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Is it Worth Adopting the Credit Card Surcharge?

What should retailers do with the option to add a credit card surcharge?

Because retailers can transfer to consumers the the "checkout fees" Visa, MasterCard and several other card providers have charged merchants for years, the next question retailers must ask themselves is "What do we do now?"

Many retailers have worked hard to build their customer base, and don't want to ruin their relationships with patrons by adding a credit card surcharge to transactions. Meanwhile, others argue that their bottom line has been dramatically affected due to the up to 4 percent that credit card companies are taking during every transaction.

Can You Handle Manage the Angry Customers?
Customers feel as though they are helping businesses when they enter their stores or buy products and/or services online, so why should they have to pay extra to use a credit card? They believe no matter the form of payment, they are benefiting the company. It would be just as easy for them to enter a competitor's store where there is no surcharge.

Recently, KNXV-TV, an ABC affiliate in Phoenix, Arizona, spoke to a few customers who were unhappy with the surcharge, believing it was unfair and disloyal. Customers who are greatly affected by the surcharges could make an effort to avoid them or start an initiative to rise against .

"If the surcharge fees get out of hand, customers will likely push back," said Brent Smith, an associate professor of marketing at Saint Joseph's University. "People could protest through social media, as they did recently against Subway's $5 foot-long product. Savvy shoppers could also respond by crowd-sourcing tips to find surcharge-free retailers."

It is widely believed that smaller retailers that are unable to negotiate favorable rates with credit card companies will be the businesses that will adopt that surcharge. Owners at these smaller firms must hope these charges don't cause a strain with their their loyal customer base.

Are Costs Simply Too High?
Large retailers are not going to add the surcharge to the transactions as they are financially able to continue paying the extra credit card fee to Visa and MasterCard, according to one industry group.

"We have discussed the settlement with many, many merchants, and not a single merchant we have spoken to plans to surcharge," Craig Shearman, spokesman for the National Retail Federation, said in a statement.

The same cannot be said for smaller retailers that have been looking for a way to alleviate those costs since they were enacted. By shifting them to onto customers, they have the ability to turn higher revenues, instead of operating on a shoestring budget. It is often difficult for small merchants to remain successful for several years, and while it may not seem like much, saving up to 4 percent per transaction could add up in the long run. Saving on processing fees can clear up several difficulties that some merchants have had trouble interpreting in the past.

"If you think your own credit card statement is confusing, take a look sometime at a merchant's credit card agreement with VISA or MasterCard," Gerri Detweiler, director of consumer education at Credit.com, told ABC News. "I wouldn't want to wade into those waters."

While very few businesses are expected to apply the surcharge from the outset, it will be interesting to see if it gains traction down the road.

Is your business plan to add the credit card surcharge to customer transactions? Do you feel the surcharge is fair?

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