared the previous practice unconstitutional and the rules were changed for businesses.
Credit Card surcharging benefits everyone.
Customers earn points and rewards from the credit card companies. Even if a customer has the money to pay for a good or service they typically use their credit card to earn points. In the past, the businesses always had to pay the processing fees so it made sense for everyone to use their credit card even if they don’t need to. Not allowing businesses to surcharge is like telling them they have to extend terms to customers. In effect, the consumer earns points and has 30 days to pay while the business owner pays the cost of this in the form of fees.
Credit Card surcharging opens new opportunities for businesses that don’t accept credit cards.
There is no doubt that the merchants will benefit from this change in the rules. Many business owners had little share of margins so they will get the most out of this. Moreover, this change led to another phenomenon when the consumers stopped using their credit cards for payments. It also opens up new opportunities for businesses that don’t accept credit cards. Now they can take credit card and it is cheaper to process than check or ACH.
What are the rules for credit card surcharging?
In order to comply with the new rules and charge consumers the fees, businesses need to follow a set of rules. This is the most important aspect of the new change. It is not as simple as businesses just adding a fee for credit cards.
- They cannot charge a fee on debit card
- they need to display the surcharge properly
- they need to process the surcharge and cost of good/service at the same time
- some states can not surcharge
- the fee cannot be over 4%
- the business cannot profit from the transaction
- the business has to register with the card brands to pass on the fee.
- TO LEARN ABOUT ALL THE RULES CLICK HERE
Interested in passing on the fee? Learn more about a compliant surcharging solution that allows you to eliminate your credit card processing fees.