Nowadays, every business must accept credit card payments or risk losing customers to their competitors and auto body shops are no exception. As a shop owner, you are in the business of making repairs, but the cost of processing high volume transactions is causing you to have to fix the serious leak in your profit bucket. In 2013 surcharging became legal in the United States and those merchants who have implemented surcharging have seen tremendous savings by switching to a zero-cost credit solution.
The practice of charging customers a small fee for the privilege of using their credit cards is already widespread in many countries. Surcharging is gaining popularity among many different industries and will only continue to grow as more businesses realize the cost savings of this solution. Surcharging became legal in Australia in 2003. Today, 42% of all Australian merchants and 60% of large Australian retailers pass on a surcharge to customers who use credit cards.
Industries with specialty products and services are hit especially hard because many of their transactions carry high ticket amounts. These businesses are perfect candidates for the zero cost credit processing solution. Charging a fair and transparent surcharging rate isn’t always as easy or as straightforward as the notion may sound. Between government regulations, processor policies, and not-so-user-friendly technology, many auto body shops charge flat surcharge rates as high as 4% of the total transaction just to ensure that they are covering all their costs.
Fortunately, there are better ways of doing business. Charging a smart, fair, and transparent surcharge that covers the entire cost of acceptance — and nothing but the cost of acceptance — is possible.
Many auto body owners agree that three big pain points for their business are:
- High ticket amounts eating into profit margins
- Staying on top of the fee/rates of current processing solutions
- Customers who pay with a credit card instead of paying with their insurance check
Traditional processing accounts cost shop owners thousands of dollars a year. Applying a surcharge on all credit card transactions will drive the credit card transaction rates down to zero. The cost of credit card acceptance is one of the fast-growing operating costs to business owners today, a zero-cost credit solution changes that. Passing on the credit card fee to your clients allows you to increase your income by thousands of dollars every year.
For example, one business who regularly processes credit card transactions from $100 to $35,000. The processing costs associated with those high-ticket amounts added quickly and they wanted a different payment solution to reduce overhead costs. NXGEN saved this merchant saved more than $23,000 in 2016 by switching to a zero cost credit processing option.
When surcharges are in place, a larger portion of customers may opt to pay in cash/personal check or with the check from their insurance company, which most business owners prefer. When a client sees that you accept credit cards, they often pocket the insurance check and opt to pay with their credit card for the points or rewards. Your quote did not account for the cost of a $5,000 credit card transaction and now this has eaten into your profit. Surcharging eliminates this issue.
As more and more industries begin to implement surcharging, consumers will become more familiar with the practice and acceptance will continue to grow. If you would like more information about surcharging for your business, contact NXGEN today.