Let’s talk about something we are all aware of when we’re evaluating our profits at the end of the year: credit card processing fees. These fees cost you 1.5% to 3.5% of each transaction’s total. When you’re looking at one particular transaction total—such as $20—we’re talking 70 cents.
That may not seem like much on its own, but when you factor in all your credit card transactions in a day and take into account all the days we have in a year, that total feels a little more threatening.
At Cheers POS, we know what’s best for the industry because we have been in the industry. If you’re now eager to know how to offset credit card processing fees, you’re in luck—we have the answers.
What are credit card processing fees?
Before we dive into our 4 expert tips on how to offset credit card processing fees, it’s important to understand what a processing fee is so it doesn’t get confused with other business fees/costs.
A credit card processing fee is the amount that you as a business owner pay credit card companies and financial service providers in order to accept and process customer credit card transactions. This is also referred to as a “surcharge”, and even sometimes a “convenience fee”. Many small businesses operate cash-only in order to avoid processing fees.
If you are considering adding credit card processing or currently allow credit card processing, here is our list of ways that you can offset those fees.
Tip #1 on how to offset credit card processing fees: Making the fee the customer’s responsibility
One way you can offset the credit card processing fees is to transfer them to the customer. If the customer pays the processing fees, you won’t have to. That extra money per year can serve other areas of your business, like upgrading your liquor store point-of-sale
There may be a few questions running through your head right now:
- Is that legal?
- Will my customers be upset and stop coming to my store?
- How do I do this? (Hint: by using an all-in-one POS system)
Let’s break this all down.
Is that legal?: Check with your local ABC agent
The short answer is it depends. The legality of passing credit card processing fees to customers varies from state to state and county to county. We encourage you to check with your local Alcoholic Beverage Control agent to make sure you’re abiding by your local laws.
If your county allows it, make sure you have clear signage notifying customers of the processing fee that will be charged to their card. The processing fee cannot legally exceed 4%.
Will my customers be upset and stop coming to my store?
The best answer to this question is that you know your customer base best and how they might respond.
If you were transparent with customers about your reasonings as a small business owner, would they empathize and be understanding? Do you feel like imposing these fees would turn some of your customers away? Or, would your rapport and store environment keep them coming back?
With the Cheers POS system, you’re able to choose how to handle transferring fees to your customers. You can choose the percentage and easily toggle it on and off based on yours and your customers’ needs; all it takes is a click of a button. You can even choose to turn it on or off on specific days, like just the weekends, when you’re a little busier.
At the end of the day, we as humans are very adaptable. After a certain number of times paying a fee, it just becomes part of the total. Plus, the percentage is so minute that most customers either don’t notice or don’t mind paying it. Passing credit card fees to customers is a completely feasible way to offset your credit card fees and prosper as a business owner.
How do I do this? Use an integrated credit card processing system that works for you
Our all-in-one point-of-sale system was designed to make your life easier, especially when it comes to credit card processing. In addition to the other services that make our POS system state-of-the-art (more on this later), our system includes an integrated credit card processing service in which the power is all yours.
You get to choose your processor (from our list of accredited processors) and hardware and completely customize your processing fees (within legal limits of course).
Ultimately, with our all-in-one POS solution, you have complete control to make the credit card processing fee work for your business. Your funds will no longer be at the mercy of credit card processing companies—you’re in charge.
Tip #2 on how to offset credit card processing fees: Marking up prices
Another way you can offset credit card fees is by marking up prices on some of your products. This allows you to bake the 1 to 4% processing fees into the cost.
Pay attention to what your customers are buying:
- Is there a trendy product that people are dying to get their hands on?
- Keep your eye on social media to capitalize on this.
- What products can you mark up for certain holidays or seasons?
- What products are your competition marking up?
How do you calculate markup?
Using this equation as a starting point, you can then evaluate your processing fee percentages and decide how much more you want to mark-up to either break-even or make a profit. This will depend on your liquor store’s goals and processing fees.
Tip #3 on how to offset credit card processing fees: Finding small items you can add to a transaction total
The third way to offset credit card fees is to find small convenience items you can place at checkout. This could be a bottle opener, plastic cups, bar tools, mixers, etc.
This way, you and the customer both win; you’re meeting their needs and you’re offsetting those credit card fees.
Another common item that you can add to the transaction total is bags. You can charge anywhere from 10 cents and beyond; whatever works for you. However, you definitely don’t want to charge an amount that makes the customer question whether or not they want to pay for a bag.
The customer can make the choice for themselves and if they don’t want to pay for a bag, they can start bringing their own. This fact won’t prove to be counterintuitive though, you’ll still get plenty of customers opting for a bag out of convenience.
Tip #4 on how to offset credit card processing fees: Investing in an all-in-one POS system
The best solution for offsetting credit card processing fees is streamlining your business processes with an all-in-one point-of-sale system. At Cheers POS, we are savvy and we know that you are, too. You value your business and your time and you just want your processes to be as efficient as possible. When your processes are efficient, you save money.
With our POS solution, you have access to services that will not only solve your “how to offset credit card processing fees” question, but will also make your life easier.
Invoices & reporting system
Besides our integrated credit card processing system, our POS system also includes an automated invoicing and reporting system. This service will automatically run data such as different categories of sales reports, employee logs reports, and detailed register logs.
You can even set up automated ordering with our purchase order automation system. You won’t have to worry about ordering too much, running out of product, or doing your own reports because our system does the legwork for you. Plus, you don’t have to be a data expert to understand the numbers; our reports are made to be easily digestible.
Inventory management system
With built-in credit card processing, invoices and reporting, and purchase order automation systems, you’re on your way to saving yourself money on fees and saving time. You can also make sure you’re offsetting fees with our automated inventory management system.
By tracking your inventory and automatically updating after purchases, returns, and reported damages, you can cut down your losses. Accurate inventory counting and loss prevention will certainly show their value in your profits at the end of the year.
Inventory management also allows you to:
- Find and track theft
- Feel in total control of your store even when you aren’t physically there
- Keep track of profits
- Confidently know your shelves are appropriately stocked
- Save time otherwise spent managing your store
Your permanent solution is waiting
After a lot of trial and error as liquor store owners, we found the answers to our time and money problems: a one-of-a-kind POS solution. We realized that no amount of focus and day-to-day troubleshooting could be a permanent fix to what was actually wrong.
The truth is, we can’t do what computers and systems can. And if we try to, it sucks away all of our time, energy, and even money. At Cheers POS, we can assure you that your days of headaches over extra credit card processing fees and reporting and inventory discrepancies are over.
With our comprehensive POS system, those extra hundreds to thousands of dollars at the end of the year are yours to do with whatever you please.
Get a free quote today
If you’re ready for a solution to business inefficiency, get a free quote on your POS solution.
We’re here to help
Another valuable lesson we learned about running a liquor store is how necessary it is to have support. At Cheers POS, our team wants to hear from you and takes all of your feedback seriously.