What is a credit surcharge program? And why do you, a small business owner, need it?

A credit surcharge program is a strategy merchants can use to offset credit card processing fees. If the customer pays with a credit card, merchants add a fee to cover those fees. This way, transaction fees that go to the likes of Chase Bank, Visa, and others don’t end up hurting the business. 

Now, you may think, “What’s the big deal? Why do I need a credit surcharge program if it’s just a small fee?”

Here’s why: when you actually crunch the numbers, you’ll see those fees kill your bottom line. 

Consider this example. You operate a rhinoplasty and plastic surgery clinic. Each year, you bring in $1,500,000 from all your procedures. To pay their bills, your patients frequently use credit cards. $750,000, or half of your revenue, comes from credit card transactions. If you pay an average fee of 3.5% on that revenue, you pay $26,250 per year just in credit card processing fees

A credit surcharge program, if used correctly, eliminates the problem of transaction fees. We’ll go over all you need to know below.

Are credit surcharge programs legal for my business?

Yes, credit surcharge programs are legal. They’ve been around for some time.

Most likely, you can implement a credit surcharge program at your business, whether you run a rhinoplasty center or a clothing shop. 

Note: credit surcharge programs are currently legal in 46 states. The only four states where credit surcharges are illegal are Colorado, Massachusetts, Kansas, and Connecticut. Rules constantly change, so stay updated by checking our page that covers all the credit surcharge program rules

Before you implement a credit surcharge program, there are few guidelines you must follow: 

  1. You must have clear signage showing your customers that you use a credit surcharge program.
  2. No merchant can assess a surcharge greater than 4% of the purchase price. For instance, if someone buys a piece of clothing for $50, you can assess a surcharge of up to $2. 
  3. You can’t assess a surcharge if your client pays with a debit card. With debit card transactions, you have to pay the transaction fee. With Nadapayments’ surcharge solution, the merchant pays a 1% fee plus $0.25 per transaction. 
  4. Your payment system must work with the major credit card brands. 
  5. You must surcharge, and products/services must be processed together on the same receipt, being sure to show a separate charge for the surcharge. 

As long as you’re in a state that allows credit surcharge programs and your company follows the rules, you can use a surcharge solution to get rid of transaction fees. Over time, the positive effects on your company’s bottom line will be substantial.

How much money can I save with a credit surcharge program? 

Know that you can boost profits considerably with a credit surcharge program. But before we go through the numbers, let’s answer a few questions that you may have about implementing a credit surcharge program: 

  • How much should your surcharge be? Whether you operate a rhinoplasty clinic or run a donut shop, your credit surcharge fee should reflect the effective rate of your credit card processing fees (which is the average CC fee you pay per transaction). This is probably between 3–4%. 
  • Will a surcharge program push away customers? No! If anything, customers will appreciate the flexibility. They can save money by paying with cash or debit, or opt for the convenience of the credit card. Many will appreciate the transparency with your pricing too. 

Overall, the benefits of a surcharge solution make such a program a must. The exact dollar value of a credit surcharge program varies by your type of business and how your customers prefer to pay. But every business sees a boost to their bottom line. At Nadapayments, merchants who partner with us have seen profits increase by $10,000 and more. 

For instance, let’s say your luxury fashion boutique does $1 million in sales per year, with $500,000 of that revenue being processed via credit card payments. If your effective rate is 3.5%, that means you pay $17,500 per year in credit card transaction fees. Eliminate those fees, and you’d have $17,500 more per year in your pocket.

To give you an even better idea, look over the example below of a rhinoplasty and plastic surgery clinic.

The rhinoplasty and plastic surgery center example

For this example, let’s assume the following: 

  • You have your own rhinoplasty center. The cost of a nose job at your center is just around the national average of $5,500
  • You do 200 rhinoplasty procedures per year. That’s $1,100,000 per year in revenue. 

Congrats, you’re doing quite well. But you could be doing better. Since insurance doesn’t typically cover rhinoplasty, most of your patients pay out-of-pocket. Considering the high cost of a rhinoplasty procedure, many of your patients probably choose to set up a payment plan with automatic credit card payments. As research from the Federal Reserve research shows, as the value of a transaction increases, the more likely a customer is to use a credit card. 

Considering all that, here’s how much credit card fees are impacting your financials: 

  • 65% of your revenue comes from credit card payments. That means $715,000 of your revenue is subject to credit card fees. 
  • If you pay a 3.5% average fee per transaction, you pay $25,025 per year in credit card fees. That’s way too much. 

Now, think if you could eliminate those credit card fees completely. Your income from your rhinoplasty center would jump $25,025. If you make $200,000 per year (which is solid), your income will rise to $225,025. That’s an increase of 12.5%! 

You may be wondering, “Is it really that easy to boost profits by 12.5%?”

The answer is yes. All you have to do to see that much more money in your pocket is implement a credit surcharge program.

Just think of all that you could do with that extra $25K. You could: 

  • Save more for retirement.
  • Put away money for your children’s college.
  • Take a nicer vacation.
  • Expand your rhinoplasty business and help more patients.

The point is this: that money belongs to you—not the credit card companies. So, take the step to take home 100% of your revenue by using a surcharge solution. 

Ready for free credit card processing?

Whether you have a rhinoplasty center, eCommerce store, or ice cream shop, you can boost profits overnight simply by implementing a credit surcharge program. In fact, you could earn more than $25,000 more per year. 

How can you pass up that opportunity?

At Nadapayments, we’re ready to help you make the most out of credit surcharge programs. Our solution easily integrates with your credit card installment plan and has all the capabilities you need, including mobile, online, and virtual terminal credit card processing

Even better, we can set up your credit surcharge program in days. Before next week, you can say goodbye to credit card processing fees for good. And you can make your business more financially sustainable. 

Ready to enjoy all the benefits of a credit surcharge program? Contact us at +1 (929) 293-1800 or click the link below.

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