Surcharging: Is it the Best Option?

If you’ve ever thought about adding surcharges to your patients’ credit card transactions in order to recoup some of the fees you’re paying each month, you’re not alone. In fact, it’s an option many pharmacies have pondered, and with good reason. But before you take the leap, is it really the best option for your pharmacy? Here are some things to consider.

It might disrupt your customer base.

Adding a surcharge can be risky. You don’t want to upset customers and lose business. One way to determine the amount of credit transactions your pharmacy is processing each month is by running a report through your point-of-sale (POC) system. If it shows the majority of your customers pay by credit consistently, then surcharging probably isn’t a good idea and could create an uproar.

While some will be okay with paying another way, others may veto the idea and take their business somewhere else.

Check your rate on credit card fees.

Before you add a surcharge onto your customers’ credit card transactions, stop and consider that your credit card fees may be high because you’re not getting the best rate. Do a rate comparison and find out if you’re getting the best available rate. Many processors offer more than one rate type, and while one may be perfect for the pharmacy up the road, it may not be the right one for yours. That’s why shopping around for other processors is important. Compare all of the many offers to find out if your current rate is competitive and if you’re on the most ideal rate type for your pharmacy.

Do you have the right hardware to surcharge?

If you are wanting to surcharge in order to lower how much you spend each month, be sure your current credit card hardware is capable of surcharging. Requirements vary by processor, however, the main requirement is that your credit card devices are Europay, Mastercard, and Visa (EMV) compliant. If not, you’ll have to fork over a lot of money to upgrade your machines to an EMV system. And if cash flow is tight, it’s not a viable option.

If you decide to go the surcharge route, you’ll need to:

  • Verify your state’s requirements on surcharging to be sure you’re in compliance.
  • Give your processor a minimum of 30 days’ notice of your intention to start surcharging.
  • Display proper signage disclosing the nature of your surcharge both at point of sale and point of entry.
  • Be sure surcharges don’t exceed the rate you pay per transaction. It’s capped at 3% and has to be identified separately on a customer’s receipt.
  • Remember: you can only surcharge on credit transactions, not on debit or prepaid transactions.

You can minimize the amount of money you spend in card processing fees in other ways, too. Have you considered offering a cash discount? It’s a more positive approach than charging a fee. Plus, customers are used to seeing this at convenience stores and gas stations.

Be honest with your pharmacy customers about credit card processing fees. A lot of your customers don’t really understand the impact their credit card has on your business. If they knew, then they might be happy paying a different way.

A Member-Owned Company Serving Independent Pharmacies

PBA Health is dedicated to helping independent pharmacies reach their full potential on the buy-side of their business. Founded and run by pharmacists, PBA Health serves independent pharmacies with group purchasing services, wholesaler contract negotiations, proprietary purchasing tools, and more.

An HDA member, PBA Health operates its own NABP-accredited warehouse with more than 6,000 SKUs, including brands, generics, narcotics CII-CV, cold-storage products, and over-the-counter (OTC) products — offering the lowest prices in the secondary market.

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