Credit card Surcharges – do your customers care?


I found this article from the Canberra Times http://www.canberratimes.com.au/business/-2g9nl.html relevant to a discussion I regularly have with small business owners. Should you charge your customers for paying by credit card or not?

My own view is that offering alternative payment options is part of running a customer focused business. You should be making it easier for people to do business with you and not adding barriers or negative experiences!

I get annoyed by the surcharge when it is imposed: you want to charge me for paying you and you’re getting the funds instantly? How about I impose a levy on the business for the cost savings of not managing accounts receivable, and preparing and banking cash takings!

Regardless of the sale payment method there is a cost to business and it should be factored into the margin. The market will determine if your price is acceptable for your product or service, and if it is over priced, or poor value, you simply will not make the sale.

Thankfully the surcharge is only applied by around 1/3 of businesses. That allows me to take my dollars to businesses that don’t penalise me for not carrying cash. The major fuel companies with supermarket brands do not impose a surcharge, give me a discount if I am a loyal shopper and even a bigger discount if I make an impulse buy at the service station. How can I possibly pass them over for the competitor service stations, which include major brands, who impose a surcharge and do nothing more for me; no discounts, no extra service, no one washing my windscreen or filling my tank!

So those surcharges might make a bit of difference to the bottom line but what is it doing to the top line?

My suggestion is to find a better merchant deal. Many industry associations may have a group deal available with lower merchant fees than your own sales volumes can command.

Finally, concentrate on up selling and cross selling customers and always remain focused on the customer experience. The bottom line is a composite number and the many factors that make it up need to be leveraged.

Tony Commisso FCA, BA (Accounting) Tony is a an experienced business adviser and chartered accountant and former a partner with Deloitte. He has operated a successful driving school in Canberra, Australia and through application of his professional skills and passion for excellence has developed a range of specialist skills in the successful operation and growth of driving school businesses. He has co-founded Elpo Technology Pty Ltd a developer of a comprehensive online business solution for driving schools which includes a customer ecommerce interface and leverages modern cloud technology for managing a mobile workforce of driving instructors.

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Posted in Blog, Business processes

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