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We can smell it now – the crisp fall air, our favorite pumpkin spice coffee brewing and new cost-saving processing solutions for accepting credit cards. You heard that right! A new season means taking a closer look at how to save money running your business and that includes credit card processing.

OTM Payments has a proven track record of delivering meaningful processing programs and that commitment is further enhanced through a synergistic partnership with technology provider CardX. Recently, we sat down (virtually) with CardX Account Executive Michael Melrose who helped us dive further into the many benefits of the CardX Surcharge Program offered through OTM Payments and we are happy to share his insight with you.

What is the biggest advantage of this program?

CardX is proud to partner with a provider like OTM Payments who shares in our mission to prioritize the best interests of our merchants by delivering products and services necessary for cost-effective operations. That certainly includes solutions like the CardX surcharge program, which is the only solution built from the ground up to offer a great experience for merchants who want to pass on their credit card fees. Every aspect of the CardX product suite, from compliance to reporting, is designed to support the surcharging model. That means the work is done for merchants. No need to worry about registering with the card brands, managing disclosures or reconciling bank statements. It’s all built into the product and everything just works the way they expect.

Is it legal in every state? Do you expect that to change?

CardX is currently available in 46 states (in New York and Maine, an additional disclosure is required). Oklahoma was the state most recently added to that list of 46, and our CEO, Jonathan Razi, worked directly with a State Senator to overturn their outdated law restricting surcharging. We are actively engaged with Attorney Generals in the remaining four states to open them up to surcharging, and we expect surcharging will be available in all 50 states soon.

Is there a type of business that is particularly a good fit for the program – conversely, a business that is not a good fit?

An ideal fit for the program is a business that has higher average tickets ($50+), more payments on credit cards than debit cards, and tighter profit margins. We focus on these three qualities because businesses that meet this profile are paying a lot to accept payments and it is affecting their bottom line.

In contrast, if a merchant is microticket, the per-transaction cost on debit cards looms larger. If they see mostly debit cards, passing on credit card fees won’t save them much. And, if they are in a high-margin segment like luxury goods, the cost savings won’t enhance their per-unit profitability as much.

Businesses that fit the target profile are in verticals like automotive (service, parts and repair), industrials and building materials, contractors and construction, professional services (lawyers and accountants), elective medical (cosmetic surgery or orthodontics), and businesses that use recurring billing.

What is one big misconception that you find merchants carry when it comes to the surcharge program?

When merchants learn about surcharging for the first time, many are surprised to hear how popular this option has become in the market. Businesses are consistently frustrated with the cost of credit card acceptance, but not all of them know they have an alternative—they think they either pay the fees or choose to not accept credit cards. When they learn about all that has changed in the industry, and the thousands of businesses using this solution, it really changes their perspective.

What would you say to a merchant who is reluctant to pass fees on to their customers?

The number-one worry for merchants considering surcharging is how their customers will react. The truth is, in practice, we virtually never see businesses cancel because of customer pushback. There are thousands of businesses using this model every day, customers are more and more familiar with surcharging, and the signage and web forms provided when a business signs on do all the explanatory work. Customers who do not want to pay the surcharge will simply pay by debit card, cash, ACH or check.

Can businesses create their own surcharge program simply by adding a fee onto credit card transactions?

Businesses that try a “do-it-yourself” program often run into trouble with compliance. One major rule from the card brands is that a fee cannot be charged to debit card transactions. It is very difficult for a business to meet that requirement without using state-of-the-art technology like the solution we offer. Merchants are also understandably confused with the required card brand registrations and that is why we handle it on behalf of our clients. In fact, we work with many merchants that previously tried to surcharge on their own and received letters from the card brands threatening operational shutdowns and fines. This is more common than business owners realize—there are forms on the card brand websites for consumers to report non-compliant programs and the card brands use secret shoppers regularly as well.

Lastly, on average, how much do you see merchants saving when switching from a traditional surcharge program?

When we think about a typical SMB merchant using this solution, they may be accepting $50,000 per month in payments by card, and 70% of the payments volume is on credit card. If they are paying a typical rate of 2.5%-3% for their credit cards, they should save over $1,000 each month using surcharging. That savings can do a lot for a business: reinvest the savings in marketing, spend it on new technology, hire more employees. The savings can be a real game changer.

Now more than ever before, operational savings for businesses is critical and we thank Michael for helping shine a brighter light on OTM Payments’ CardX Surcharge Program. Our team is diligently working with merchants to implement innovative and meaningful credit card acceptance solutions, like surcharging, that offer several cost-saving and operational advantages. For more information on this program and more, please reach out to us at 732-230-7702 today!