Payment Processing

What Should Pharmacies Consider Before Surcharging?

Credit card surcharging may be an option for reducing your pharmacy's spend each month, but here are some important factors to first consider.


Is your pharmacy looking to add surcharges on credit card transactions to recoup some of those pesky fees you're paying each month? If so, you're definitely not alone. Surcharging has become quite an alluring option for many pharmacies lately, and we can certainly understand why. 

But... time to play devil's advocate here. Is it the best option for you? The answer to this will depend on a few different factors, so let's breakdown some things to consider before your pharmacy takes the plunge into surcharging. 

1. Will it be a deal-breaker for your customer base?

One of the most important factors to consider before surcharging on credit transactions is if it will disrupt your customer base to the point of losing business.

While you probably don't have a crystal ball that can show you the future (if you do, though, we totally want to borrow it), you can easily determine how many credit transactions your pharmacy is processing each month by running a report through your POS. If the consensus is that the majority of your customers are consistently paying by credit, then surcharging may cause a bit of a disturbance in the force.

For some, using another form of payment to avoid the surcharge may not be an issue. But for others, it could be a deal-breaker - especially if paying by credit is the only way they're able to make ends meet right now. With increasing competition from online retailers (like the one that shares a name with a very famous rainforest in South America), you may not want to risk giving your shoppers an incentive to take their business elsewhere. 

2. Are you getting the best rate on credit card fees?

High credit transaction volume (and the hefty fees that come with it) is ultimately why many pharmacies have turned to surcharging. But before you start passing those fees along to your customers, there's a very important factor you should first consider: Are your credit card fees too high because you're not getting the best rate? 

We highly recommend doing a rate comparison to ensure you're getting the best deal available. Many processors offer multiple rate types (fixed and interchange-plus are two of the most common) and no one type will be the best fit for every pharmacy. Shopping around with other processors and comparing their various offers is the best way to see if your current rate is competitive, and if you're on the most ideal rate type for your pharmacy.

And, if you're using a bundled POS through your pharmacy management system and are locked-in to one processor, well... it might be time to shop around there, too. 

3. Is your credit card hardware capable of surcharging?

Since most pharmacies are looking to surcharge as a means of lowering their monthly spend, another important consideration is whether or not your current credit card devices are capable of surcharging.

Some requirements will vary by processor, but the main one across the board is that your credit card devices must be EMV-compliant. If they aren't, you'll unfortunately have to fork out a pretty penny to upgrade your machines to an EMV solution. This is not always a viable option when cash flow is tight, so be sure to take this into consideration as you evaluate whether surcharging is the right fit for your pharmacy. 

A few other important considerations.

  • Make sure to verify your state's requirements on surcharging to ensure you're in compliance. (Currently, surcharging is either prohibited or limited in the following states: Connecticut, Maine, Massachusetts, and Oklahoma.) 

  • You must give your processor a minimum of 30 days' notice of your intention to start surcharging, and you must display proper signage disclosing the nature of your surcharge both at the point of sale and the point of entry.

  • A surcharge cannot exceed the rate you pay per transaction and is capped at 3%. It also must be identified separately on a customer's receipt.   

  • Surcharging is only permitted on credit transactions; debit or prepaid transactions cannot be surcharged. 

To learn more about merchant surcharging, check out this helpful page from Visa.

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