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Thanks to recent legislation, it is now legal for retailers to charge their customers a fee for using a credit card. This is typically a fee of less than a dollar to make up for the merchant account fees that retailers pay to process their transactions. While this has been touted as a way to recoup some of the costs a retailer incurs for allowing customers to use credit cards, it can actually end up costing a retailer money.

Customers who use credit cards tend to spend more in a store and online. Some surveys have estimated that customers using online payment solutions that utilize credit cards vs. bank withdrawals spend about 20% more. By charging a fee to customers who use a credit card, customers could potentially decide to use an alternate form of payment, and thereby spend less.

Next, many retailers tend to underestimate the value of the security that comes along with accepting credit cards. Without credit cards, customers have to either write checks or use cash to make a purchase. Cash can be easily stolen, and a busy store will often find itself losing money as distracted cashiers count change wrong. Checks, of course, come with the risk of bouncing. While services such as check guarantee can cut down on the risk of accepting a bad customer check, these services also come with a lot of fees.

Credit cards, on the other hand, are guaranteed by a national chain. If a customer doesn’t have enough funds on hand to make the purchase, the credit card company deals with collecting the money. The merchant, meanwhile, is paid promptly, in full, and the funds are automatically deposited into its bank account. There is no need to set up a bank drop.

By charging customers a fee to process credit cards, many retailers are collecting relatively little money and increasing their costs to do business.


Posted in credit card processing, Credit Cards, online payment processing on May 08, 2013