Monday, October 3, 2016

Credit Card Fees: Businesses Should Reward Customers, Not Punish Them

There was a recent article in the Wall Street Journal about the Supreme Court agreeing to hear a case about whether local governments can ban merchants from charging fees or surcharges to customers who use credit cards.

This debate is also occurring internationally.  For example, according to the Journal article, the European Union is banning credit card surcharges next year because they say that retailers can't discriminate based on payment method.

However, I think that focusing on the legal issues is missing the larger picture.  From a customer service and innovation perspective, charging customers for using credit cards is a mistake.

Credit and debit payments are the future – whether they are done with "cards", chips, watches, or phones.  Charging an extra fee for the dominate and most convenient payment format will simply drive customers to the competition.

What are some alternatives for merchants?

1. Accept the fee as a cost of business.  Instead, focus your efforts on encouraging your customers to spend more money per transaction.

2. Raise your fees across the board, and offer a discount if customers pay with cash.

3. Offer some other perk (besides discounting) if customers pay with cash.

Never think of punishing a customer, especially when he is actually trying to buy something from you.  Buying should always be a rewarding and hassle-free experience.