Should you charge clients for paying with a credit card?

August 27, 2020 Trilby Lawless

Just because you can doesn’t mean you should. Could you hear your parents’ voice when reading that? 

The lesson here is still valid. While yes, a merchant fee or charging your clients to process their credit card payment is legal in most states as long as you follow protocols, it doesn’t mean this is always the best strategy for your business, and we’ll explain why. 

Before you get too far, we recommend you confirm with your state government’s Consumer Protection unit that your state isn’t an outlier to the rule before moving forward. 

What are the common fees businesses charge? Convenience fees versus surcharges

Convenience fees are charged when a client uses a form of payment that isn’t your preferred primary payment method. Let’s say you run things old school and request to be paid by check, you may then offer the option to pay by credit card for a fee. This can only be enforced if there is an alternative preferred form of payment. 

On the other hand, a surcharge is a fee for a form of payment, which is only legal in certain states and must be displayed clearly when requesting payment. 

How much could we charge a client for paying by credit card? 

The goal of both charge types is to help the business cover the posts of the processing fee. Credit card surcharges cannot be more than four percent or exceed the processing cost for the business. You must use the lowest amount of the two, even if it costs more than 4% for your business to process the credit card. Similarly, convenience fees range between two and three percent and also cannot exceed the cost of the processing fee. 

Is charging your clients for paying by credit card best for your firm?

If processing fees are holding your firm up from moving to electronic payments, consider the bigger picture. By improving your billing system and offering an easier payment method for clients, you’ll start getting paid much, much faster, if not immediately. With a benefit as big as stability for your firm’s cash flow, the fees often become an obsolete obstacle. 

Think of when you go to order your favorite restaurant online and all of a sudden the bill is higher than you expected and you think how did this happen? Service fees, convenience fees, delivery charges. All those small amounts add up to leave a sour taste in your mouth. Ideally not the same impression you’d like to leave your client with at the end of an engagement after working hard to provide them with an excellent experience. 

If you still feel like it’s a better decision to charge your clients and protect your finances, the payment processing system you’re currently using may have too high of fee and not be the right choice for your firm. 

How to lower your credit card processing fees

The best way to ensure your firm has the lowest payment processing fees is to select the right payment processing provider. There are many solutions available, so take your time to research who has the lowest fees and most flexible options for your firm. You may find your clients prefer ACH as an electronic payment option to credit cards. 

As we mentioned earlier, giving clients the ability to pay by credit card is a tremendous value for your firm. Not only does it make their life easier, but you’ll also be amazed at how fast you get paid and see a domino effect of perks for your cashflow. 

If you want to go a step further towards simplifying your collection of payment, check out this blog next to learn about integrating your payment system with your invoicing software. 

Save Your Firm Time and Money with Integrated Payments

Ready to explore our payment processing solution, BigTime Wallet? Watch our 20-minute webinar for an overview of how it works, or request a personalized demo from a member of our team.

About the Author

Trilby Lawless

Digital Content Manager

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