3 Reasons Why Charging a Customer a Service Fee for Using a Credit or Debit Card is a Poor Business Decision
Let’s say you own a
restaurant, and you offer your customers the ability to pay with cash or credit
or debit card at the end of their meal. But then, once they have dined, you
charge them an additional fee if they decide to use their credit or debit card in
the form of a service fee. While this may sound like an easy way to make some
extra money, it’s a very poor business decision because it can turn off your
customers and lead to fewer repeat customers in the future.
1: Chargebacks Are Painful
Credit repair
services can be expensive and time-consuming. If you’re already struggling with
bad credit, chargebacks can make things worse. They can also lead to higher
fees and interest rates, and make it harder to get approved for new lines of
credit. In short, chargebacks are painful – both financially and emotionally.
From the merchant’s perspective, the cost and risk associated with charging
back are extremely high when compared to the revenue generated from a single
sale. Consequently, many merchants choose not to accept cards as payment at
all!
While some may
think this is terrible customer service, there are many reasons why accepting
debit cards or credit cards may not be worth the risk:
A merchant could
lose their entire profit on that transaction if they lose a cardholder dispute.
Unlike cash transactions where the money doesn’t change hands until after an
item has been purchased and paid for in full, cardholders have up to 60 days from
the purchase date (not from when they noticed the problem) to initiate a
dispute against their bank.
When a cardholder
initiates a dispute, the disputed amount gets held by the bank until the
resolution process is complete. During this period, the funds don’t belong to
either party; instead, they sit in limbo waiting for resolution. The longer it
takes to settle a dispute, the more money gets tied up while everyone waits.
2: Credit Cards Bring In Additional Revenue
While it may seem
like a good idea to charge customers a service fee for using a credit or debitcard, there are several reasons why this is a poor business decision.
First, it may deter
customers from using your credit repair services.
Second, you could
end up losing money if the customer pays with cash. Finally, you may damage
your reputation if customers feel that you’re trying to take advantage of them.
In conclusion, charging a customer a service fee for using a credit or debit
card is not worth the risk.services.
· Credit cards bring in additional revenue and discourage customers from
being discouraged about paying with cash.
· will be hard to get back any potential loss if the customer chooses to
pay in cash.
· If the customer feels taken advantage of, they might share their
negative experience on social media platforms and have future clients choose a
different company altogether.
· A typical transaction fee can range anywhere from 1.5% to 3%.
· Charging a service fee for using a credit or debit card also creates more
work for employees because then they would need to manually refund any
overpayment via check, which takes longer than accepting payment by card.
· Additionally, every time an employee needs to issue a manual refund,
they'll need to contact the bank to do so, which will make customers wait even
longer for their refunds.
· Last but not least, merchants who offer discounts when paying with cash
may see their costs increase as fewer people choose this option if a service
fee is imposed on those who wish to use plastic.
3: More Customers Are Likely To Pay With A Credit/Debit Card When You
Don’t Charge A Fee
Charging a customer
a service fee for using a credit or debit card is a poor business decision
because more customers are likely to pay with a credit/debit card when you
don’t charge a fee. This practice can also damage your reputation and deter new
customers from doing business with you. In addition, many credit repair
services exist to help people improve their credit scores.
For example, the
FCRA (Fair Credit Reporting Act) allows consumers to dispute inaccurate
information in the files of any of the three major credit bureaus: Equifax,
Experian, and TransUnion. If an inaccuracy cannot be verified by these bureaus,
it will be removed from the consumer’s file. Likewise, if false information is
reported on someone’s credit report that would lead to adverse action by a
creditor – like being denied a loan – they have the right to receive
documentation of this adverse action within 30 days. Once they see that their
denial was based on incorrect information, they can then go back to the
creditor and try again. These two provisions give consumers lots of protection
against unfair practices.
Allows You To Offer Lower Prices
When you charge customers a service fee for using a credit or debit
card, you’re essentially asking them to pay more for your product or service.
This can lead to customers feeling resentful and may cause them to take their
business elsewhere. In addition, charging a service fee can dissuade customers
from using their credit or debit cards, which could limit your sales. Finally,
many card issuers prohibit merchants from passing on surcharges to their
customers, so you could end up violating your contract and incurring costly
fees. Keep in mind that if you have a negative experience with one bank, it’s
likely that another will provide the same services at no cost.
Contact us -
Address - 18930 HWY 18STE 101 Apple valley CA 92307
Phone - (866) 342-1062
Email - info@decswekilldebt.com
Website - DECS-WE KILL DEBT
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