Blog Posts Tagged as surcharging

This is the Beacon Payments blog. Learn about the credit card processing and the merchant services industry. Hear about the successes of our outside sales people whose job it is to sell merchant services and sell credit card processing programs.

How to properly surcharge

Published 04/20/2018

When a business owner wants to charge their customer a 4% surcharge then they need to pay a 3.84% fee to their processing company to guarantee the charge is being properly offset. 

Look at the following examples:

The merchant runs the card for a $100 sale.  The cardholder is then charged a total of $104.

If we then take 4% out of the $104 transaction the business owner will pay $4.16 in fees - an effective rate of 4.16%

$104 * 4% = $4.16

$104 - $4.16 = $99.84 deposit

If we instead take 3.84% of the transaction out then the business owner pays $4.00 in fees on the $104 sale. 

$104 * 3.84% = $4

$104 - $4 = $100 deposit. 

This ends up being a 4% charge on the original $100 sale.  The business owner is charging 4% to the client and exactly 4% is being paid to offset by the 3.84% processing charge.