Profit Killer #2: The Hidden Fee That’s Draining Your Profit
Welcome back to the Profit Killer Series — where we unpack the habits, blind spots, and small decisions that quietly eat away at your bottom line.
This time, we’re looking at something almost every small business owner pays but few track closely: credit card processing fees.
The Silent Drain
Every time a client pays you by credit card, a percentage of that payment goes to the processor. Two percent here, three percent there — it doesn’t feel like much in the moment.
But let’s do the math:
$50,000 in annual card payments at 3% = $1,500 lost.
$200,000 in card payments at 3% = $6,000 lost.
$500,000 in card payments at 3% = $15,000 lost.
That’s money that could go toward paying yourself, building savings, hiring support, or investing in growth. Instead, it disappears into someone else’s pocket.
Why Most Owners Absorb It
For many small business owners, card fees feel like the “cost of doing business.”
They don’t want to feel pushy by passing fees along.
They assume clients will be upset.
They simply haven’t looked at how much these fees add up.
But here’s the truth: more and more businesses — from utility companies to online retailers — pass credit card fees along to the customer. Large businesses do it without apology. Why should small businesses be any different?
The Legal Catch
Some states have laws restricting how you can add credit card surcharges. That doesn’t mean you’re stuck.
The easiest workaround is to:
Build fees into your pricing. Set your baseline price with card fees in mind.
Offer a discount for cash or ACH payments. Instead of penalizing card users, you reward customers who pay another way.
For more information, see Consumer Financial Protection Bureau – Payment Systems for updates on how payment practices affect consumers and businesses.
This way, you’re still competitive, transparent, and compliant — while protecting your margins.
The Ripple Effect
When you absorb credit card processing fees, you:
Shrink your profit margins.
Undervalue your work by paying for someone else’s convenience.
Normalize carrying costs that aren’t truly yours to carry.
When you take control of those fees, you:
Strengthen your margins.
Gain predictability in your cash flow.
Model healthy business boundaries for your clients and your industry.
A Better Way
If you’ve never looked closely at processing fees before, here’s a simple action plan:
Know your numbers. Review how much you paid in processing fees last year. (Most processors provide year-end summaries. Visa, for example, publishes their interchange fee rates).
Decide on your approach. Will you absorb, pass through, or build into your pricing?
Communicate clearly. Add language to contracts, invoices, and checkout pages so clients know what to expect.
This isn’t about nickel-and-diming your customers. It’s about protecting your profit so you can continue serving them sustainably.
The Takeaway
Credit card fees may feel small, but left unchecked, they’re a major Profit Killer.
You deserve to keep more of what you earn. Don’t let processing costs quietly drain your business.
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Join me next time for Profit Killer #3: The Silent Cash Flow Drain — Slow and Late Payments.
Missed the start of the series? Catch up here: Profit Killer #1: Are You Hurting Your Profit by Writing Off Personal Expenses?
If you’re ready for someone to help protect your profit and keep your books clear, learn more about how I support small business owners here: Work With Me.
How the CLEAR Method™ Helps
“L” in CLEAR Method™ stands for Learn from Your Numbers—because without insight, data is just noise.
The right tools and support can help you spot trends, make decisions, and regain control.
📘 Download my free guide, “7 Signs You’re Avoiding Your Books,” to start shifting these patterns one tiny, doable step at a time.
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