“Starting Oct 6, small businesses can now add a surcharge to credit card transactions to eliminate their fees. Why didn't they get access to this fee saving program when the billion dollar companies did?”

Introduction:

Canadian businesses are starting to adopt this strategy of adding surcharges to their goods and services. We will discuss how/why this is happening and how you can take advantage of Surcharging your credit card processing to eliminate all of your fees.

Consumers and small business owners alike have been discussing surcharging recently in the news, kind of viral really. Surcharging is now being used to help small businesses save money on credit card processing.

With that said, here's how Surcharging works 👊

A beginner's course in credit card surcharging.

What is surcharging?

Merchants can pass the cost of processing credit card transactions to consumers by charging a surcharge. In other words, a surcharge is an additional fee tacked onto a credit card transaction to cover processing costs.

In Canada, this has been done by big companies online for a while now (think Ticketmaster, paying your hydro bill online etc)

Businesses are using surcharges on their products or services to save on a very expensive part of running a business.

How does Surcharging work?

Let's make things simple by assuming your processor charges you 2.4% for credit card transactions (the legal cap for a surcharge in Canada). For simplicity's sake, we'll say that the total value of a hypothetical average sale is $20.

Whether the credit card processor gets their fee depends on whether the surcharge is charged by the merchant or by the customer.

Is it legal for businesses to charge customers more money for paying with a credit card than with cash or another form of payment?

Credit card surcharging was prohibited in Canada up until recently (this month, October 2022) where the card brands lost a lawsuit with small business that ended up with them lifting their ban on surcharging.

There are some stipulations to the program to remain compliant. Obviously some businesses have been using this process under the table in some cases, however with new compliance and laws, should a visa/mc mystery shopper get one of these under the table surcharges, you risk fines and having your ability to accept payments removed.

Merchants must post signage regarding the surcharge. When surveyed in the states, 99.2% of customers during the survey didn't notice or say anything to business regarding the surcharge. The perceived notion that a surcharge would cause a business to lose customers just didn't prove true.

Merchants must abide by credit card association surcharging rules.

Before you consider implementing a surcharge program, you must review all of the cards' requirements.

Merchants cannot favour one credit card association over another by discounting transactions made with one card brand over another (for example, by making it cheaper for customers to pay with a Visa card than an American Express card).

Prior to surcharging credit card transactions, you must notify your credit card processor and credit card associations 30 days in advance of implementation.

The main goal of credit card surcharging is to ensure that customers are fully informed about the surcharges before they pay for their purchase. Dough provides your business with compliant signage so you don't have to worry about any technical language!

Businesses with an eCommerce website must also post surcharges as a separate line item on the customer's receipt.

Should businesses add a surcharge to transactions?

It depends.

If your business is known for having the cheapest rates/pricing in the area, you may choose not to implement the surcharge of 2.40%

Alternatively, if you've raised your prices at any point in the business' history, and you didn't lose customers, adding a surcharge may be one of the best ways to save thousands every year (and can be implemented fairly quickly).

With rising costs on all goods and services, business expenses increasing, employee turnover, and the myriad of other issues facing small business owners...

A surcharge allows you to recoup some costs so you can further grow your business to BETTER SERVE your customers.

Save money on credit card processing fees.

Small business owners with thin profit margins especially seek to save money on credit card processing by turning to credit card surcharging.

When companies add a surcharge or provide a cash discount program, they can effectively reduce their monthly bills by 50-90%.

That is substantial for a small business.

That money could go to paying other expenses.

Running digital marketing to bring in new customers.

Hire new employees.

Update the hardware/software in your business.

The list goes on.

If the United States market is any indication, Surcharge and Cash Discount programs will spread like wildfire in Canada due to the shear fact that business owners (who are cash strapped after the last couple years of turmoil) get to save up to 90% of the entire expense (for accepting payments).

Interested in a quote?

Dough is one of the first providers in Canada to assist small businesses get started with Surcharge or Cash Discount programs. Having sold the same program in the states as well, we have a unique set of experience helping businesses like yours get started today saving 90% of their annual processing expenses.

We'd love to learn more about your business and provide a quote for these programs (while also updating your processing equipment)!

• Leave us your information over at getdough.co in the form. We will reach out with more details and look to set up a time to chat (we like meeting merchants, call us old school).