I fought, for a very long time, charging the customer fees for credit cards. After all, I felt blessed and grateful that people trusted me and my business to help with their home interior projects and upgrades. When they are already spending hundreds if not thousands of dollars on product and services, why would I demand an additional charge of a percent or two when no one else in our industry is charging fees? It just felt like a money grab.
Then, as years went by and I noticed nearly every business across virtually every industry had begun adding credit card processing charges to every sale, I began considering the idea. Curious, I investigated my own credit card use. I found that more frequently, businesses were either charging a fee or would not accept a credit card as a method of payment. As a consumer, I had not stopped buying those products and services but rather changed the method of payment in order to avoid the additional cost of credit card charges. As a retailer, I began to explore charging a percentage to recoup the costs of those fees.
When I began to dig deeper, I found I had paid tens of thousands of dollars in credit card processing fees. All those fees were sucking money from my bottom line that was being wasted on my customers’ spending choices. Moreover, it was unnecessary; they would still update their homes and cover their floors whether they paid with a credit card or simply used checks or cash.
I researched the legalities of additional charges to cover credit card processing fees, and what I discovered was the laws regulating this practice vary greatly by state. State governments have strict and varied laws ranging from the amount allowed to be charged to how that charge is spelled out on the customer invoice to a cap on the amount charged. While some state laws were overly specific and regulatory in the consumer’s favor, a couple of states had never taken the time and effort to address the topic at all, I learned. Two states had nothing in their laws and ordinances about charges to closers for credit card use.
Learning to pass it on
I had a hunch that the customer would object, even take offense, to being charged a fee for one method of payment over another, so I decided to feel out the situation with each customer. After closing the sale, I would delicately mention a small additional cost to cover the costs associated with credit card processing fees. While some customers required a brief education of how credit card companies earn their profits beyond consumer interests and fees, I found most people to be completely informed and knowledgeable on the topic. Most showed support and empathy for the burdens of charges being laid on the backs of small businesses in their community.
A few months ago, I began the practice of charging a small fee associated with the use of credit cards. I thought, “I’ll give this a try and hopefully put a stop to the bleeding of my store’s profits with this onslaught of fees.” And if a customer objected or seemed offended, I would quickly offer to split the fees or, if needed, waive them entirely.
So far, no customers have objected to paying a small fee to cover my additional costs. As a result, I have positively impacted my profitability. Every cent collected toward offsetting those fees shows a direct and total increase in my store’s bottom line.
Eric Thompson is the owner of Satolli Carpet & Floor Covering, Warren, Ohio. He is also a philanthropist and stand-up comedian.
