Merchants today face rising payment processing costs, especially when accepting credit cards. Many have started to pass these costs on to customers by adding a surcharge for credit card transactions. But what happens when customers incur this extra fee?

A growing trend shows that about 40% of payments convert to ACH or electronic checks when a surcharge is applied. Here’s why this shift is happening, and what it means for your business.

Customers React to Surcharge Fees

When a business adds a surcharge fee to credit card transactions, it’s intended to recover the cost of accepting credit cards, which can reach up to 3%. While this helps the business, customers often don’t want to pay more.

Instead of using a credit card, many customers seek alternative payment methods that avoid extra costs. ACH payments (also known as electronic checks) offer them a fee-free option, leading to a natural shift away from credit cards.

ACH: A Simple, Cost-Effective Option

ACH payments allow businesses to transfer funds directly from a customer’s bank account using routing and account numbers. ACH processing has several advantages:

-Lower fees: ACH processing fees are typically 70% to 80% lower than credit card fees.
-No chargebacks: Unlike credit cards, ACH (with guarantee) transactions don’t involve chargebacks for disputes.
-No returns: When combined with a guarantee, ACH payments can help avoid returns due to insufficient funds or fraud.
-Faster funding: Our ACH program offers next-day funding, improving cash flow.

The 40% Conversion Effect

Once surcharges are introduced, about four out of every ten merchants switch to ACH. This isn’t just a cost-saving move for them, it’s also an opportunity for businesses to save on processing costs.

By encouraging ACH payments, businesses can:

-Improve the customer experience.
-Speed up settlement times.
-Strengthen cash flow and operational predictability.

Making ACH Easy: The UTA ACH Solution

At United TranzActions (UTA), we make it simple for businesses to offer ACH as a strong alternative to credit cards.

Our Electronic Check / ACH Processing with Guaranteed Settlement gives you:

-Immediate approval or decline decisions.
-Next-day funding.
-Zero chargebacks.
-No returns for NSF, fraud, or other reasons.
-Significantly lower processing fees than credit cards.

If your business is considering applying surcharge fees when accepting credit card payments, it’s essential to be prepared for the change. About 40% of customers are likely to choose ACH instead, and that’s a good thing when you have the right solution in place.

Mark Tapia
Vice President Business Development
mtapia@unitedtranzactions.com
800.858.5256 ext 3028.
Direct: 786.264.7028.