Are Credit Card Processing Fees Clipping Away at Your Profits?
As a dedicated pet groomer, you pour your heart and soul (and maybe a little fur) into making beloved companions look and feel their best. But in today’s digital world, a significant portion of your transactions likely comes through credit and debit cards. While offering this convenience is crucial for attracting and retaining clients, those pesky credit card processing fees can really take a bite out of your hard-earned profits.
You’re not alone in looking for ways to manage these expenses. Many groomers are searching for solutions to offset credit card processing fees. One term you might have come across is credit card surcharging, which involves adding a small fee to the customer’s bill to cover the processing costs. But is this legal? And what are the alternatives? Let’s dive in.
Understanding the Landscape: U.S. and Canadian Laws on Credit Card Surcharging
Navigating the legality of credit card surcharging pet groomers can feel like untangling a matted Golden Retriever. Here’s a breakdown of the current situation in the U.S. and Canada:
United States
- As of now, credit card surcharging is legal in most U.S. states.
- However, there are a few key exceptions where surcharging is currently prohibited by state law. These states include:
- Connecticut
- Maine
- Massachusetts
- Oklahoma
- It’s absolutely crucial to stay informed about the specific laws in your state, as these regulations can change.
- Even in states where surcharging is legal, there are strict rules you must follow, including clearly disclosing the surcharge amount to the customer before the transaction is completed and limiting the surcharge to your actual processing cost (typically capped around 3-4%).
Canada
- As of October 6, 2022, merchants in Canada are permitted to surcharge on credit card transactions.
- Similar to the U.S., there are rules that must be followed, including providing clear disclosure of the surcharge.
Important Note: This information is for educational purposes and should not be considered legal advice. Always consult with legal counsel to ensure your business practices comply with all applicable laws.
A Common Workaround: Raising Prices and Offering a Cash Discount
When surcharging is not an option, many pet groomers (and other businesses) employ a common industry practice:
- Calculate your average credit card processing fees as a percentage of your total revenue.
- Slightly increase your overall service prices to account for these fees. This means the cost of every service inherently includes a buffer for processing costs.
- Offer a discount to customers who pay with cash. This “cash discount” effectively provides a lower price for those using a payment method that doesn’t incur processing fees for your business.
This approach allows you to indirectly offset the cost of credit card processing without explicitly adding a surcharge. Remember, it’s essential to clearly communicate your pricing and any discounts to your clients.
Surcharging is tightly regulated by the credit card industry
- No surcharges on Debit and pre-paid cards
- No surcharges on Tips
- No surcharges based on cardholder location
- Surcharge cannot exceed the cost to the merchant of accepting that card
- You’ll also want to make sure your customers are aware that they will pay a surcharge when using their credit card by posting a sign at the point of purchase. Something like “A surcharge of 3% will be added to credit card transactions to cover processing costs. This fee does not apply to debit or prepaid cards.”
Streamline Your Surcharging with GroomSoft Payments
If your pet grooming business operates in a region where credit card surcharging is legal, GroomSoft can help you implement this seamlessly and compliantly. Our pet grooming software is designed with features that allow you to:
- Easily enable surcharging: GroomSoft has partnered with Fortis to provide payment processing. During your application, if you are in an area where surcharging is allowed and/or if you want surcharging, upon Fortis approval of your account, your surcharge settings will automatically be imported into GroomSoft.
- Automatically calculate the surcharge: GroomSoft automatically calculates the correct surcharge amount to add to eligible transactions.
- Ensure clear disclosure: GroomSoft displays the surcharge amount clearly on invoices, receipts and during the checkout process, ensuring transparency for your customers and compliance with regulations.
Don’t let credit card processing fees continue to clip away at your profits.
By understanding the legal landscape surrounding passing processing fees to customers and exploring compliant solutions, you can take control of your bottom line. If surcharging is an option for you, GroomSoft provides the tools to implement it efficiently and transparently. If surcharging is not an option for you, GroomSoft can still help with seamless credit card payments as part of our all-in-one pet grooming business management system. Explore GroomSoft today and discover how Groomsoft Payments can increase your bottom line!