What is a Credit Card Processing Fee?

A credit card processing fee is charged whenever a consumer uses a credit card. It is essentially a fee a merchant charges you—the consumer—in order to accept payment from you in the form of a credit card swipe. This cost to transact via credit card is charged to merchants and merchants then typically pass the charge down to consumers. However, not all merchants pass the fee down to consumers in the form of a surcharge. These fees aren’t something that merchants want to pass down to consumers but many do it because they don’t have many other options.

Credit Card Transaction Fees

Transactions fees have been slowly but surely passed down from merchant to consumers as years have passed on and it’s negatively impacted both parties. More often than not these fees tend to negatively affect small business owners that don’t have a tremendous amount of transactions which can easily offset associated costs. In New York most of these costs are passed down to the consumer (this has been occurring for years now) as a credit card surcharge. This most commonly occurs in small delis, shops, restaurants, etc. These are small businesses that can’t afford to exclude the fees from their prices.

Why is the Cost Passed Down to Consumers?

If you’re a small business owner and your business is struggling to keep up with increase input prices, you might not have much choice except to pass the cost down to the consumer. It’s become more and more difficult to eat the transaction cost unless there’s a significant amount of transactional volume, which isn’t usually the case for small businesses. Otherwise these costs can be included in the sale of goods or services which can lead consumers to believe that their purchases are inherently more expensive than they actually are.

Any Way to Avoid These Fees?

The main way to avoid these fees is to pay with cash. This isn’t ideal for many since when you use cash you are missing out on credit card rewards however for smaller merchants it might make more sense to do so. Where there is a cash price and a credit price you will want to consider not using credit and instead opting for cash payments.

What’s the Effect of These Fees?

These fees are unfortunately making it more expensive to use credit cards and are in many ways a surcharge/tax on using credit. This makes consumers want to use credit cards less and makes it more expensive to use them. For consumers that are already facing financial difficulties and relying on credit cards to get by this isn’t ideal. Credit cards have become a part of modern society and consumers using cash to pay for goods and services has decreased dramatically. The effect is that all consumers are effectively paying more than they would otherwise in order to purchase goods and services.