Should you pass along credit card fees to customers?

Dudley credit Q & A


Dear Thea,

Our company is exploring the idea of passing on credit card fees to our customers. The fees are impacting our profits and seem to be increasing with more customers choosing to pay that way. Any words of wisdom on how to roll something like this out to customers?

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— Passing the buck in Pasadena


Dear Buck Passer:

When I got married, the question I heard constantly was “when are you going to have kids?” We wanted to wait—wait until we bought a house, until our careers were settled, until the perfect time. There was always a reason to wait. My Dad told me, “There is no perfect time, if you wait for that you will never have kids.” Credit card fees are like that. If you wait until the perfect time to pass on those fees, you will never do it.

The hardest part of rolling out a pay-for-play program is making the decision. Everyone in your company has an opinion. Some agree, some are certain all is lost, and customers will leave you faster than a toupee in a hurricane. Some in your company will flip flop between the two, never fully committing to either. However, once the decision is made, you move forward.

Let’s talk details. How are you planning to roll this biscuit out, both internally and externally? What is the fee structure? Are you charging a flat fee or passing on a percentage? Who is facilitating the charge? Is it only on your payment portal? Are you able to utilize your payment processor to handle the calculations and pass on the fees? What about compliance? Does your state (or states you do business in) allow you to pass on fees? There are rules. You can’t pull a figure out of the woodpile, and you can’t play favorites. In other words, if one account gets a fee, all card payers get a fee.

Once you have those questions answered you have a few more items to address before you can get this show on the road. You have to let customers know before they pay with a credit card that there is a fee, no springing it on someone as they are giving you that card. Notice, inclusion on your invoices, credit application, or on your payment portal is required.

Then come the conversations. Lots of conversations, both within your company and with customers. Be prepared to hear everyone’s view on the new policy. Everyone understands that credit card fees take a bite out of profit, everyone accepts it as part of life, and it gets chalked up to “cost of doing business,” until the “cost of doing business” boomerangs back to them. Then it is unacceptable and outrageous. “Suck it up,” they say. “This is the cost of doing business. Why am I, the customer, penalized for choosing the way I want to pay?”

Sometimes silence is the better part of valor. Let the rant happen, listen, show some empathy. “I understand” goes a long way. Offer alternatives, like ACH. Most people want to be heard, grumble for a few minutes, then use their cards (the most common response to using an alternative payment method is, “but I really want my points”). Yeah, me too, but someone is paying for those frequent flyer miles.

You may lose some customers, some will come back, a few will hold the indignation. You made the decision and like most change, it is met with resistance but before long it becomes part of your business landscape. As with almost everything in life, there is no perfect time.

With more than 30 years of credit management experience in the LBM industry, Thea Dudley consults with companies on a wide range of credit and financial management issues. Contact Thea at

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