Credit card processing fees can accumulate quickly and are often one of a dealership’s most significant but overlooked expenses. However, with more buyers becoming cashless and opting for the convenience of credit card payments, what steps can dealers take to ease the burden? In today’s episode of Inside Automotive, Amberly Allen, founder and managing partner of Dealer Merchant Services (DMS), shares how her company helps auto dealers save millions on credit card processing fees.
Credit card companies have banned businesses from charging customers different fees based on payment methods for decades. This changed with the 2010 Durban Amendment, which prohibited surcharges on debit transactions. In 2018, a class-action lawsuit was filed against major credit card companies and banks, alleging anticompetitive practices and hidden fee structures in credit card processing. Only Massachusetts, Connecticut, and Maine currently ban credit card surcharging. At the same time, states like California, Colorado, and New York have specific regulations.
Many dealers attempt to avoid credit card processing fees by encouraging customers to pay with cash or a cash equivalent–such as debit or check–through a cash discount incentive. However, many consumers may still prefer to use credit cards or may not have the funds to pay upfront in cash.
The easiest way to offset credit card processing fees is to employ a surcharge program and pass a portion of the processing fees onto the customer through a transparent surcharge. However, it requires a delicate balance to avoid upsetting customers and some best practices to ensure everything runs smoothly.
Firstly, Allen advises dealers to ensure that accounting departments understand where surcharges must be allocated. Proper allocation is essential not only for accurate bookkeeping but also for maintaining compliance with state regulations. Missteps in this area could lead to costly penalties or customer dissatisfaction.
Secondly, dealerships should regularly audit credit card processing fees to identify overcharging, hidden costs, or increases that banks may try to sneak in. Staying proactive with routine audits ensures unexpected expenses don’t blindside dealers. As Allen points out, even small, unnoticed rate adjustments can add up to thousands of dollars in unnecessary costs over time.
Thirdly, she emphasizes the importance of training all relevant staff—not just the accounting team but also sales and finance departments—to communicate payment options strategically and effectively to customers. It’s critical for staff to explain surcharges clearly, answer any questions customers might have, and alleviate potential frustrations. Allen recommends that dealerships introduce this information early in the process rather than waiting until customers are finalizing paperwork. This transparency helps build trust and reduces friction.
Additionally, Allen suggests that dealerships keep an open line of communication with their merchant services provider. By staying informed about changes in processing rates or regulations, dealerships can avoid surprises and make more informed decisions about their payment strategies.
Taking control of credit card processing fees isn’t just about saving money—it’s about reclaiming resources that can fuel your dealership’s growth and innovation. By implementing a strategic surcharge program, paired with regular audits and strong communication practices, dealerships can offset one of their largest overlooked expenses while preserving customer satisfaction and staying ahead in an increasingly cashless marketplace.
"We recommend, based on our experience, to communicate that credit card price at the time of estimate in person so it’s not a surprise at the end." – Amberly Allen
