The costs of auto repair credit card processing can add up quickly. It’s not uncommon for repair orders to become large-ticket items for your customer, so you want to give them the option to pay with a credit card. But losing out on about 3.5% per transaction is hurting your bottom line.

There is a better way though that’s a win-win.

In this article, we’ll explain what you need to process credit cards in your auto repair shop, the pros and cons of accepting credit cards, and how you can eliminate credit card processing fees by implementing a surcharge program.

What You Need for Auto Repair Credit Card Processing

Credit card payment processing in the automotive industry is similar to retail credit card processing

To get started, you’ll need:

  • A credit card machine
  • A merchant account
  • A merchant services provider (MSP) or payment services provider (PSP)

First, you’ll need a credit card machine (also known as a credit card reader or a terminal). This will allow you to swipe your customer’s card so that you can accept their payment via credit card. But for the most functionality, you’ll want a machine that will allow for EMV chip cards and contactless payments as well as debit card transactions.

Next, you’ll need a merchant account. This is a type of bank account that serves as a holding tank for the money when a customer uses a credit card for payment. Once the transaction has been verified, you’ll receive the funds in your business’ bank account.

Finally, you’ll need a merchant services provider, like Nadapayments, or a payment services provider. An MSP is also known as a credit card processor. It manages the interaction between your business and the customer’s credit card company. 

If you use Nadapayments as your MSP, you can be ready to accept credit cards in even fewer steps. Nadapayments will set up your merchant account for you and will provide you with the credit card terminal.

The Pros and Cons of Accepting Credit Cards in Automotive Businesses

Auto repair credit card processing: person handing a credit card to another person

As we mentioned earlier, the auto repair industry often deals in high-ticket items. In fact, the average car repair costs $500-$600. But that’s just the average. It’s not unusual for repair invoices to carry a four-digit total.

Oftentimes, a customer needs a car repair unexpectedly or urgently. So if they don’t have the funds available to cover the cost, they will need to use a credit card. By accepting credit cards in your auto repair business, you are providing your customers with more payment option flexibility.

Plus, depending on your payment processing solution, you may be able to accept credit card payments online, via a mobile app, or over the phone. Having these options can be beneficial to your business because it can allow service technicians to accept payments from the service bays or customers to pay ahead if they need to pick up their car after-hours.

However, the primary downside to accepting credit cards in your auto repair shops: credit card processing fees. With a traditional payment processor, you could be paying 3.5% or more in transaction fees. So that $500 repair order quickly becomes $482.50 after you’ve paid the fees. Let’s say you have 50 of those repair orders in one week. That’s $875 of lost profit. This can add up and quickly eat into your bottom line.

But there is a way to avoid this downside — by implementing a surcharge program.

How a Surcharge Program Eliminates Credit Card Processing Fees

When you use a surcharge program, you’ll no longer be on the hook for credit card processing fees. Instead, your customer will cover the cost of the fees if they choose to pay with a credit card.

Surcharging actually gives your customer a choice. If they wish to avoid the fees, they can pay with a different payment method, like cash, check, or debit card.

In addition to saving you money on fees, a surcharge program may help your business in another way. If you’ve been paying exorbitant credit card processing fees, perhaps you felt forced to raise your pricing in order to make up the difference and increase your profit margin. But once fees are eliminated, you might be able to entice more customers to your shop with repair prices that beat the competition.

The Rules of Surcharging

When you use a surcharge program in your business, you need to make sure you’re complying with the rules set forth by the major credit card brands (e.g., Visa, Mastercard, etc.):

  1. Register your surcharge program with the major card brands.
  2. Inform your customers and display signage about the fees.
  3. Keep your fee under 4%.
  4. Show the credit card fee as a separate line item on the receipt.
  5. Don’t apply the fee to debit card transactions.

How Nadapayments Makes Surcharge Programs Easy for Auto Repair Businesses

If you want to begin surcharging and saving on credit card processing fees in your auto repair business, you can use Nadapayments as your merchant services provider. With Nadapayments, the surcharge program is built right in and designed to keep you in compliance with all the rules. This takes what could otherwise be a complicated process and makes it simple.

With the Nadapayments Wi-Fi-enabled EMV Quick Chip terminal, you’ll be able to accept both credit and debit cards in your business as well as contactless payments, like Apple Pay or Google Pay. It will easily work with your existing point-of-sale system. Plus, it works with installment plans.

The credit card machine is programmed to automatically add a 3.5% surcharge fee to the transaction when a credit card is used for payment, so you can keep 100% of the profit. If the customer chooses to use a debit card, you only have to pay 1% plus 25 cents per transaction. Here’s an example of what that would look like for your business.

Auto repair credit card processing fees

As an added bonus, Nadapayments will provide you with the signage you need to keep your customers informed about the surcharge program.In addition to the credit card machine, you will have access to a virtual terminal and a mobile app, which also have the surcharge program built right in. This will allow you to accept payments online, over the phone, or on-the-go via a tablet or cellphone — like straight from the service bay or from an on-call service location.

Start Saving on Fees With a Surcharge Program

Person paying a car rental using a credit card

If you want to accept credit cards in your auto repair business, the setup can be pretty easy, especially if your merchant services provider supplies the credit card machine and sets up your merchant account for. And while offering flexible payment options can be good for business, the credit card processing fees that come with it can quickly eat into your profits.

However, if you implement a surcharge program, you can say goodbye to credit card processing fees while still giving your customers a choice when it comes to their payment method. But if you try to go it alone, the rules of surcharging may feel strict and complicated. 

This is where Nadapayments comes in. As an MSP with a built-in surcharge program, it will all happen automatically when you swipe, dip, or tap your customer’s credit card. Plus, Nadapayments has done the homework about all the surcharging rules, so you won’t have to worry about being in compliance.

You know your auto repair business, and Nadapayments knows the credit card processing industry. Let us help you. Contact Nadapayments today to get started.