Credit Card Fees: Why Your Self-Care Biz Should Stop Leaving Money on the Table

Industry • Perspective

Credit Card Fees: Why Your Self-Care Biz Should Stop Leaving Money on the Table

Your business deserves to keep the revenue it makes — and your clients agree

Does it feel like client transactions at your self-care business are giving you less economic headroom than they used to? You aren’t imagining things: Credit card swipe fees have more than doubled in the last decade, and they’re cutting into many small businesses’ annual revenue by thousands of dollars or more.

Banks and credit card networks are taking a larger portion of businesses’ bottom lines than ever before. However, simply incentivizing cash transactions through discounts or bonuses isn’t a realistic solution to this problem. Not when four in ten U.S. consumers don’t use cash transactions at all in a typical week, a proportion that’s only set to grow as contactless payments become even more convenient and prevalent.

So what can you do as a self-care business owner to preserve your profit? Share credit card fees with your clients in a way that’s transparent, manageable, and already well-understood among clients across industries. But before we get into that, let’s break down exactly how credit cards can be such a sneaky drain on your business when you face them alone.

Credit card processing fees chip away at your bottom line

Every time a customer makes a transaction using a credit card at your business, the issuing bank and the credit card network take a percentage off the top. The total charge can be broken down into interchange fees, assessment fees, payment processor fees, and beyond. While these fees rise and fall based on the type of transaction and fraud risk, they typically average out somewhere between 2.5% and 3.6% of the total transaction value, with an additional flat charge of 10 to 30 cents on top of that.

It may not sound like all that much on its own, but it can add up fast for successful self-care businesses. That flat fee can be especially onerous for businesses with a higher volume of lower-cost services, such as barbershops or nail salons. But they’re a difficult reality to contend with no matter what services are most common for your business.

Hi, skin, a high-quality skin care business with locations throughout Arizona and Texas, once spent at least $58,000 per year on card processing fees. Hi, skin was still growing fast at the time, but these fees presented an unwelcome limitation to its expansion. After becoming a Boulevard customer in April 2021, Director of Operations Cali Everts asked if the business could create a way to pass credit card fees onto clients automatically.

The resulting feature was Boulevard Offset, one of the first programs of its kind for self-care POS software. However, it was hardly a foreign concept for the many clients who were already used to paying credit card surcharges with their other favorite businesses.

Clients are comfortable paying a little extra for convenience

It’s 9 o’clock at night and you want a burrito. You could rush out the door to your car or the bus stop, make it to the taqueria right before they close, put in your order, and enjoy the deliciousness. Or you could pull up Uber Eats or DoorDash on your phone (and you’ve already put on your sweatpants for the night, sooooo), pay a few upcharges and fees, and enjoy.

Modern consumers are accustomed to service fees: A 2022 study found that 85% of cardholders who face credit card surcharges agree to pay them on the spot. Furthermore, only about a fifth of the cardholders surveyed said being asked to pay a surcharge would affect their satisfaction with a business.

Before Boulevard Offset went live at Hi, skin, the business posted signage and talked to clients to explain what the new credit card fee was, why it was essential, and when it would begin. Clients got it. And Hi, skin got a substantial uptick in its profit margin that ensured its continued rapid growth.

In short, when you explain what credit card fees in aggregate mean for your business, and when you give clients a chance to help lessen their impact with a small extra charge, they’re typically happy to do it. After all, it’s better for them than raising your menu prices across the board. Inflation fatigue is real, and clients will be happier to have an informed choice regarding how they pay rather than price hikes on the services they rely on to look and feel their best. Plus, your business’ growth means that you can continue to deliver the premium, high-quality client experience they expect.

Boulevard Offset helps build more sustainable self-care businesses

When Cali suggested we build a credit card fee feature into Boulevard Payments, we knew it was an idea we should pursue right away. Now we’re proud to offer it to all of our customers where it’s legal to do so. Boulevard Offset is currently not available in Connecticut, Maine, Massachusetts, or Oklahoma. Here’s how it works.

Boulevard Offset is an optional program for customers who use Boulevard Payments to handle their POS transactions. It allows you to charge a 3% fee on all credit card payments as part of the order total, and business’ credit card processing costs are effectively reduced to 1% of the products and services you sell. Note that Boulevard Offset does not work on debit cards, which can’t be surcharged due to regulations and network rules.

Transparency is key when implementing a surcharge, and there are multiple points throughout the checkout process where the credit fee is displayed to clients. Boulevard also enables their customers with signage templates and a handy FAQ so you can start discussing the program early with staff and clients. If a client wants to avoid the surcharge, they can decide to pay through another method instead.

Boulevard Offset is an opt-in program. We will never implement it without your go-ahead. That said, we believe it’s an effective way to build more sustainable self-care companies, minimizing the impact of unpredictable and opaque charges on your bottom line. It's time for self-care business owners to stop leaving money on the table and start reaping the rewards of a smart pricing strategy.

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