Credit card fees for small businesses are a contentious topic among retail store owners. As credit card fees continue to rise, shopkeepers are wondering what they can do to lower this expense. 

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In July 2023, I went to Washington, D.C., to advocate for credit card reform. Credit card fees have been at the top of my mind since then and continue to be, especially with these fees being a significant expense for many indie retailers.

For example, a Master Shopkeepers member recently asked: 

“I know this has been discussed before, but wanted updated thoughts. I am noticing more businesses around me charging a fee for credit card sales, and more of my vendors are charging me if I pay with a credit card or not accepting credit cards at all. Wondering what others are doing and if charging [for] credit card fees is becoming more normal??”

As mentioned in their question, one solution to the cost of credit card fees for small businesses is charging customers for the privilege of using a card. 

While I’m not usually one to offer prescriptive advice, this is one instance where I have a definitive stance: you shouldn’t pass credit card fees onto your customers but there’s a particular reason why and it’s probably not what you’re thinking.

Credit Card Fees Are a Business Expense

First, let’s look at what credit card fees for small businesses are actually for: they cover the cost of processing a transaction. 

This is a service that you, as a business owner, subscribe to so that you can accept credit card payments. You can’t process credit cards on your own, so you pay for the service. 

Paying for a credit card processing service is a decision YOU are making and responsible for as the business owner. 

There are tons of business services we choose to pay for to make our jobs simpler. 

Two key examples:

Example #1: Email Service Provider

You could, in theory, manually collect email addresses and send bulk emails via Gmail. But can you imagine doing this with a list of 1000+ subscribers?! 

What if you accidentally forget to put email addresses in the “BCC” section, and everyone can see everyone else’s email addresses (a significant privacy issue!)? 

What if you want your emails to look beautiful, professional, and properly formatted? You’d have to learn to code an HTML-based template from scratch. 

And tracking click rates, open rates, and engagement? Not possible without an email service provider. 

That’s why businesses pay for ESPs, such as Flodesk (affiliate link), ConvertKit, or Drip. 

Example #2 Inventory Management Software

Again, you could do this manually with a spreadsheet. But it just wouldn’t be efficient! 

You’d have to manually update the spreadsheet with every single transaction. You couldn’t scan items, auto-generate SKU labels, or have a consistently accurate online shop. 

Most shopkeepers pay for Shopify (affiliate link), Square (affiliate link), or other inventory management software options because the efficiency cost of doing it manually far outweighs the monthly subscription. 

What If You Want to Stop Paying For Credit Card Processing? 

You could implement a cash or check-only policy in your business. 

But it might not be worth it—especially as more than 70% of all purchases made at retail stores are with a credit card. And with the popularity of tap payments on the rise, more and more consumers just don’t carry cash. 

With that, I know of a couple of businesses—particularly restaurants—that are cash-only. And some of them do very well! But they are rare unicorns.

Five Questions to Consider Before Passing Credit Card Fees to Customers

We’ve already established that credit card processing fees for small businesses are a business expense. But what if you’d still like to figure out how to reduce their impact on your P&L by asking customers to pay them? Here are five critical questions to consider before doing so. 

1. Is it even legal in your state? 

Many states prohibit passing credit card fees onto the customer! 

According to Lending Tree, “Ten states prohibit credit card surcharges and convenience fees: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, and Texas. It is illegal for merchants to add any surcharges to credit card transactions or charge convenience fees to nontraditional payment methods in these states.”

2. Does this provide value to your customer? 

With every business decision you make, you need to consider how your choice affects your customers. 

Does charging your customer extra for using a credit card improve your relationship with them? Does it provide extra value?

The answer: nope. 

3. Whose responsibility are credit card processing fees?

As mentioned above, credit card processing fees are just part of running a business. These fees are your responsibility if you accept credit cards as a form of payment in your store. 

4. Does passing these fees on to customers convey a lack of confidence or a limiting belief as a business owner?

Asking customers to cover processing fees can show a lack of confidence as a business owner, particularly in your pricing. 

If you’re playing small and running your business from a place of scarcity, of course you’ll feel like these fees are too expensive and want to avoid paying them. And that allows your customers to play small, too: by charging them these fees, you’re opening the door to negotiating prices, asking to take off the surcharge, and other difficult conversations.

Instead, what can you do to easily afford the credit card fees?  Perhaps changing your prices or reconsidering your inventory would help you feel confident in paying them.

5. Why is this practice commonly accepted in service industries but not in retail?

Fees can often be much higher in service industries. Think about a home contractor whose bill/service is $2K or more. Credit card fees on $2K are much higher than fees on the average $91 credit card transaction!

Additionally, when given payment options in advance, you have time to think about HOW you’ll pay. You can pay with a debit card or save up cash for more expensive services. 

But in a retail store, we don’t have time to explain these fees or give customers options. Could you imagine explaining this to every customer on a busy Saturday or during a packed event?! 

Convenience is critical in retail, often meaning customers want to pay with a credit card. Making it easy for your customers to pay you in the way that they prefer means happier customers who return again and again. 

credit card fees for small businesses

The Real Villain in This Discussion: Credit Card Companies

Instead of being frustrated with your customers, be frustrated with the credit card companies! 

I know that these credit card fees are a substantial expense. Some indie retail store owners are raising their prices to cover them, while others still charge customers a credit card usage surcharge. Others are just drowning with the fees in our already tight-profit-margin industry. 

As a result, we’re…

  • judging each other as business owners
  • hurting our relationship with our customers by passing on the fees, or
  • hurting ourselves by absorbing this cost

No matter what, it makes us look nasty to each other and makes us feel bad, too—because these fees are far above and beyond what we should be paying.

But the real villain here isn’t our fellow retail store owners. It also isn’t our customers. 

It’s the credit card companies who are choosing to charge exorbitant processing fees. 

Imagine a customer uses a $50 bill at a small business. The small business owner can use that same $50 bill at another small business. That business’s owner can do the same, and so on. Not a single fee is taken out because it’s cash!

But for a single $50 transaction with a credit card, the business owner immediately pays 3+% in fees. Once the business owner gets their deposit, they then pay for something else with their credit card—and the next business pays a 3+% fee. 

Eventually, that original $50 has no value. It’s all gone into the pockets of Visa and Mastercard. 

So instead of judging each other, passing on fees, or allowing Visa and Mastercard to profit billions of dollars off of small businesses…

Let’s use our voices to stand up against these fees. 

The only way to relieve this situation is to do something about the credit card industry in the US. It’s time to take ACTION against an unethically profit-maximizing industry by forcing small business owners to either damage their relationship with their customers or pay outrageous fees out of their own profits. 

You’re probably thinking, “OK, Kathy. But how do we do this?”

And to be honest, I’m not sure of every step along the way. People are telling me we can’t win against big banks—but if you’ve been in the Savvy Shopkeeper community for a while, you know that I believe that we each determine our outcomes. And I’m determined to fight this with you.

But the first step? Speak up. Contact your representatives in Congress today and ask them to support the Credit Card Competition Act.

Let’s Fight Credit Card Companies’ Profit-Maximizing Practices Together

I get it: credit card fees are hard for an indie retail business owner to swallow. 

I absolutely want you to get relief from these fees! But the way to do that isn’t by being frustrated with other shopkeepers or passing fees on to customers. Passing on the fees just fuels the current Visa/Mastercard duopoly, makes credit card banks even stronger, and indirectly tells them that it’s okay to keep raising rates and hurting small businesses. 

Small businesses have become the scapegoat in this situation, but remember: we are NOT the problem. Visa and Mastercard’s unethical behavior and profit-maximizing is.

Instead of putting so much effort into finding a solution to these fees for just your business, redirect that effort and energy into battling on behalf of ALL small business owners by contacting your congressional representatives today. 



  • [02:35] Credit Card Fees Are a Business Expense
  • [04:59] Five Questions to Consider Before Passing Credit Card Fees to Customers
  • [09:15] The Real Villain: Credit Card Companies
  • [12:34] Let’s Fight Credit Card Companies’ Profit-Maximizing Practices Together

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