Anytime a customer uses a credit card to pay for your services or products, you pay an interchange fee. These fees are non-negotiable, and they’re usually the most expensive part of credit card processing costs. This is why some credit card processors offer zero-fee processing to get around these fees and get businesses to use their services.

As tempting as it is, you should still educate yourself on the fine print of these zero-fee programs. The main thing to understand is that those fees won’t just disappear. Instead, it’s your customers who will pay them. This will require you to charge customers a little more, which means, you should weigh the pros and cons of adding zero-fee credit card processing to your business. Here’s what you need to consider.

What Is Zero-Fee Processing?

In short, zero-fee processing (also known as no-cost processing) is a way to pass your credit card processing fees to your customers. This is known as surcharging credit cards, and you can already choose it regardless of your credit card processor. If a company offers no-cost processing, that typically means they’ll take care of the surcharging setup for you.

Covering the Costs

As we mentioned, your customers will cover most of your zero-processing costs. That said, you may still need to deal with monthly fees and PCI compliance fees. Also, surcharges can only be added to credit card transactions. If your customer pays with a debit card — even if that card is “run as credit” — you’ll incur the processing costs.

You may also have equipment charges. Some zero-fee processors allow you to lease credit card machines, and these charges are likely to exceed the costs of purchasing a terminal.

The Main Considerations

Even though it’s not really free, zero-fee processing is still an appealing option. Not sure if it’s the right fit for your needs? Ask yourself these three questions to find out.

• Are your competitors surcharging? If they aren’t, using zero-fee processing means your customers will have to pay 2-3% more at your business. Will you be able to attract new customers that way? Will your competitors use those fees against you?

• Can customers obtain your services or products elsewhere? These days, most people consult the Internet when making their purchases. If they can purchase the same things you offer with little inconvenience, they may not want to bother with surcharge costs. Keep in mind that major brick and mortar retailers such as Target and Walmart don’t use surcharging.

• Is your target market fine with surcharging? Since surcharges can only be applied to credit cards, some of your customers would end up paying with cash or using their debit cards. In the worst-case scenario, they would just go elsewhere.

If you would like to learn more about Zero-Fee Credit Card Processing or if you would like to request a credit card processing review with one of our merchant professionals, please get in touch with our office today!