How to charge customers more for using credit cards with my Pizza Point of Sale systems?

In light of the settlement credit card companies like MasterCard and Visa reached recently, we got a call from one of our Pizza Point of Sale (POS) customers from on how they can charge customers more for using credit cards at the Pizza Shop.
POS Credit Card Processing
Lets quickly answer these questions:

  • Can my Pizza POS charge more for credit card customers? YES
  • Can my Pizza POS do this easily? YES
  • How can my Pizza POS charge credit customers more? Using the “Surcharge” function.
  • How should I use my Pizza POS to charge customers more, by percentage or dollars? That depends. Some choose to place a fixed per transaction amount ($) while others charge a percentage of total.
  • Should I charge the credit card usage fee before or after taxes (i.e. sales)? The surcharge needs to be added to the total before taxes.
  • Does this work the same way on my other Point of Sale systems (Frozen Yogurt, Restaurant, Chocolate)? YES, the function is available on all POS systems.
  • Will this cause any issues on the POS with customers using Gift Cards? No.

Multi terminal pos systems
Now, there is an equally important business question: Should I charge credit card customers more? The answer to this question is a longer range business/marketing issue than a simply thinking that you will recuperate the cost of credit card fees by passing them to your clients.
Looking at it strictly form accounting perspective you have to ask the following questions?

  • What percentage of my total sales do I pay in credit card merchant fees?
  • What percentage of my current sales come from credit card customers?
  • How much in sales might I lose if I start charging credit card fees?

Let assume that you pay 1 percent of your total sales in credit card merchant fees. If you risk loosing equal to or more than 1.0 percent in total sales, then it is a bad business decision to start charging this nominal fee. There are other factors also to consider:

  1. Credit card only customers may not purchase from you if your competition is not charging fees.
  2. Credit card customers typically spend more.
  3. You can lose more revenue not only by customers spending less, but also a negative perception which may lead to the customer visiting your store less.
  4. Loss of future customers from decline if referrals.

The moral of the story is: Concentrate on important business matters rather than the relatively minimal merchant account fees. Withe the right business mentality you can deliver real value to your customers and eventually increase total revenues.
Do you have any questions or comments? Please contact Sintel Systems, your Global POS Provider:
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