Eliminating Credit Card Processing Fees: Benefits of Credit Card Surcharging and the Risks of Non-Cash Adjustments

So, I decided to make this blog because I noticed that my credit card processing fees have been gradually increasing over the last few years and Colorado (where I live) just recently passed a bill that allows credit card surcharges. 

About my business:

I have a chiropractic office that runs about $15,000 in sales through my credit card machine.   The amount of payments through credit cards is getting higher each year as people co-pays and deductibles are increasing.  Part of my concern with reducing credit card processing fees in a medical practice was to stay in compliance with both credit card processing laws as well as insurance company laws.

I did a ton of research to find out what I felt was the best option to save me money and to also stay within the law. One of the first things I realized is that there are 2 types of companies that provide a service to reduce your fees. One of them is called credit card surcharging and the other is called a non cash adjustment. 

Credit Card Surcharging: 

This is where the processor adds a certain percentage (usually 3.5%) to all credit card charges to cover the processing fees. This is paid by the consumer and thus, the business doesn't pay for the credit card charges. The law does not allow debit cards to qualify for this surcharge so the business does pay for all debit card charges, but they are much less than the percent that we pay for credit cards. 

Non-Cash Adjustment: 

This is similar to credit card surcharging but the 3.5% is added to all cards (credit and debit) so that the only charge a business pays is a monthly maintenance fee. The theory behind this is that the posted price is the discounted cash price so any "non cash" charge gets the 3.5% added. This type sounds like it would be better, because your fees are actually going to be lower than credit card surcharging. The problem I believe with this is that they are curtailing the law of not charging debit cards on a technicality. I still believe this non-cash adjustment is actually a surcharge just disguised with a different name. 

Why I chose a company that does Credit Card Surcharging 

Even though my monthly cost is going to be slighlty higher using this method, I feel much more comfortable that I won't be breaking any laws. The difference for my business was about $50/month for this peace of mind. I'm still saving about $300/month by having just the credit card processing fees covered by the customer. 

Also, with non-cash adjustments, it is required that each item's price is posted in both cash price and non cash price.  This would be too much work to make it worthwhile in my opinion.

Here is a great article about the legality of cash discount programs.

https://www.heartland.us/resources/blog/beware-of-surcharge-programs-by-any-other-name

Why I chose Payroc RewardPay Choice 

I looked at several different companies that provide the Credit Card Surcharging service I was looking for. The standard charge to the consumer seemed to be  3.5% for the credit card charges, so that was really a wash. The difference I found was the debit card processing fees. Some were up to $.25 per transaction and 1% of the total. Not too bad since my average transaction was aboiut $50, that is still only a total of 1.5% on the debit cards and 0 on the credit cards. 

Payroc Choice was a bit better though... The fee was only $.10 per transaction and a little less than 1% of the total transaction. On a $50 order, that comes out to only about 1.2% on the debit cards, and of course, still 0 on the credit cards. 

Here are some others I looked at:

CardX - .25 per transacton and 1% charge for debit cards

Elavon - .25 per transacton and 1% charge for debit cards

My theory, that was proven true, was that more people would opt to use their debit card (for free) vs using their credit card and pay the surcharge. This makes that difference in debit card fees even more important as you want that debit card fee to be as low as possible. 

Overall, I'm very happy with my decision to switch my credit card processing to Payroc RewardPay Choice. I'm saving a significant amount of money eah month and customers don't seem to even care about the surcharge. 

To find out how much you can save, visit https://partners.payroc.com/sfc

Laura Morgan is my representative at Payroc and she would gladly help you and answer any questions you may have.