The Rise of the Surcharge: How B2B is Finally Embracing Credit Card Fee Recovery
For years, the practice of passing credit card processing fees onto customers was largely confined to consumer-facing businesses. But a shift is underway. Driven by rising costs and enabled by sophisticated payment platforms, B2B enterprises are increasingly adopting credit card surcharging – and the trend is poised for significant growth.
From Legal Gray Area to Mainstream Practice
While legally permissible since a class action lawsuit resolution in 2013, credit card surcharging didn’t gain widespread traction until recently. According to a 2024 J.D. Power survey, 34% of U.S. Slight businesses now add surcharges, a dramatic increase from just 2% in 2019 and 5% in 2021. This surge reflects the mounting pressure on businesses to manage operating expenses.
Why B2B is Catching On
Traditionally, B2B transactions relied heavily on manual processes – paper invoices, checks and spreadsheets. This delayed the adoption of credit cards and, surcharging. However, as more B2B organizations embrace digital payments for convenience and efficiency, the benefits of fee recovery are becoming too significant to ignore.
The Financial Impact: Small Percentage, Big Savings
A 2.9% credit card fee might seem negligible on a small consumer purchase. However, in the B2B world, where transaction values are substantially higher, that percentage translates into real money. For example, a $10,000 invoice incurs a $290 fee at a 2.9% rate. Recovering this fee can significantly impact a company’s bottom line.
Empowering CFOs with Cost Control
CFOs are constantly seeking ways to optimize expenses. Credit card surcharging provides a direct and controllable way to manage payment processing costs without impacting core business operations. It’s a strategic tool for maintaining financial health in an era of rising costs.
Navigating Compliance with Modern Platforms
One of the biggest hurdles to surcharging adoption was the complexity of navigating varying regulations and disclosure requirements. Fortunately, today’s integrated payments platforms simplify compliance by providing businesses with the necessary tools and controls. This removes a significant barrier for B2B enterprises, particularly those operating across multiple jurisdictions.
Margin Recovery and Pricing Strategy
Surcharging allows B2B companies to recover margins lost to processing fees. By transparently applying fees only to credit card transactions and incentivizing alternative payment methods like ACH or wire transfer, businesses can avoid broad price increases and maintain competitive pricing. This approach can likewise foster customer loyalty.
The Changing Customer Landscape
Concerns about alienating customers are diminishing. Consumers and business buyers alike are increasingly accustomed to fees and service charges. Transparent and strategically implemented surcharging is now widely accepted, making it a viable option for B2B organizations.
Future Trends in Payment Fee Management
The adoption of surcharging is likely just the beginning. Several trends suggest a more dynamic approach to payment fee management in the B2B space:
- Dynamic Surcharging: Platforms may offer the ability to adjust surcharge percentages based on card type, transaction amount, or even real-time network fees.
- Integrated Payment Orchestration: Businesses will leverage payment orchestration layers to intelligently route transactions to the lowest-cost processing option, minimizing fees overall.
- Increased Transparency: Expect greater clarity in fee breakdowns, empowering buyers to make informed payment choices.
- Expansion of Alternative Payment Methods: A wider adoption of options like virtual cards and real-time payment systems will further reduce reliance on traditional credit cards and associated fees.
FAQ
Is credit card surcharging legal? Yes, it has been legal since the resolution of a class action lawsuit in 2013.
What is a typical credit card surcharge percentage? While it varies, 2.9% to 3.5% is common.
Do I need to disclose surcharges to customers? Yes, clear and conspicuous disclosure is essential for compliance.
What payment methods can I incentivize instead of credit cards? ACH transfers and wire payments are common alternatives.
Where can I find more information about compliance? Consult with your payment processor or legal counsel.
Did you understand? J.D. Power data shows a significant increase in surcharge adoption, with 34% of U.S. Small businesses utilizing the practice in 2024.
Pro Tip: Transparency is key. Clearly communicate your surcharge policy to customers to avoid disputes and maintain trust.
Want to learn more about optimizing your B2B payment strategies? Explore our other articles on digital payments and financial management.
