Every business is looking to cut costs – we get it, we’re no exception! Running a lean, mean, profit-making machine is key to your overall success. We also know that no business owner likes to pay credit card processing fees. Recently we’ve been getting a lot of questions about surcharging, and we understand why. Surcharging seems like a great way to accept credit cards without paying fees – but there are serious drawbacks. We’ve written about these drawbacks before here and here, but today we want to focus on a different side of the surcharging story – sleazy sales tactics.
The Pitch
Credit card processors know you want your fees to be as low as possible – and that you’d prefer not to pay any at all! Even more importantly, you don’t want to have to deal with the complexities of surcharging. You’d really like it if someone could just take care of it all for you. That’s just what some processors promise when they pitch surcharging to you. They say they’ll set up your account in a special way so that the proceeds from credit card sales go into your bank account but the extra surcharging fee goes right into theirs. You never need to worry about the surcharge and you never pay a bill to your processor because the processor is essentially billing the customer to collect their fees. Sounds like a dream come true, right?
The Reality
What processors won’t tell you is that they’re making money off of surcharging like never before. You may think that you’re holding onto a bunch of extra money because you’re not paying processing fees, but in reality you’re just giving your profits right to your processor. Think about it this way: Your customer makes a $100 purchase and pays an additional 3% as a credit card surcharge, bringing their total bill to $103. $100 of that gets sent to your bank account, while $3 gets routed directly to the processor. That’s money that really should be yours, to do with as you see fit! Allowing the processor to take their fees directly from your customers give up control of your money and your book of business. If your processor ever raises their rates, your customers will feel the pain of the increase long before you can negotiate with your processor. Essentially, the processor now controls how much your customers pay and where that money goes. As a business owner, that should make you pretty uncomfortable.
The Fix
We’re not big fans of surcharging at 360 Payments, for a whole host of reasons. Some of our customers elect to do it anyway, but we make sure we educate them on the pros, cons, and risks. But we’ll never directly take money from our customers to pay our fees. We think that’s dishonest and predatory, and that’s the exact opposite of everything we stand for. We want our customers to be in full control of their money at all times and to be empowered to make their own decisions about how to pay us. If this kind of transparency appeals to you, we think we’d be a great fit for your business. Give us a call at 1-855-360-0360 or drop us a line on our website. We’d love to talk.
PS – There are better ways to cut costs than surcharging. Read about them here and here.