What is a surcharge? You may have heard of them before. A surcharge is an additional fee that a business places on the purchase of a product or service. Surcharges are generally used to help cover fluctuating costs, like oil fuel prices and real estate. They help the business to pay the cost that involves delivering a particular product or service that is provided.
Business owners are well aware of the costs they have to pay to provide services to customers like credit card purchases. Add on top of that the daily overhead costs of running the business, and it can be overwhelming. Here’s how surcharges work in a nutshell if you’re thinking about implementing them.
1. Surcharging Offsets Your Credit Card Expenses
If your business is bogged down with service bills from credit card companies, surcharges to your customers can help shoulder the cost. They’re essentially paying a little extra for the convenience of using a credit card. Surcharges are a common practice for many businesses. There are other types of surcharges that can be implemented, too. Ask your point of sale provider what your options are in regards to what makes sense for you and your customers.
2. Some States Don’t Allow Surcharges
Before you decide to surcharge your customers, make sure to do some basic legal research. Surcharging is legal in most areas of the United States, but not in 11 states. If you are in this type of situation, you may be able to implement other types of charges in creative ways. If you’re not sure where to begin, you may want to contact a firm that has in-depth knowledge of how to surcharge and where, such as Platinum Payments.
3. They’re Different from Convenience Fees
Believe it or not, surcharges and convenience fees are not the same things. Surcharges can be added to any type of good or service that is being sold. Convenience fees, on the other hand, are only applied to payment methods that are not considered standard. For example, a college may apply a convenience fee to a tuition cost if it is being paid with a credit card. Most tuition balances are paid with cash or a check.
Curious to see how surcharges for your services can impact the financial health of your business? Contact our expert team at Platinum Payments today. We can perform a free analysis of your business to help you determine your point of sale needs. From hospitality to retail to healthcare, Platinum Payments has helped a variety of clients with solutions for their business transactions. Let’s get started today. We look forward to servicing you!