Credit card surcharge

[homeprogreen]

So it looks like Square is finally going to allow credit card surcharges to be applied to in-person transactions. It’s a beta and limited to just a couple of their systems like Square Point of Sale and 1 other. Doesn’t work for Square for Retail but it’s progress on a much requested feature. Here’s the link to the support article so people can check it out 

https://squareup.com/help/us/en/article/8580-set-up-and-manage-credit-card-surcharges?utm_medium=web...

[JTPets]

About time lol

[Gossip14]

In the UK , credit card surcharge is not allowed for personal CC , only business CC

[androo]

As a storekeeper, I'd never add a credit card surcharge. As a customer, I find them offensive. Like "Oh, you want to pay my asking price for something? He's an additional fee." 

I understand in some places it's normal to add taxes, tips, etc. to a displayed price. Here in Australia we display a price inclusive of tax - the price that is paid for the item. I don't charge customers more to pay by cash (it has costs too—insurance, safety, fraud risk, time to count, time to take to the bank, etc.). I see any surcharge as a cost to my business and build it into my pricing. 

Nice feature for those who want it, I'd never use it. 

[TheRealChipA]

@androo You're in good company.  My solution when I opened my business 10+ years ago was to build card fees into my product pricing.  That way everyone pays them and I actually end up making a little profit on my card fees.  I've never had a year where I actually "lost" money on card fees, and I never will.  If I walk into any business that surcharges, I immediately cancel the transaction and never go back.  I find the practice to be decidedly customer-unfriendly.

[PerroneTech]

I appreciate that they added this feature, but I think this works better for those with really thin margins, otherwise, the 2.5% I pay is simply the cost of doing business, and it is baked into my pricing scheme.

I'm glad it is there for those who need it though.

In case you are on the fence about this, you MUST inform Mastercard of your intent 30 days BEFORE you activate it.

[HanaleiBreadCo]

I enabled this today for our Square Point of Sale systems, but on the first day 37 out of 184 credit card transactions were not charged the fee (2.5%) resulting in $50 of lost fees.  I understand this is in beta, but this seems like a pretty egregious bug.  I did notify Mastercard 30 days ago, and there's no rhyme or reason to the missed charges, it's happening on different card types etc.

Is anyone else trying this new feature and having any issues?

[TheRealChipA]

@HanaleiBreadCo Per the help document that @homeprogreen included the link for:

• Surcharges only apply to credit card transactions. ACH, debit card transactions, tips, offline payments, and split tender payments can’t have surcharges applied. 

Also, the card networks (Visa, etc) have other restrictions even for credit cards.  For example, gift credit cards can't be surcharged.  Neither can other prepaid cards -- the kinds that their owners can fill up and use to help them build credit history.  There are some banks in the Visa and Mastercard network that also do not allow surcharges.  It's not a bug.  Because of the restrictions that can be placed on surcharging, you will never get 100%.

That's one of the big reasons I'll never use surcharging.  The biggest reason is it is a bad business practice.  This is the second biggest -- it doesn't cover all cards.  My solution when I opened my business 10+ years ago was to build card fees into my product pricing.  That way everyone pays them and I actually end up making a little profit on my card fees.  I've never had a year where I actually "lost" money on card fees, and I never will.

[homeprogreen]

Well you didn’t actually lose the fees. All credit card processing fees are a dollar for dollar deduction from profit when you do your income taxes. Honestly I find it’s better just to factor in the fees when you set your margin for pricing just like you factor in overhead and cost of goods. If you have the fees included in margin then not only are you covering the expense for the sales that are with a card but you’re also making an extra 3-5% on the sales that pay with cash then you factor in the fact that the fees are a business expense deduction and you actually turn a profit on them 

[HanaleiBreadCo]

Losing $1 in profit is not recouped by an income tax deduction (e.g. in a 20% bracket, you still are out $.80).

COGs is a business expense deduction, but I don't want it to be 100% and I don't buy the argument you turn a profit on expenses.  I agree you can factor them into your prices, but it was much easier to add a surcharge than increase all our prices a few percent, especially when most are rounded to an even dollar amount.

[homeprogreen]

Ok I will attempt to explain it better. Your card processing fees are deducted before your tax is figured. The same as your utilities, rent, insurance and other overhead. So you’re not out a dollar. It’s a direct dollar for dollar deduction from profit. You don’t turn a profit on expenses. You turn the profit by factoring in the card fees into your margin when setting your retail price. Since you charge the same price on every sale you gain the extra 4-5% profit on every single cash sale due to the fact that you aren’t paying the processing fee on that sale. What’s the margin that you have currently calculated your products?

[HanaleiBreadCo]

Well before Square supported this,  I added a 3% surcharge for employee health care benefits on all sales.  I did this rather than raise all prices, as it was much easier and I could rachet it up over time.   We are making a very acceptable profit now and I don't like the idea of charging cash customers a surcharge built into the price just so that we don't have to add a credit card surcharge.    As a customer, I understand why I get charged a credit card fee at some places, and I have credit cards that typically pay me more in cash back than the fees I get charge, so I don't mind.  The margin on our products factors in the approx 3% in fees we collect, so one way or another I have to collect those to keep our profits acceptable.   If I drop all surcharges then I will have to raise prices about 3% which is a royal pain.

[bonny]

I have always found that when businesses add a line for a surcharge for employee health care benefits, I question why behind the notice. Why aren't employee health care benefits included in the prices?  They are included in mine.  Same for credit card fees.  Accepting cash still costs to process.  I've found that when folks use debit or credit to make their purchases, they tend to buy more.  Personally, when I see surcharges added to my invoice, I won't go back.  

[kayteeS]

Gas stations charge more for credit cards than for cash payments, in order to pay the fees... and for taking the chance that the card may be stolen and cause a charge back. My dentist also charges 3%-- she does "regular" dentistry, but also does cosmetic/non-covered procedures, and those can be pricey, so 3% can be significant.

I do "discounts" instead for cash/check/Venmo, and in-person sales. That way, no cc fees and no shipping, both of which are included in my prices.