Convenience fees for accepting credit cards are evil. Almost as evil as rebates.
One of the joys of running a business is having customers that pay you. They arrive with any number of payment forms. If you want to get paid, you have to juggle accepting different payment types with costs of doing such.
Unfortunately, some businesses lure you in with a “pay by credit card” promise when, in fact, you have to pay extra for the “convenience” of this service.
Large stores will accept credit cards for what would seem any amount, even less than a dollar. Why? Because the cashier is just an employee. These front line folks probably don’t even know what a merchant account is or how it works. They feel no pain like you (the business owner) do at the killer fees you have to pay to process a credit card transaction.
Don’t use the excuse that you are a small business to slap a “convenience fee” on a customer. I’ve seen my share of handwritten notes taped to cash registers indicating a 25 cent fee will be applied to orders under $5. You’ve probably seen these too.
If you have such a sign on your register, consider that it may be a violation of your terms of service with the credit card companies.
As a small business owner, I know that you have to pay the merchant account and processing handlers per transaction. When you run that low dollar purchase, your fees are a higher percentage of the total than a more expensive purchase.
Nevertheless, you walk a fine line between alienating customers and violating the credit card companies’ terms of service. Neither option seems like a good one.
Credit card processing is the backbone of e-commerce. Unfortunately, some government and utilities insist on charging a “convenience fee” for paying online.
I know they are just passing along their fees to the customer. But the customers don’t know that. They are just hit with a 3-4% “fee” that greatly increases their out-of-pocket expenses.
Take a look at the savings you’ll get from accepting credit cards online and they will offset the overhead of paying for people to open envelopes and manually process payments received by mail.
Just Say No
If your offline business deals with lots of transactions around a low dollar amount, maybe you shouldn’t take credit cards to begin with.
My wife reminded me of Amy’s Ice Cream here in Austin. Not only do they have “legendary” ice cream but also have an ATM in the corner of their store for your “convenience!”
There is a fabulous Mexican restaurant, Julio’s, in town that only accepts cash. The food is so good that it doesn’t matter, they are always packed with people.
Naturally, a “no credit cards” policy may be a barrier to some customers. However, if your product is superb and your service is excellent, people will come back and bring their friends, cash in hand.