Credit surcharge on the rise

More merchants are making customers pay extra for credit, says research firm East and Partners in their Merchant Acquiring and Card Markets report. Since 2003, merchants have been allowed to charge a fee as a percentage or a fixed amount for credit card use, but many businesses have chosen to absorb the fee in their pricing.

This is beginning to change says Zoran Knezevic, market analyst with East and Partners. “Critical mass has been building. [Merchants] realise that credit cards are costing them.”
 
Businesses with an annual turnover of between $1 million and $5 million have doubled their uptake of the practice, while more than a quarter of large corporations charge a fee, with 38.7 percent saying they plan to in the next few months.
 
Smaller businesses are expected to follow as the practice becomes more common and merchant fees for providing credit facilities rise.
 
“The small-end-of-town-merchants are purely surcharging to offset the cost of processing,” notes Knezevic, while larger merchants tend to add to their margins “because they can”.
 
The results came from interviews with 2,500 businesses.