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Free Credit Card Processing - Is there such a thing as Free?

What is the difference between Surcharging and Zero-Fee Processing and No Cost Processing?

Trick question, as they all mean the same thing. Zero-fee processing, no cost processing or surcharging is a processing resolution where credit card processing fees are passed to your customers automatically. Instead of your business paying the processing costs, your customers will pay the fees. Passing your processing costs to customers is already an option you can choose regardless of your credit card processor. In the United States, surcharging is permissible in all but 9 states, if certain requirements are met. While no-fee credit card processing is available with traditional processors, some companies are trying to create a business around offering “free” or “no-cost” processing, meaning that the processor will handle the setup of surcharging for you.


Is it really that simple?

Not really.

With zero-cost processing, most of the costs will be covered by your customers, but that is not to say you may not incur charges as well. There may be additional fees including monthly fees, PCI compliance fees, and many others. In addition, surcharges can only be applied to credit card payments. If your customer chooses to pay with a debit card, you will still incur the costs of processing that transaction. A debit card is always considered a debit card for processing purposes, and so it will incur debit card costs. Surcharging is not allowed for any debit card transaction.

Finally, depending on your credit card equipment, you may need to buy new equipment. Either with a lease, lease to own or an outright purchase.  Typically, credit card terminals are not very expensive. Keep in mind that leasing this equipment will more than likely cost you more in the long run.


So why would a business consider this?

Well, credit card processing is expensive, and most customers have come to fruition that it is just the cost of doing business. But the concept of free processing is very appealing. So why doesn’t everyone do this? 

There are many things to consider before making this decision and this decision should not be made without knowing some of the drawbacks or thinking about the long-term effect of this decision.


Are your competitors surcharging?


Will your customers be happy with an extra 2-3% added to their bill if your competitors are not doing this?


Will your competitors gain your customers if you charge 2-3% more for the same service?


Can you raise the prices of other goods to make up the 2-3% without interfering with customer satisfaction?


Can your goods or services be easily obtained elsewhere?


Your message to customers is that you prefer cash, is that the right message to send or is your business ready to handle more cash?


In conclusion, when deciding to go with a “zero-fee” credit card processor, read the fine print. As everyone knows, if it sounds too good to be true, it most likely is. If you believe you are currently paying too much in credit card processing fees, reach out to us today for a no obligation statement analysis.


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