What is Zero Cost Credit Card Processing?

“Zero-fee” refers to a processing method where businesses can process credit card payments without paying the processing fees. Instead of your business paying the credit card processing fee, the customer pays the processing fee. The charges vary by processor but it can’t be more than 4%. After the customer swipes their card, the terminal will notify them of the fee and give them a chance to accept or use a different payment form. When the customer covers the fee, you get 100% of the sale—it’s that easy.

As a retailer, “zero-fee” processing generates significant cost reductions associated with processing credit cards. It’s known as surcharging credit cards if you pass your processing fees to consumers, and it’s already an option that you can select regardless of your credit card processor. In all but 9 states in the United States, surcharging is allowed as long as certain criteria are met.

From gas stations and cell phone carriers to healthcare and nonprofits, many industries have found success with zero-fee processing and continue to give their customers the option to decide which card payment is most convenient.

Benefits of Zero Cost Credit Card Processing

There are numerous benefits of zero-cost credit card processing for your business. For one thing, it can help you avoid hefty monthly fees for using your merchant account services. In addition, if you’re strapped for cash, zero credit card processing fees allows you to invest more of your profits back into your business. Plus, you have the freedom to adjust the pricing of your product or service to fit your needs.

Additionally, it may provide more security than other options by ensuring that all sensitive information remains with the provider rather than being stored at another location such as in-house servers or mobile devices. Many business owners use zero-cost credit card processing to prevent fraud and ensure their company won’t be responsible for invalid charges.

Many companies also don’t lock you in a long-term contract, equipment fees, or have any upfront costs, so it’s easy to get started. 

Considerations before you Deploy Zero Cost Credit Card Processing

Surcharging programs can shift the cost of processing transactions onto your customers, but you’ll still be paying fees, including a host of recurring and incidental merchant account fees. In addition, you might also be charged an additional monthly fee for adding surcharges on to your card.

Evaluate carefully to ensure that this doesn’t cost more than it would have without a surcharge program. For example, implementing a zero-cost credit card processing program works best for businesses with a high credit card monthly volume. On the other hand, charging may not make sense if your business rarely takes credit cards.

To surcharge credit card users, you must provide adequate notice that they’ll be charged extra. The biggest downside is that this’ll lead to lost website or store sales once your customers realize their purchase will incur additional fees. Ensure that your business has a plan on how to attract and keep customers when they’ll be expected to pay 3-4% more at your business. 

Examine what your competitors are doing before surcharging. If they aren’t, you’ll put yourself at a competitive disadvantage, which ultimately results in less profit than if you opted to shoulder the processing fees yourself. The Internet has made it easier than ever for customers to obtain goods and services, so factor this in your decision to implement a zero-cost credit card processing program.

It’s important to note that surcharges can only be applied to credit card transactions, making customers consider using their debit card or paying with cash instead, which might result in overall lower processing costs. Still, you won’t eliminate fees because many consumers take advantage of credit card reward programs while others never carry any form of currency. For these types of consumers, these surcharges will likely discourage them from shopping at your store altogether. 

Before choosing a no-fee processing program, consider the advantages and disadvantages. Of course, you’ll want to weigh savings in credit card expenses against lost sales or incensed clients, but ultimately, the only way to know is to give it a shot.