How much could your business save if you didn’t have to pay credit card processing fees?
Maybe more than you think. You might even save enough to jump from operating in the red to operating in the black.
And in case you’re wondering: Yes, there’s a way to do surcharges and stay compliant with current financial regulations.
InterPayments, a financial technology firm, developed SurchX, a product that can help businesses recover the maximum allowable amount of their credit card processing fees by passing them onto the consumer as a surcharge.
Andrew Bart, the chief growth officer for InterPayments, joined us on the podcast to talk about how SurchX works and who it can benefit.
How did SurchX get started?
Over the last two years, SurchX has focused on the card-not-present space — ecommerce, phone sales, or anywhere the end customer is making a purchase without physically swiping their card.
“That nets out for the merchant,” Andrew said. “Ultimately, about 3-3.5 percent of their expense line will drop straight down to their bottom line net margin for about a 30 percent or greater net gain on average.”
The difference between SurchX and others in the market
SurchX has two big differentiators from others in this space.
- SurchX is an ISV (independent software vendor) versus an ISO (independent sales organization). When you are deploying a new terminal, SurchX will simply factor your existing merchant process or terms if you already have a merchant account. If not, the company will refer you to its partners.
- You don’t have to change any of your current technology. SurchX simply integrates its technology into whatever it is that you’re using as part of your stock. In the case of Adobe, Magento, Oracle, or Salesforce, for example, SurchX will integrate either VN extension or API.
What’s next in the surcharging space?
You’re going to see a significant adoption of surcharging especially in card-not-present transactions and a tightening of POS environments.
“You get physical point of sale,” Andrew said, “you’re going to see a tightening of the reins by the card brand issuers, by the banks and the regulatory bodies that have their hands in governing and establishing the penalties around not doing this in a compliant manner.”
Why all the interest in surcharging?
There’s a lot of money on the table here. When you talk about 3-3.5 percent of credit card transactions, you are talking about billions, even trillions, of dollars. That’s a meaningful amount of money, and people are going to pay attention to that, especially the regulatory bodies.
Also the merchants. Merchants are feeling the pain of increasing rates. Things are so margin sensitive these days, it’s truly painful. Surcharging is a salve for the pain.
“Do you know that card brands are in the business of raising their prices?” Andrew asked. “That’s how they make money, so they’re going to continue to raise prices. And there’s nothing that a merchant has been able to do about it in the past.”
Now, they can.
Won’t surcharging impact the merchant’s conversion rate?
Everyone asks this, and the answer is “No.”
The reason the answer is “No” is because the law requires you as a merchant, to present at least one alternative form of payment such as a debit card or ACH that will not allow the consumer to incur a surcharge. That law lets customers opt out. But they almost never do.
“Don’t believe a word I say about conversion rate or about any of it,” Andrew said. “Put it into place. Run a couple hundred transactions and then let the data decide whether it works for you or not.”
Until next time!