Customers don’t take well to change—particularly price change.
Credit card processing companies in January assigned merchants a new transaction fee after previous restrictions resulting from a 2012 lawsuit had lifted. Large retailers won a $7.25 billion settlement over credit card companies Visa and Mastercard and several large banks, according to CNN.com, forcing them to reduce “swipe fees.” That grace period has lifted, however, and swipe fees are back.
Credit card companies can now charge merchants 1.5 to 4 percent fee for each transaction. As part of the agreement, merchants can legally pass this fee along to consumers. How excited are you to announce a new fee to your customers? Businesses don’t have to take these new regulations lying down. With proper communication and a little cash, merchants can avoid raising costs for their customers.
Encourage Cash, Debit or Amex
The most effective form of protest against these new fees is to avoid credit cards all together. Encourage your customers to pay with cash, debit or an American Express credit card (Amex has a contract that restricts surcharges, according to Abcnews.com). Consumers value transparency. Hang signs encouraging customers to avoid paying with credit.
Larger retailers with national clout are able to negotiate lower rates with banks. The credit card processing fees paid by local mom and pop retailers cut into their overall profit margin. This also explains why there is an increase in the number of small retailers who require a minimum purchase when accepting credit cards.
-Better Business Bureau Report
When they ask why, explain the source of these new fees and express your apologies for the inconvenience. If either merchants or consumers accept these as the price of convenience, credit card companies can count on transaction rates going forward. If business and customers band together to avoid credit cards, however, they’ll force the credit card industry to rethink its stance on these new fees.
Negotiate With Your Credit Card Processor
You can’t opt out of this new fee, but you might be able to opt out of your current credit card processing contract. It’s easy to forget about the small machines that process most of your revenue. The prominence of these devices creates an opportunity for savings. Negotiating a lower credit card processing rate can cover the cost of this new fee, enabling businesses to absorb the fee without passing it along to customers. Businesses that absorb this fee can follow others that actually advertise their refusal to charge credit card customers extra, according to Capital Processing Network. If it has been a while since you’ve looked at your credit card processing agreement, a new rate could be your loophole to avoid conflict.
Find Savings Elsewhere
Business locked into their credit card processing agreements will have to be more creative to cover these new costs. Tech savvy owners can allocate a portion of the marketing budget toward covering credit card fees and replace it with social media marketing. A burgeoning form of business outreach, social media marketing connects businesses with consumers on platforms like Facebook and Twitter. Businesses have the opportunity to build trust and brand loyalty as users follow their pages and share their content. Best of all, it’s free.
However you’re able to do it, neglecting to charge customers this new processing fee with set your business apart from the crowd.