Dr. Mike Carr

Making the case to pass the fee

The COVID-19 pandemic decimated small businesses across America. Net profit margins dropped in almost every industry, some double digits. If you are in the restaurant or hotel industry, we know you are still feeling the financial effects of the last two years. Here at Sky, we strive to help reduce costs for the businesses that we serve. One way we do this is by encouraging our merchants to ‘pass the fee’. 

Passing the Fee allows merchants to automatically add a surcharge to all credit card payments made at their location. A $2-$3 fee on a $100 purchase is a small price for the customer to pay. However, after 100, $100 transactions, the merchant is feeling the burn with $200-$300 in lost revenue.

One of our new merchants recently switched from Square because of Sky’s Passing the Fee feature. Their first week in business with Sky, they processed 156 transactions totaling $8,711.11 in gross revenue. We calculated that they saved $254.73 in fees! We also figured how many products they were ‘giving away’ before they made the switch. As you can see, this is equal to giving away 51-$5 items… This is an estimated monthly savings of $1,018.92 or 204-$5 items!

As you can see, passing the fee significantly increases your bottom line month-to-month. So why is it such a divisive topic for merchants? Some believe that passing the fee will result in negative reactions from customers. In our experience, most customers understand and are happy to pay the fee or simply pay cash to avoid it. For the one or two people that want to raise a fuss, you have the option of easily turning the feature off for a single transaction.

To the left you can see an example of what the customer’s receipt will look like should you choose to pass the fee. Customers are already accustomed to paying processing fees on their electric bills, utilities, cell phone provider, license, etc… So it is not out of line for a small business to expect the same courtesy for the convenience of using a credit card. This is also an opportunity where a business might persuade the use of cash to avoid paying the fee. Should you choose to pass the fee, you will need to ensure it is clearly posted in your retail location or on your website if you are a service provider.

Of course, if you decide passing the fee is not for your business, you can still enjoy industry low rates by switching to Sky. You can learn more about our flat-rate-pricing HERE. If you would like to learn more about Passing the Fee, contact us at support@skysystemz.com.