Why “convenience fees” are horrible for your business
If you’re running your business like it’s 1995, there’s a good chance that your penny-pinching is leaving some serious money on the table.
Today I asked my wife to call a couple of health clinics and pay our bills. One was in Tulsa and the other was here in Sapulpa. I wanted to pay online, but there’s no option for that. We could’ve mailed in our debit card number, but I hate doing stuff like that through snail mail (part of the reason I’m a tech-geek). She called the one in Tulsa and had no problem paying over the phone using our HSA debit card. But when she called the local clinic, we found that there would be a $5.00 convenience fee for the “privilege” of paying our bill over the phone.
Our total bill was only $125.00; an additional five bucks for paying over the phone? No, thank you!
I have strongly hated convenience fees ever since I first heard the term. After all, let’s run down taking a payment using a credit card, vs. paying with cash:
Someone makes a payment with cash, you have to:
- Take the cash.
- Count it, give them their change.
- It then has to be placed into a register now, and a safe later.
- Typically, it then gets taken to the bank the next day, or maybe even later.
So there are several areas where that cash might actually get stolen, lost or misplaced. Plus, it takes longer to show up in your account.
Now, to take a payment with a card:
- Take their card.
- Swipe their card.
- Give them their card back.
That is literally all there is. There are no more steps. So, who exactly is this convenient for? Sure it’s easier on the customer, but it’s a lot easier on you, the business owner, as well.
But what about the merchant fees?
Yeah, I get it. You have to pay a fee to take credit cards, and so it seems to make sense to pass that fee along to your customers. But taking credit cards is a bigger benefit to you than it is to them. When McDonald’s began taking credit and debit cards, they saw they average order go up from $4.50 to $7.00. That’s 64%! Tell me one other thing you’ve done that in one fell swoop, increased your average order price by 64%. Go on, I’ll wait.
And that’s not all. Cayan.com shows us how much it can mean on a monthly basis, plus the benefit of taking mobile payments:
Those fees that you get charged are just the cost of doing business. You can work them into the price of your product if you really need to, but don’t penalize the customers for bringing you more money, that’s nuts! As the world continues to move their lives online, we’re going to become less tolerable of things like “convenience fees,” especially when we know they’re helping you as much as anyone. Show your customers you’re listening by making their transaction as smooth as possible.