For small business owners, minimizing credit card processing fees can be a huge issue. The vast majority of businesses and even many independent contractors accept credit cards and other electronic payments for customer convenience. Credit card processing may be a standard part of doing business in the 21st century, but there are options for small businesses to minimize or even eliminate these fees through surcharges, cash discounts, and/or convenience fees.
Today, we will focus on convenience fees, how they can reduce the financial burden of credit card processing fees, the potential downsides of convenience fees, and whether or not these solutions are a good fit for your business.

Convenience Fees vs. Surcharges vs. Processing Fees
Convenience fees are itemized fees that are charged to customers for using a “convenient” method of paying. In most cases, this payment method will be a credit card. However, convenience fees are not directly tied into a single payment type. It is required for businesses to disclose convenience fees, and there are certain regulations on when and how convenience fees can be charged.
Surcharges are very similar to convenience fees. The primary differences are that surcharges can only apply to credit card purchases and they are represented differently to the customer. Surcharges also are regulated separately from convenience fees from a legal standpoint.
Credit card processing fees are the fees incurred by the merchant for processing credit card transactions. These can include flat fees from the merchant service provider, tiered fees, and fees from the credit card issuing bank. These are the fees/expenses which business owners hope to offset with convenience fees, surcharges, and cash discounts.
Benefits of Convenience Fees for Small Businesses
The potential benefits of convenience fees are obvious: they will save your business money on processing fees. The bigger picture impact is much less obvious. We recommend doing a deep dive into your credit card processing statements to determine exactly how much your company spends each month on processing fees.
If your company is bleeding money because of credit card and merchant account processing fees, convenience fees can be a lifesaver. If your merchant account processing fees are not making a major impact, convenience fees and/or surcharges might not be the way to go.

Potential Backlash for Charging Convenience Fees
It almost goes without saying that customers don’t like to pay more. When your loyal customers receive a receipt with a convenience fee, they may start to ask questions. And not all of your customers are going to understand or accept that your small business cannot afford to eat into your margins by paying credit card processing fees for a $3 cup of coffee.
A famous example of customer backlash is when mobile phone and tech giant Verizon announced that they would be “instituting a $2 ‘convenience charge’ for those customers who make one-time bill payments using a debit or credit card, either online or by telephone.” People lost their minds, and the policy was dropped.
You are not Verizon. You likely do not have 10’s of millions of consumers to worry about. What you do have is a consumer base that you would like to keep happy and keep loyal to your business. Whether or not the financial benefits of convenience fees are worth the potential risk is difficult to answer.

Should my Business Charge Convenience Fees?
As stated above, there simply is no one-size-fits-all answer to this question. Instead, consider asking the following questions about your business to determine whether convenience fees apply to you:
Does my business model qualify for convenience fees? Unlike surcharges, convenience fees depend heavily on the nature of your business, the credit card(s) you accept, and a number of other factors. Before going too far down the rabbit hole, check that you are eligible.
Will my consumer base accept convenience fees? No two businesses are exactly alike. What might fly at a high-end boutique might not go over so well at a thrift store. Always consider your customers’ reactions first.
Is another option more beneficial? When it comes to offsetting processing fees, your business has options. You can work with your merchant account provider to lower your rates, you can use surcharges, convenience fees, or offer cash discounts. Never forget that there are options at your disposal!
Will convenience fees make a material impact on my bottom line? Convenience fees are a great tool, but one that will impact every business differently. Make sure the effort is worth the potential benefits down the road.
True Merchant Offers Customizable Merchant Services for Businesses of all Sizes
True Merchant is proud to offer payment processing solutions that are simple, secure, and supported by a qualified team of industry professionals. Our products range from online payment solutions, credit card machines, mobile credit card machines, and of course payment processing.
At True Merchant, we understand that choosing a payment processing service is not what most business owners look forward to. It can be daunting, confusing, and it isn’t the most thrilling part of operating a business. However, working with a well-established payment processor will allow your business to meet customer expectations for convenience, stay protected from fraudulent activity, and avoid costly fees.
This is a very important decision for any business. Contact True Merchant today to learn about how our payment processing services can help your business reach the next level!