By Rob Eberly, VP, Paymentus
Credit card usage for bill payments surged by 38% in 2023. While we would count any bill paid as a good thing, credit card payments are unique in that processing fees eat away at revenue and can cost billers millions of dollars each year.
Time and again we have seen the impact of credit card processing fees go well beyond a biller’s bottom line. Whether it’s limiting innovation or straining the ability to hire and retain staff, the true cost of fees is almost immeasurable.
Credit Card Fees Are Everywhere
We, as consumers, all pay fees. One of the most glaring examples of an everyday fee is one that is promoted out in the open—gas station fees. Right on those big digital signs you’ll see “cash price” and “credit price”. It’s not that the gas station is taking advantage of what it feels is a captive audience (credit card users). It’s that the gas station runs on thin margins and cannot spare this loss in revenue.
Sound familiar?
My point is that consumers have accepted credit card fees as a part of life. In fact, a 2024 PYMNTS.com survey showed that 85% of cardholders willingly accept surcharges or user fees.
OF CARDHOLDERS ACCEPT USER FEES
When was the last time you paid for your gas using cash? When was the last time you entered your card information and opted for a different payment method once a convenience fee was added? Fees are everywhere, and today’s consumer is okay with that.
Solving the Credit Card Processing Fee Challenge
How has Paymentus saved our clients more than a collective $1 billion on payment processing fees? The answer is quite simple: we have seamlessly moved clients from an absorbed-fee model to a user-fee model.
The crux of this challenge is not just in implementing a fee but also ensuring payments and digital payment usage don’t drop off as a result. After all, what good is recapturing revenue if it’s immediately going to be lost to late payments and paper usage?
To help our clients maximize their savings and increase digital payment adoption, Paymentus has developed what we call our five pillars of superior bottom line support:
I will discuss each of these at length in upcoming Bill Better® articles, but these five pillars have proven essential in helping our clients save more than $1 billion on payment processing fees. This is the (not so) secret sauce that helps to achieve the twin goals of driving savings without impacting adoption.
Fixing the Biggest Leak In Your Bottom Line
When FDR famously said that the only thing we have to fear is fear itself, he may as well have been talking about migrating to a user-fee model. But it’s far from scary and in many ways, we have seen our clients energized by the prospect of adding thousands (sometimes millions) back into their budgets on a monthly basis.
The first step is to calculate your savings opportunity. Simply take your average payment processing fee cost per month and multiply it by 12 to see what your organization stands to gain. If you like what you see, it’s time to consider your options. Remember, your customers love using their cards and a small fee they pay in every other walk of life won’t change that. And as always, Paymentus stands ready to give your customers the payment experience they’ll love.
Interested in reviewing your savings plan? Contact me today for an exclusive consultation. You can also learn more about this unique opportunity by visiting www.paymentus.com/reduced-cost-to-serve/.
1 Datos Insights, How Americans Pay Their Bills, 2023 Report
