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.

[VanKalkerFarms]

I couldn't agree more.  It is one of the worst feelings, all happy and checking out and glad to be spending $500 and then the last interaction you will have at the store is "oh you are paying by card?  We charge for that" I am here trying to give you money, exactly what you asked for I didn't haggle a price, and now for you to take money from me you want to charge me??? GTFO I won't be coming back, I have left stores over that exact issue.  Never make a great experience go bad on putpose because, at least by me 85% pay with card, so the by far majority are.

It is just bad business.  You don't pass on your property taxes as a line item, your labor as a line item, your cost of the item, etc etc. Figure it into your pricing just like you do all your other expenses.  But then again, I know multiple people that are really bad at business that don't even factor in things like property taxes.

[HanaleiBreadCo]

All of our other operating expenses are not related to the payment method, so I agree to bake those other expenses into the prices.   However, credit card processing fees ARE dependent on payment method.  So the real question in my mind is this - is it fair to charge cash customers a "baked in" credit card processing fee?   Here in Hawaii almost every business, even wholesale suppliers, now have credit card processing fees.  Like someone said - this is standard practice at gas pumps everywhere.

Personally, I get at least 2.875% back from my bank on my credit card purchases, which is almost always more than what I get charged, or close enough for comfort, so I have no issues paying the processing fee (even for my property taxes).

[atMerchant]

This is ridiculous because most with credit cards are paying a fee to the credit card company itself for having and using that said card. Very few are paying that bill off every single month. Yet, you want to complain because a business charges more on a credit card purchase. 

For me, I up all my prices 5%, then offer a 5% cash discount. I'm still charging for those credit card fees, I'm just telling you I'll give you a break if you pay by good old fashion mula. 

Why should those paying cash be forced to pay higher prices due to credit card fees, which is, yes, all part of the overall overhead? 

We could get technical and also go along the lines as I'm charging more on this product cause I pay a higher priced shipping fee. Is that not calculated into your price? But why? Why would you do that? Is that not just part of doing business, having items shipped to you. So why would you pass that cost onto your customer. 

It is all in the pricing. Just folks that want to use that plastic are having trouble understanding that some businesses don't want to charge EVERYONE cause some use that plastic which incurs extra fees to that business. This I offer a CASH DISCOUNT.

No doubt as more business adopt this method. Folks will be complaining about the cash discount, and how unfair that is to everyone else.

Well, credit card fees are not going away. And NO business should be told they need to absorb that cost!! Just as no customer should feel obligated to pay a higher price for their product, based on a credit card fee, cause that customer uses cash. 

This whether a business opts to charge a fee for a cc or give a cash discount, that business is giving the consumer a break on pricing. It is the consumer that is choosing whether they pay the higher or lower price for an item. 

[VanKalkerFarms]

Handling cash is not free and quite costly, and can be nearly the same when you factor in all it takes to handle.  The time it takes a manager to setup all the drawers, the cahsiers to count drawers to confirm at start amount, cashiers count down at shift change, cashier count start at shift change, closing cashiers count down at close, calculate over/under, the errors cashiers have in wrong change given, cashier theft,  time and risk of checking bills/taking a counterfit note, the time it takes for a cash transaction to take place (digging out paper and coins by the customer, transfer and counting, entering into the POS, getting change) vs less than 2 second tap.  Then the night manager has to recount all the drawers, then make the bank deposits, either pay the manager, use your time as the owner, or pay a car service to make daily/weekly bank trips.  Vs the ease of your daily money just being in your account the next day with no extra effort.  Yes, cash sounds great, but there is a lot more to it than stuffing it in your pocket if you are running a business that has employees and needs to be aware of where cash is going.   Employee cash theft is estimated to be over 50 billion, and likely higher due to so much not being reported/caught.

I can see the argument when Cash was 90% of the transactions, but when it is pushing 90,% that is the way people are paying, not the odd one out on how they are paying.  And going back to my starting point, why make the last interaction with the customer be a sour one.

I gladly pay Square their 2% and don't have to think about 85% of my income and where it is and what to do with it. Handling even the 15% of millions a year adds up to a lot of cash handling already.

[androo]

and that's a good, detailed account of my brief mention of why cash costs me. 

Every part of my business costs. I've had arguments for "online orders should be cheaper" and also "in-person purchases should be cheaper". I dove down that rabbit hole and they worked out similar. Costs of web, software, printing order/invoice, staff to pack, postage, get to post office, etc. VS cost of market stall, damage in transit, theft, staff, answering customer questions, taking payment. 

And while watching this thread, I dove down the cash vs. card rabbit hole again. The same result; both methods cost me in some way, and they are fairly comparable. I won't introduce a fee or discount for either. 

The fact we can each decide what our business does is wonderful - that's competition! free market! and all that jazz. If something works for you, do it. 🙂 

[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. 

[cookscrafts]

So far we have decided to not do the surcharge. Instead we offer our customer a 2% discount if they pay cash so many will plan ahead and bring cash.