Case Study: High Ticket Items
Rare coins are a luxury item coveted by die-hard collectors with money in the bank and an addiction to feed. The older, rarer, and more valuable the coin, the better.
Hunting for that perfect 1856 S Liberty Seated Quarter, valued at $16K a pop, is half the fun. Once found, you’d better believe collectors are going to acquire their prize.
And when a collector purchases that expensive coin with a rewards credit card, their rewards points skyrocket. Double win!
But would they pay a surcharge in order to purchase that coin with their credit card?
Let’s Find Out
A US-based company that sells highly-valued rare coins was curious to see if surcharging would work in their industry.
In coordination with InterPayments, they implemented a surcharge on any item priced $1000 or lower where a credit card was used as payment. The average transaction amount came to $327 while the average surcharge was around $6.25.
In the first four weeks of testing, our client was able to recover $15,000 with NO IMPACT ON CONVERSIONS or complaints through their website or in their call center.
60 Days In
With no complaints or change in conversion rates, our client took it a step further and added a surcharge to any item priced under $2000. After another month, the average transaction amount came to $342 while the average surcharge was $6.18.
In a matter of 60 days, our client recovered upwards of $20K, again with no change in conversions and no complaints.
3 Months After Implementing a Surcharge
In the third month, the average transaction amount came to $376 while the surcharge averaged $6.95.
Typically, where most eCommerce sites are concerned, the average surcharge would be much lower since most sales aren’t quite so high.
In only 3 months, our client recovered over $32K, all with no impact on conversions and zero complaints through their website or in their call centers.
Why Didn’t the Surcharge Affect Sales?
We can make some assumptions. Perhaps where rare coins are concerned, customers aren’t much put off by a small additional fee. Rare coins carry a hefty price, after all—a hobby for the fanatically stable, perhaps?
Here at InterPayments, We Don’t Believe This to be the Case.
We have observed similar results with all of our clients in a variety of industries. Thus far, our clients have reported very little push back as far as surcharging is concerned. Consumer purchasing habits show no signs of changing. Best of all, merchants have finally found a viable solution to the ever-growing credit-card-processing-fee problem.
Now both merchants and consumers have options. Consumers have the freedom to use their credit card and pay a transaction fee or switch to another payment method such as debit card or ACH transfer. And merchants can recoup the heavy cost of processing credit cards, which, before, would have taken a large financial chunk out of their profits.
Our Client’s Projections
Based on our findings, twelve-month projections estimate a potential for our client to recover upwards of $130K even if they remain at a $2,000 order maximum cap. And, best of all, with no initial