Richard Bucker

Should You Pass Along Swipe Fees to Your Customer

Posted at — Oct 1, 2021

The answer is a resounding NO.

Without any explanation I just received a letter from one of my vendors who said that I will be charged a variable rate processing if I use a credit card. Having worked in the card industry for nearly 20 years I understand the rules and regulations, however, businesses that decide to pass on processing fees and claim that it’s a matter of profitability must simply be terrible business people. read

First of all, in MOST businesses the profit margin is between 50% and 100% and so the deductable 2.5% processing fee can be easily absorbed. (that fee may not be deductable to the customer)

Furthermore, if you have other payment options it’s slightly more complicated but not impossible… First of all what is the cost of a transaction either cash deposits or withdrawals? Wire transfers are not free? Checks are not free? Having a brinks truck stop by your place of business is not free and each of these have different fraud and protection instruments and laws. If you take a fake $100 bill that’s on you.

It’s at this point where transaction profitability needs to be normalized so that the percentage of transactions funds the processing costs of the other.

So when I see a business pass the processing fees onto the customer is only means that they think they do not have the power to negotiate the fees with their processor. This suggests bad business people… stay away.