Consumer spending has changed. Accounting for surcharges can keep the most effective billing more beneficial.
Consumer spending has changed when it comes to subscription-based businesses. Roll back many years, members of a gym would come into the club and pay their monthly dues by cash or check. As the years rolled on, automated clearing house (ACH) became the dominant payment method which was more convenient for the merchant and the consumer.
These days the majority of subscription-based goods and services are purchased via recurring payments using credit cards, whether it be your TV and streaming subscription, utility bills or your gym membership.
But, not all credit cards are created equal. Depending on the card scheme, the merchant will be charged a higher fixed fee or percent per transaction. This is where you can be stung with large surcharge fees over and above normal ACH fees. This deters merchants from offering credit cards as a recurring payment method — or continuous payment authorization — even though consumer demand warrants the offering.
This is where dynamic surcharging comes into play. As a gym operator, you should be able to pass on these fees to the consumer depending on the card scheme they use rather than charging an unfair flat fee per customer; bearing in mind you are generally not permitted to generate revenue from these fees — merely pass on your costs.
Your club management system (CMS) should be able to handle this for you and make the necessary changes as you need to. This should be used in conjunction with automatic billing, so every billing cycle your CMS calculates the percent of the value you are going to be charge members based on the card scheme. Then it sends this value plus the charge to the payment gateway. The surcharge is a separate line item in your system so you can handle this separately for tax purposes. Having this functionality will save you a considerable amount of money while being fair to the end consumer.
Lastly, keep in mind that credit card surcharges are legal in most states, regions, and countries but not all. Furthermore, even when surcharges are legal, the laws governing them can vary. Examples include the maximum surcharge that you are allowed to pass onto members, how to communicate to members, etc. Your CMS should also be flexible enough to adjust to these varying laws for each club.