Guide to Credit Card Fees

Square has recently changed their fee structure from a flat 2.75% fee to a 2.6% fee + $0.10 / transaction. This means that the farmers with the smallest average dollar amount for credit card transactions will see the largest increase in Square's fees.   

For example, a farmer whose average credit card transaction is $10 will see a $0.09 per transaction increase while another farmer with an average of $30 will only see an increase of $0.05 per transaction. 

With 89% of consumers stating they prefer to use credit cards rather than cash, there is a need to offer this convenience to your customers. Because of that, many farmers are implementing their own point of sale systems at market.  However, as the number of credit card transactions you accept increases, so will the negative impact you see on your overall net profit as a result of these new fees.  Farmers have come up with various ways to recoup this fee. But what does the law say?

While farmers are not permitted in NY State to add a flat-fee or percentage surcharge to credit card transactions, there are other strategies permitted by law to help reduce the cost of the transaction fees associated with accepting credit cards.

Offer Cash Discounts: Build the cost of your credit card transaction fees into your pricing and then offer a discount when customers choose to use cash rather than credit cards

  • Benefits: Simple, easy to read pricing signs and easy for market staff to calculate at point of sale.
  • Challenges: Customers need to do math to determine lower cash pricing and may associate farm with higher prices. Customers focus on the total price of the transaction and the use of a credit card is discouraged.

Post Two Different Prices: A common practice now at gas stations, posting higher prices for credit card transactions and lower prices for cash transactions.

  • Benefits: Cost savings for customers is communicated immediately. The customer decides which payment method is best for them.
  • Challenges: Two sets of prices may be overwhelming on signage when offering many items and may be difficult for staff to remember at point of sale.

Set A Credit Card Minimum:  While not illegal, this practice is often prohibited by credit card merchant’s terms of agreement and could void your relationship with that provider. 

  • Benefits: Increases your average dollar amount per transaction and in turn reduces the Per Transaction Fee.  Can encourage additional sales if customer needs to meet a threshold to use a card.
  • Challenges: Can exclude potential customers from shopping with you if they are price conscious or your product offerings encourage single item purchases such as fresh baked bread.

To see how credit card fee increases can affect your business, download this Square Fee Increase Calculator tool that FARMroots developed here:

Download the Credit Card Fee Calculator

This tool allows you to test out different marketing strategies. To simply understand your overall increase in fees, Square offers an online tool: https://squareup.com/dashboard/account/pricing

If you have questions or would like additional assistance in developing a strategy to minimize the costs of credit card fees please contact Erik Hassert at ehassert@grownyc.org

 

Every year, GrowNYC holds our Annual Spring Plant Sale in order to provide community groups with affordable perennial and annual flowering plants, herbs, ground covers, and vegetables grown by Greenmarket farmers and sold in wholesale quantities.