Credit card transactions are getting more expensive. Card networks and issuers have increased interchange and other network fees, and those increases are being felt by shoppers, either through additional fees added to their purchases or offering discounts when they pay with debit, cash or checks. With more and more business-to-business transactions being made via credit card, these transaction increases are impacting small business operations as well, including those in the promotional products industry.
“Card payments historically have not been the most common method of payment in the B2B industries; however, more and more buyers are using credit cards to manage their payments and expenditures,” says Matt Fluegge, executive consultant, national sales, with payment processing company and technology provider Worldpay. “This has an impact on small businesses that are accepting card payments as increased card activity and increased fees can impact margins. There are also significant benefits to card acceptance, including increased cash flow, guaranteed payments, ease of use, reduced daily sales outstanding, and increased customer satisfaction and loyalty.”
The Wall Street Journal reports that, according to data from payments consultancy the Strawhecker Group, less than five percent of the eight million businesses in the U.S. that accept credit cards charge fees for credit card payments. However, that represents a significant step up from five years ago, when less than two percent of businesses charged such fees. WSJ notes that the pandemic likely played a role in increasing fees, as businesses sought to make up lost revenue.
“More and more small businesses are implementing credit card surcharging, meaning they are passing on some or all of their transaction processing costs to the customer,” says Fluegge. “It is important to make sure that merchants use a processor and technology that can accommodate the card networks’ surcharge rules, as many processors and technologies cannot accommodate the required rules. In addition, some of the card-processing fees can be reduced or controlled by businesses using processors and technology that can meet the card network requirements for optimal interchange. One transaction can qualify at multiple rate categories based on the technology and operations used by merchants to process payments. Having the right technology, processor and operational procedures can help merchants control and reduce card-processing costs.”
