Last January, merchants in the state of New York were given the legal right to add a surcharge to all credit card transactions, as long as the consumer is clearly informed in dollars and cents, of the amount of the surcharge. In other words, New York merchants can pass along up to 4% in credit card fees assessed by their financial institutions as long as they clearly disclose the fee to the consumer making a purchase.
Merchants can call the fee whatever they want: a surcharge, extra cost, price differential, additional fee or something else that gets at what it is: a surcharge for the privilege of using a credit card to make a purchase. Discounts for cash purchases have been around for years but merchants had to absorb credit card fees as a cost of doing business. Now there’s a way to right that situation.
As consumers, it may make each of us tighten the grip on our wallet a little. But as a merchant, it brings the opportunity to turn a cost of doing business into a little extra jingle in the balance sheet.
Follow my math here:
- On average, merchant fees are 3% on $10,000 sales or $300 per month.
- Now you can pass that 3% fee along to your customers, defraying the total cost.
- Assess a 3.5% fee to your customers (you still pay 3%) on $10,000 sales for $350 per month
- The surcharge covers your 3% fee and you add $50 profit each month
- In a year’s time, your surcharge cost is covered and you add $600 to revenue ($50/month x 12 months)
Do the math on your monthly sales and decide what’s the best direction for you.
For more information about credit card and merchant services processing, contact Mike Krause, firstname.lastname@example.org, 585-704-6453 and please visit SalesSensePayments.com.