Using Credit Card Surcharges to Maximize Revenue
Legal impediments to surcharges on credit card transactions have diminished for much of the past decade as courts continue to rule that surcharges are permitted. That’s good news for merchants looking to boost their revenue by a few percentage points and cover their card processing fees, but other hurdles remain, including consumer aversion to paying surcharges. Recent data from PYMNTS has, however, revealed that there is an opening for merchants: most consumers, when faced with a surcharge at the point of sale, will tend to pay for it with relatively minor detriment to their satisfaction vis-à-vis -to the merchant.
Merchants who best manage customer awareness and opinions of supplements will be well positioned to maximize revenue from these fees. Despite the opposition most cardholders express to surcharges, 85% of credit card users pay these fees when faced with them. Cardholders in this situation find another form of payment only 14% of the time and leave the store only in rare cases. Our data indicates that merchants will need the right approach to reap the benefits of surcharges without forcing customers to transfer their business to other merchants.
These are just some of the main conclusions of Credit Card Surcharges: What Merchants Can Do to Maximize Revenuea PYMNTS and payroc collaboration that describes how merchants can maximize their benefits and limit customer fallout from card surcharges. We surveyed 2,507 credit card users in the United States from December 8 to December 22, 2021 about the impact of surcharges on their card usage and whether the charges caused them to use another payment method – or pushed to take their business to another store. or a restaurant to avoid the extra cost.
Some additional key findings include:
• About 9% of cardholders who used their card at restaurants or retail stores in the past month had to pay additional fees on credit card transactions. Cardholders tend to be willing to pay surcharges, although the type of institution has an impact on the acceptance rate. When a customer is determined to avoid the surcharge, merchants who offer a sufficient number of payment alternatives increase the likelihood that they will retain customer activity.
• Thirty-seven percent of all credit card holders have knowingly paid surcharges on card purchases. Another 20% paid extras but didn’t realize it until they looked at their receipts or account statements. Cardholders who know what’s going on are usually willing to accept surcharges.
• Seventy-one percent of cardholders who have not had to pay a surcharge for a purchase, or are unsure if they have paid for one, say that surcharges would reduce their satisfaction with of a merchant. But most of these cardholders, facing surcharges, tend to accept the additional charges.
Merchants need to make up for consumers’ stated aversion to credit card surcharges if they want to get the most out of them. PYMNTS data revealed that 58% of cardholders say they will avoid card surcharges if faced with the prospect of paying them, but the reality is that surcharges are imposed on less than 10% of purchases by card and that consumers pay for them in 85% of these cases. . Merchants who strive to maintain good relationships with their customers can derive additional revenue from surcharges without disrupting their business.
To learn more about how merchants maximize their benefits with credit card surcharges, To download The report.