The Benefits of Passing on Credit Card Surcharges

In today’s increasingly cashless society, credit cards have become the preferred payment method for most patrons and guests. However, accepting credit card payments can come at a hefty cost for hotels.

Credit card surcharges allow businesses to pass on the cost of credit card processing to patrons.

“Hotels should consider passing on merchant fees to customers, to help tackle the rising costs in running a hotel business through recovering merchant fees from customers,” advises Perks Director Tom Paine.

“Some merchant providers make it a very simple process to automate the recovery via their terminals.”

Understanding Credit Card Surcharges

When a customer makes a purchase using a credit card, the business typically pays a processing fee to the credit card company. This fee is a percentage of the transaction amount and can vary depending on the type of card used and the agreement between the business and the credit card company.

By passing on some or all of this surcharge, hotels can reduce the impact of processing fees on their bottom line. Ultimately, the main goal of passing on credit card surcharges is to increase profitability.

This can have a significant positive impact on a venue’s profitability, especially for those that deal with high volumes of credit card transactions.

While credit card surcharges may initially seem like an additional burden for customers, it is now a commonly accepted practice.

Transparency is critical if you take this step. Clearly communicate the surcharge to customers before they make a payment. This can be done through signage at the point of sale, on your website, menus and accounts.

Increasing profitability through credit card surcharges can have a ripple effect throughout the your hotel. It can provide the resources needed to add staff, upgrade your venue or increase promotions.

How Much?

• You know your market and this will dictate how much you can pass on.

• If your patrons are well-heeled, they will barely notice it. If you operate in a lower economic area, a lower charge may be appropriate.

• What are your competitors doing?

• Consider a staged introduction. Start low to test the market and then increase from there.

• The fear that surcharges will drive customers away is often unfounded. However, your frontline staff should be trained in what to say if they are questioned by patrons or guests.