Why Surcharging is a Game Changer for US Merchants

Posted on June 26, 2019 at 09:05 AM


Not a lot of companies in the United States are familiar with surcharging, but that will likely change very soon. In our ever-evolving economic infrastructure and the rise of credit card processing fees, the practice of surcharging to recover credit card processing fees with only increase.

Anybody who accepts credit cards as payment knows the pain of losing profits to credit card processing fees.

Anybody who accepts credit cards as payment knows the pain of losing profits to credit card processing fees

Why are credit card processing fees so painful?

Because credit card processing fees cost an awful lot to your bottom line.

For instance, if you take a merchant that we would consider to be a small business, a company that generates about a million or less a year in revenue, you can bet that their credit card processing fees are probably around $30,000 a year.

Now if you take that percentage and amplify that to a much larger company—to half a billion, a billion, or two billion—you can see that those numbers dramatically grow.

One company that we’ve been talking to, which generates about half a billion dollars a year in revenue, is experiencing about $250,000 a month in credit card processing fees.

Companies who generate half a billion dollars a year pays about $250,000 a month in credit card processing fees

What Can You Do?

Now imagine if there was a way for you to spread that number out across all of your customers. Makes sense, right? Not only does it make sense, but it’s reasonable.

The customer is the one that’s choosing to use the card that they’re using, and you’re paying for that processing fee no matter what card they use.

If they choose to use a points card, which generally costs a merchant more money, you (the merchant) just paid a higher processing fee for that transaction in order for your customer to get more points on their credit card.

And here is the kicker, our research shows that customers are willing to pay the fee/surcharge.

What Have You Been Doing?

In fact, for most of us in many states, when we go to the gas pump, we’ve been paying that fee for years. How often do you stop at a gas station and see a cash price versus a card price?

How often do you actually pay by cash for your gas?

How often do you stop at a gas station and see a cash price versus a card price?

I don’t know about you, but I never do.

I’m willing to pay the extra money in order to have the convenience of not having to go into the store.

We Have Tested It!

In fact, SurchX has run real-world case studies where 2,200 people making an online purchase were given an opportunity to choose a fee-free payment method or be charged a transaction fee if they use their card.

Out of those 2,200 transactions, only 6 people chose a fee-free payment method. Once more, we had 0 complaints and 0 cancellations.

So, the fact is that surcharging is here and it’s here to stay.

Credit card surcharging is here to stay.

It’s going to become a very common term in business. No differently than baggage fees have become common in the airline industry.

SurchX is first to market, but I’m sure we won’t be the only company in the market.

We Can Help You!

It’s taken us almost two years to build our infrastructure and our algorithms in order to keep merchants in total compliance among the more than 60 regulatory bodies that govern surcharging in America.

Our technology verifies the credit card processing fee for a credit card being used by a customer in real-time against 600,000 different card types in our data set.

Not only is SurchX new to the industry, we’re creating the industry.

Currently, we’re the only solution that can calculate the correct surcharge fee and integrate that number very simply and very easily into your shopping cart as a line item in your checkout. We recover as much money as we possibly can for you by law, which is up to 4% of the total transaction.

The most astonishing thing to share is that We implement with your cart for free!

We only take a small fee when a transaction is surcharged (50bps or half a percent of the transaction’s subtotal). The merchant recovers the rest. In other words, if you don’t get paid, we don’t get paid.

So if a credit card being used by a customer is 3.5%, we will add on our half a percent, to make it a total of 4% and bill you at the end of the month for that half a percent. On the other hand, if a card that’s being used by a customer is determined to be 4% card, we don’t charge our fee at all because the maximum allowable is 4%.

It’s also important to point out, that by law certain cards that customers might use are not allowed to be charged a credit card processing fee. That includes debit cards, certain government-issued cards, and so on.

More importantly, is the fact that surcharging regulation is changing on a daily basis.

Certain states allow surcharging and certain states don’t. We stay on top of those regulations to keep you in total compliance at all times.

I mean, what more could a merchant ask for than to be able to recover up to 30% of their net margin, returned straight to their bottom line, and it doesn’t even cost them a penny.

There is ZERO RISK for the merchant, we take all the compliance risk.

It just makes total sense. It’s simple and it’s what’s going to help American-based merchants be able to compete in this ever-changing marketplace.

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