Adding a COVID Surcharge? Be Upfront With Your Customers

After an unprecedented year of business upheaval, many companies enter 2021 with an understandable apprehension about the future. But with vaccines being distributed in greater numbers, the end of this crisis may be within reach, if you can hold on just a little longer.

One method many companies are using to recoup some of their 2020 losses is adding a “COVID surcharge” to credit card purchases. These additional fees began turning up in particular among restaurants, bars, hair salons and other businesses that were hardest hit by the pandemic. Some places added them to debit card and cash payments as well.

There is nothing new about surcharges, especially at a time when credit card processing fees were already rising, and merchants were looking for ways to offset that additional cost. Retailers are allowed to charge customers to cover the expenses of merchant fees, by passing along a charge equal to what they pay to accept the card, which can be up to 4 percent.

But in this case, the surcharge is added not to offset fees but to make up for lost income from months of being closed.

Will that make a difference to your customers? It might. Many restaurants were fortunate to have customers who tipped their servers extra, even if all they did was bring food out to their car. They had a vested interest in keeping a place they loved in business, and will likely not object to paying a little more to help.

Ultimately it is up to each business to decide whether a COVID surcharge is an appropriate measure. Just keep these tips in mind:

1. Make sure you’re allowed to do so. There are laws in California, New York, Texas and other states that made it illegal for merchants to add card use surcharges, though some of those rules have been loosened in recent years. Talk to us to find out more

2. Be upfront about the amount of the charge and why it is being levied. Clearly display the full price that your customer will pay — excluding tax — using each method of payment that you accept. Simply notifying customers that there is a surcharge, without disclosing detailed costs, is not enough.

Finally, it should also be acknowledged that while many businesses are suffering, many individuals are suffering as well, and thus paying closer attention to every dollar they spend. A surcharge that might have gone unnoticed in the pre-pandemic era might be an issue for those who are watching every dollar more closely.

Need to talk to someone about this? A Cliq representative is here to help