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Should You Pass Along Swipe Fees To Customers?

Credit cards came up with easy access to credit, insurance coverage, several discounts & fantastic cashback offers, which compelled consumers to keep them in their pockets. It has become the most accepted payment method, which increased usage of swiping credit cards by 47%(till Dec 2021). 

Many people do not know much about credit card usage and its term & conditions. Many defaults occur due to a lapse in understanding the repayment terms resulting in unlikely surprises when they see an annual fee charged to their card. Similarly, even a swipe fee can be one such topic. Let’s discuss the most common question among credit card users:

Who is responsible for paying credit card swipe fees?

To make the above question clear, let’s discuss a few questions you need to know.

What are swipe fees?

Interchange or swipe fees are the hidden processing fees per transaction. Usually, it costs 2-2.5% on average, and sometimes it costs about 4% for premium cards.

Swipe fees are the extra charges paid on the consumer’s pay. These fees balance the cost of the credit card company and the cost of processing.

Benefits of using a Credit Card:

  • Easy to avail Credit.
  • Most accepted payment method.
  • Attractive discounts and fantastic cashback.
  • The easiest way to improve credit score.
  • No worry about carrying cash.
  • Access to Insurance coverages.

What is a credit card swiping machine called?

It is referred to as a PoS (Point of Sale) machine; it is the most advanced avenue for accepting payments that issue proper transaction receipts and offer real-time transactional data. It is now becoming more user-friendly day after day. In India, you can invest in a card swiping machine for as low as Rs. 1500. The range in price may extend to an investment of Rs. 8,500.

PoS system gathers all of your data related to customers, inventory, and sales. This quantum of data can help you better understand your customers and plan your marketing strategy. 

Benefits of cashless transactions:

The benefits of a quicker turnaround in transactions, a more straightforward process to manage data and reconciliation as well as the cherry on the cake, which is convenience and better customer experience, make POS Billing machine vital for every business

Now let’s come to our question,

Who is responsible for paying credit card swipe fees?

The onus is on the business owner to pay the swipe charges, but due to litigation calls for MasterCard, Visa & Banks, business owners are now flexible to pass along swipe fees to customers. 

Many business owners choose the easiest way to avoid swiping fees; they stop accepting credit cards and pay a lot later. For instance, in an era of cashless transactions, people avoid carrying cash which might impact your business. Not accepting credit cards directly impacts your sales. You will start losing customers. It might also be possible that you’ll start losing customers also if you pass along swipe fees to customers. You might understand it advantageous to pay swipe fees for transactions. Here is how you can do it:

  • You can balance swiping fees and customer footfall by compromising the goods’ price. Remember that all your customers want are quality products or services at lower prices.
  • Everyone loves earning points. So tell them about the earning points & rewards which might attract them. Tell them about the goods news that they can even benefit from swiping fees.
  • Offering them a discount on cash by being transparent regarding swiping fees can also provide them an option to spend their money.

To pass along the swipe fee or not?

It is up to every retailer to choose whether or not to pass on the credit card swipe charges to the customer. The benefit lies in absorbing the swipe fee as a business cost and letting your customers know that you are doing so. This creates goodwill and more opportunity to retain long-term loyal customers in the future.


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