Legal Ruling in Kansas on Compliant Surcharging Gives Businesses Massive Cost Savings Opportunity

With a recent ruling regarding surcharging in Kansas, merchants are now able to legally surcharge credit card transactions. This gives merchants of all types the opportunity to save a massive amount of money on their payment processing while allowing certain industries that did not take credit cards before, to give their customers the ability to pay by card without footing the bill of the transaction.

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Credit card processing fees can be one of the largest monthly expenses for a business. With the increased use of high rate rewards/skymile cards by consumers, the cost of processing credit cards continues to rise. This combined with the economic effects of the pandemic have driven merchants to adopt surcharging across the country where legal. Merchants who have implemented credit card surcharging have seen very little push back from their client base, especially since the pandemic started. This has ultimately led to a massive cost savings for businesses in order to invest money in other parts of their business. With the decision in Kansas, there are only three remaining states that prohibit surcharging.

What is credit card surcharging?

Credit card surcharging is when a merchant charges an additional fee to a consumer for the use of a credit card that is not greater than their cost of acceptance. Merchants are not able to surcharge debit cards and ultimately all merchants in states that allow surcharging are required to follow strict Card brand rules that dictate exactly how a merchant is able to compliantly surcharge.

Why is surcharging now legal in the state of Kansas?

The law prohibiting surcharging was introduced in Kansas in 1986. K.S.A. 16a-2-403 states the following, “16a-2-403.Prohibiting surcharge on credit or debit cards. No seller or lessor in any sales or lease transaction or any credit or debit card issuer may impose a surcharge on a card holder who elects to use a credit or debit card in lieu of payment by cash, check or similar means. A surcharge is any additional amount imposed at the time of the sales or lease transaction by the merchant, seller or lessor that increases the charge to the buyer or lessee for the privilege of using a credit or debit card.”  This was ultimately challenged in the case of CardX vs. Schmidt where the plaintiff argued that the law went against a merchant’s first amendment right regarding how they are able to communicate price differences. This argument had legal precedent due to similar laws being overturned in California, New York, and Florida. Federal Judge John W. Broomes settled in the plaintiffs favor saying, “If allowed to pass on the cost of credit card acceptance, such businesses are able to offer their goods and services to the significant portion of the consumer base that prefers or needs to pay with credit. In these industries and across the economy, credit card surcharges expand consumer choice”, issuing his decision on February 2nd 2021.

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How will surcharging affect business and consumers in Kansas?

There are several ways this ruling will affect consumers and businesses. Although at first glance, consumers may react as though there is no benefit, just an additional fee, it will ultimately lead to more transparent pricing. Typically merchants have had to calculate the cost of credit card processing into the cost of their goods and services. This puts the consumer who wishes to use cash in a situation where they are having to pay a higher price for a service they did not use. With that, credit card processing fees continue to go up as more and more consumers are using high rate rewards cards when paying with credit cards, making it harder for merchants to keep up with price increases associated with their rising costs. By allowing merchants to surcharge credit card transactions in a compliant manner, the merchant will be able to more accurately price their products and services. Merchants who did not accept credit cards due to it’s high cost and their slim margins (B2B wholesale, professional services, construction services) will now be able to offer consumers more payment flexibility while keeping their costs as low as possible. 

Although some industries may be slow to adopt, surcharging is here to stay and can be a key tool in lowering costs. Merchants in Kansas should consider if surcharging is the right choice for them. It is extremely important to make sure that when implementing a surcharging program that you work with a reputable service provider as their are many who sell “semi-compliant” solutions that may claim to offer higher costs saving, but in the end may get your business in hot water.

Solvit’s 100% compliant surcharging program can be utilized in our Smart Terminal, Point of Sale System, eCommerce platform, and invoicing service, giving your business the functionality you need with the cost savings of a compliant surcharging program.

Solvit Success Stories: Online Ordering Systems for Restaurants

Few industries have been hit as hard by the pandemic as the restaurant industry. With in-person dining options limited or entirely suspended, many restaurant owners have implemented restaurant online ordering systems. For Eden East, the solution was to temporarily pivot from their community dining farm to table business to selling fresh vegetable and seasonal herbs on their eCommerce website, giving their regular customers a way to safely support their favorite local restaurant and a steady revenue stream to help keep them afloat during the transitional period.

eCommerce for Restaurants

In the past several years, the purpose of eCommerce has been completely reimagined. Restaurant owners have gotten creative, and asked the simple question, “what if eCommerce could serve as a restaurant online ordering system?” The antiquated systems of old required extraordinarily complex configurations to enable timely kitchen order printing, but modern eCommerce platforms like Solvit eCommerce can easily be configured to connect with our kitchen display systems. Its a fast, streamlined solution for restaurants that are looking to add custom delivery services through their own platform.

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Product Upsells and Gift Cards for Restaurant eCommerce

Three of the best things that you can do as an eCommerce business owner is to leverage product add-ons, gift cards, and abandoned cart emails. Eden East offers at least two out of three of these services, allowing them to do things like offer “Dinner for Two” gift options and to add unique add-ons like Rose Honey. This allows them to maximize each order placed on the site, which is brilliantly effective way to make sure that you are not selling yourself short. Kudos to Eden East!

What about when things go back to “normal?”

At Solvit, we believe that “normal” is an ever-changing condition, especially as it pertains to technology and global markets. We understand the state of flux that we are all in, and we anticipate many of these changes finding a permanent home in our economy. First among those is the importance of free eCommerce websites, online payments, and specifically – online ordering systems for restaurants – are at the top of this list. The businesses that succeed in post-COVID America will likely be those that stayed creative during the pandemic, the businesses that found new revenue streams through eCommerce, safety for employees with self-order kiosks, convenience through digital invoice software, reduced expenses with compliant surcharging, and streamlined checkout with smart payment terminals.

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We have been inspired by these Solvit Success Stories, and we hope they inspire you as well. Dig deep friends, together we will come through the other side of this stronger than ever! If you are curious about how business modernization can help keep your business not only afloat but growing, get in touch with Solvit – your business modernization team.