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Navigating Credit Card Processing Fees for Small Businesses

A person holding their card and mobile to make a payment
Casey Shull

Running a small or medium-sized business (SMB) comes with its own set of challenges, and handling payments efficiently shouldn't be one of them. For SMBs in sectors where transaction amounts can be substantial, navigating the intricacies of credit card processing fees is crucial. These fees can significantly eat into profits, making it imperative to strike a balance between customer convenience and financial sustainability.

Depending on the type of merchant, most credit card fees run an average of almost 3%, and most of the time, that fee goes toward the bank providing the service. To help offload some of the cost burden, many business owners consider moving the fees to the consumer. If you are considering this route, keep reading.

In this article, we'll explore three common options for handling credit card processing fees, weighing the pros and cons of each.

1. Surcharging

A surcharge is an additional amount that is tacked on to the price of a good or service at the time of purchase. As a business owner, if you accept credit cards, this is called surcharging. Think of it as a type of checkout fee for providing credit card payments.


  • Fees are covered by the customer, relieving the business of the cost burden.


  • Customers generally dislike extra fees, potentially leading to dissatisfaction and loss of business.
  • The separate listing of surcharges on receipts may discourage customers from using credit cards in the future.

2. Absorbing the fees

Another approach is to absorb the processing fees by incorporating them into the overall pricing structure, spreading the cost across all customers, not just credit card users.


  • Customers don't see an additional fee, avoiding negative reactions.
  • Pricing appears simpler and more transparent.
  • Credit card usage is encouraged without penalties.


  • The business bears the processing fees.
  • There is less transparency about the specific fees being charged.

3. Raising prices 

Building the fees into the overall pricing structure by raising prices across the board is a third option business owners can consider. Raising prices may be risky in the beginning, but having a fully transparent pricing structure may prove invaluable in the end.


  • Costs are spread across all customers.
  • No extra fee or surcharge is applied, avoiding customer turn-offs.


  • Higher prices may make the business less competitive.
  • Customers may notice and be unhappy about price increases.

Absorbing the fees: The best solution for SMBs

Among these options, incorporating the processing fees into the overall pricing structure is likely the most favorable solution for small businesses. This strategy provides a balance between customer satisfaction, simplicity, competitiveness, and financial sustainability.

The other options risk damaging the customer experience through surcharges or price hikes. A small uniform increase across all products and services is less likely to stand out or upset customers, making the fees part of the cost of doing business rather than an additional penalty fee.

This approach allows the business to continue accepting credit cards without placing an extra burden on customers, ultimately fostering customer satisfaction and loyalty.

In the complex landscape of small business operations, finding the right strategy for handling credit card processing fees is crucial. By carefully weighing the pros and cons of different options, SMBs can strike a balance between financial sustainability and customer satisfaction, ensuring a positive and lasting relationship with their clientele.

If you want to streamline your payment process even more, Scorpion’s Payment Suite unlocks all the indispensable payment solutions like invoice support, payment request options, and website payment portals. If you’re ready to upgrade your payment process or revitalize your marketing, turn to the experts at Scorpion.