Contractors challenged by the historic recession brought on by COVID-19 have had to revise their business and marketing models and find innovative solutions. One of the most promising is credit card surcharging, because it can potentially increase net profits by as much as 3.5 percent. That can make the difference between financial stagnation or bankruptcy and sustained success and prosperity.
Contractor Surcharging in a Nutshell
Contractors are wise to accept credit card payments, because customers prefer them. The unfortunate trade-off is that they are hit with significant credit card merchant fees by companies like Visa and MasterCard. Surcharging eliminates those fees, so contractors do not pay a penny in merchant interchange fees. That happens instantly at the point of sale, effectively increasing net profits for contractors in an amount equal to the merchant fee. For example, if the credit card transaction is for $1,000 and the “swipe fee” is three percent, normally the contractor would net only $970 ($1,000 minus 3% = $970). With surcharging, however, the contractor nets the full $1,000. The interchange or swipe fee is passed along to the customer, in a transparent and fully legal way. Customers who prefer to not pay the surcharge have the freedom to use other payment methods like cash, debit cards, or checks.
How Surcharging Benefits Customers
For high-dollar projects credit cards are especially useful to homeowners as a way to repay the cost over time or to earn perks like rewards points. They can avoid applying for a construction loan or depleting their hard-earned equity by tapping a home equity line of credit. Consumers also depend on credit card payments as a contact-free and safer alternative during the pandemic. Plus, consumer protection agencies like the Federal Trade Commission recommend paying contractors by credit card. Credit cards off greater consumer protections and digital documentation in the event of a dispute over shoddy or incomplete work. So, contractors who accept credit cards and utilize surcharging get the benefit of increased consumer trust and confidence, coupled with the financial benefits of saving the processing fees and getting paid faster.
Contractors have ample experience with building codes and site inspections, and are aware that noncompliance can cost them time, money, and reputation. That is also true of following credit card company rules and government laws regarding surcharging, which are complicated and carry severe penalties for noncompliance. Experts emphasize that the best way to incorporate surcharging is by using a fully compliant automatic system like CardX. The CardX plug-in card reader technology provides unique surcharging software developed specifically and exclusively to serve the needs of businesses like contractors who utilize surcharging.
A Simple and Easy Solution
It’s reliable, easy, extremely secure, and convenient − and works seamlessly without slowing down credit card transactions. It can also be paired with mobile and online payment systems which are so helpful to contractors who need to process payments while away from the office. Homeowners use contractors when they face upgrades that are too difficult to be a DIY project, because contractors can save them from making expensive mistakes while guaranteeing a job well done. Similarly, by relying on a simple plug-in solution such as the one offered by NTC and its CardX partner, full compliance is essentially effortless.