Should You Charge Customers Extra When They Pay with a Credit Card? Gene Marks

It drives me nuts when small businesses don’t accept credit cards.
In this competitive environment, how can you not offer as many payment options as possible for your customers?

As a small business owner, your job is to make your customer’s experience with your business as pleasurable and seamless as possible.

Some merchants and restaurants still don’t get this.

Worse, there are others who do accept credit cards, but then have the audacity to charge an extra fee as a penalty to those customers who choose not to pay cash.

There should be a law!

Wait, now there is. In the U.K., that is.

According to this report from NPR, soon British retailers will no longer be allowed to levy a surcharge when customers pay with their credit card.

This is why England is considered such a civilized society.

Apparently, the surcharge has been pretty widespread there, with retailers charging as much as 20% extra when plastic is used instead of cash. “Rip-off charges have no place in a modern Britain,” a government official said.

Hear, hear!

The practice also is not allowed by 11 states here in the U.S., but many businesses in the remaining parts of the country still do this and some — to skirt the law — then offer “discounts” for using cash (instead of a surcharge for using credit).

Tomato, to-mah-to.

There’s still a lot of debate. According to the NPR article, the Supreme Court gave a “partial victory” earlier this year to those challenging the New York State ban on surcharges because it could be interpreted as “regulating free speech,” and sent the law back to the lower courts for further argument. Free speech indeed.

I say, your business must accept all forms of payment!

Credit cards, mobile payments, PayPal, Apple Pay, cash, Bitcoin. OK, maybe not Bitcoin — yet.

Your number one priority is customer service, and in today’s world, customers want their transactions to be easy, pleasant, and fast. Making me run out to an ATM machine to pay for my dinner will motivate me to never dine in your restaurant again. Charging me extra just because I have the audacity to want to use my credit card is a further insult.

Sure, credit card fees are high, and you’re the one shouldering the burden with each transaction. So here’s my advice. Do what the bigger and smarter companies do — push the costs down to your customers.

If the extra 2.5% charge is too much to bear, then figure out what these charges are costing you during the year as a percentage of all of your revenues (it will be less than 2.5% because of your cash customers), and then just increase your prices by that sliver.

Trust me, I’m not going to notice (or quibble over) the $14.50 lasagna after you’ve raised the price by 36 cents. And if your lasagna is as good as you say it is, then I’ll gladly pay!

There shouldn’t have to be a law against charging your customers extra for using a credit card any more than there should be a law prohibiting people from doing dopey things. But in this case, it’s pretty much the same thing.

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