Cash is King

We have had a few retail experiences lately that, frankly, rather surprised us. The issue at play is the cost of credit card fees and whether the retailer or the customer should pay them.

Historically, if you pay things such as taxes online, or utilities online, you will often see a Disclaimer around additional fees for paying via card. The option to avoid a fee is usually if you grant the entity access to taking the funds directly from your checking account. If you choose to pay by credit card, a fee, sometimes up to 3.5%, will be applied at check-out. For years, this has been standard practice with government entities and utility companies. Now, it seems to be expanding outside that circle.

Until recently, we had not experienced a store retailer charging a fee for credit card usage. This is especially concerning, as a customer, when the ticket prices are higher - hundreds to thousands of dollars. Most of us do not carry around that much cash, it just is not safe. But we also do not typically pay cash for items such as furniture or services such as professional services, that may be on the higher side of the payment spectrum.

We had a conversation with a retail store owner recently who indicated there has been a real push in the dialogue among her peers to pass the credit card fees to the consumer. She resists, considering it a cost of doing business. When our dog swimming pool business was opened, nearly all payments came through credit cards. And we never charged a credit card usage fee on top of the pool rental fee.

Times have certainly changed and costs continue to rise in many of the products and services we either buy or sell. Be mindful of what your direct competition is doing, relative to credit card fees. You may be able to capitalize on adding new customers, disgruntled by others passing those fees directly to them.

An alternative to disclosing you are passing credit card fees directly to the buyer is to just increase your prices to cover that 3.5%. We always react better to just being told prices had to increase for business reasons rather than being told we now have to explicitly pay one particular fee. It has made us consider changing retailers, since so many traditional retail shops have never and still do not have a separate line item credit card processing fee. Sometimes, it is just semantics.

If you are a retailer and choose to begin charging specific credit card processing fees, please warn your client base first so they can obtain cash and have the opportunity to avoid paying the fee. The old saying of ‘Cash is King’ seems to be haunting our retail shopping these days!

Be well.