MODERN PAYMENT STRATEGIES FOR AUTOMOTIVE DEALERSHIPS Leveraging Surcharging for Efficiency and Profitability The automotive retail landscape is evolving rapidly, and payment acceptance at dealerships is no exception. Dealers across Montana and the nation are adopting new technologies, responding to shifting consumer expectations and managing rising costs associated with credit and debit card acceptance. Among these trends, credit card surcharging has emerged as a practical strategy to control expenses, improve cash flow and maintain compliance. THE CHANGING PAYMENTS LANDSCAPE Dealerships historically relied on straightforward credit and debit card processing. Today, consumers expect flexible payment options, from digital wallets to instant funding. Meanwhile, processing fees continue to climb, impacting profitability. Surcharging, the practice of passing a portion of card processing costs to the customer, is a legal and increasingly common way for dealerships to manage these rising costs. Surcharging is particularly effective because it offsets costs directly without affecting the overall pricing structure. COMPLIANCE MATTERS Surcharging is not just about cost savings — it also requires strict compliance. Under the Truth in Lending Act (TILA) and card-brand rules, dealerships must clearly disclose any surcharges. Key compliance considerations include: • Transparency: Fees must be displayed at the point of sale and included in all invoices and documentation. • Consistency: Surcharges must be applied uniformly across locations, transaction types and payment methods. • Profit: The merchant cannot profit from any transaction. Failure to follow these rules can result in disputes, fines or reputational damage. It is important to note that surcharging is not a DIY project. Attempting to implement a program without professional guidance can lead to errors in fee application, disclosure omissions and compliance violations. Dealers should work with knowledgeable payment partners to ensure proper setup, system configuration and adherence to all regulatory requirements. Clear communication and expert oversight are critical for success. OPERATIONAL AND FINANCIAL BENEFITS Beyond compliance, surcharging impacts cash flow, reconciliation and customer experience. Benefits for dealerships include: • Reduced Processing Costs: Recover a portion of card fees rather than absorbing them. • Simplified Accounting: Transparent fee structures streamline reporting and reconciliation. • Customer Choice: Offering clear options allows customers to make informed decisions about payment methods. Operational alignment is essential. Sales, finance and accounting teams must understand how surcharges interact with invoicing, contracts and customer communications. By Amberly Allen, Dealer Merchant Services 34 MONTANA AUTO DEALER
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