Thriving Stylist Podcast - Episode #398 Summary

Title: Should We Start Passing Along Processing Fees To Our Clients?
Host: Britt Seva
Release Date: August 11, 2025

Introduction to the Topic

In Episode #398 of the Thriving Stylist Podcast, host Britt Seva delves into the contentious issue of whether salon owners and hair stylists should begin passing credit card processing fees onto their clients. Sparked by a listener's inquiry, Britt explores the legal, financial, and customer satisfaction aspects of implementing such a surcharge.

Listener's Question and Background [00:00 - 04:30]

The episode begins with Britt sharing a thoughtful message from a listener named Hannah Elizabeth K., who has been thriving since 2019. Hannah expresses appreciation for the podcast, stating:

"When I found you, it was like you were speaking my language for the first time. I was hearing someone speak the values that were in my heart. It was validating and I learned how to turn them into action."
[00:05]

Hannah raises a pertinent question about the growing trend of charging clients processing fees:

"Consumer behavior is changing about charging clients the processing fee. I know this is a hot-button topic, but it's also becoming the norm."
[00:50]

She seeks Britt’s insight on whether passing these fees to clients is a viable business strategy without negatively impacting tips or client retention.

Understanding Processing Fees [04:31 - 15:00]

Britt begins by clarifying what processing fees entail:

"When you swipe a credit card, there is a percentage that goes to the credit card processor. So it's anywhere from usually 2 point something percent to 3 point something percent."
[04:40]

She emphasizes the significance of these fees, especially for high-revenue salons:

"If you ran $100,000 in service transactions as a business owner, you're going to pay, you know, call it $2,500 in credit card processing fees."
[06:10]

Britt underscores the cumulative impact of these fees on a salon's profitability.

Legal Landscape of Surcharging [15:01 - 25:30]

Transitioning to the legalities, Britt outlines the varying state laws regarding surcharging:

• States Where Surcharging is Illegal: Connecticut, Maine, Massachusetts, Oklahoma, and Puerto Rico.

• Regulated States:

  • California & Kansas: Mandate incorporating processing fees into the listed price rather than as a separate charge.

    "It's just like if your tint was once a hundred dollars and you want to recoup that 3%, it's now going to be $103."
    [19:45]

  • New York, New Jersey, Nevada, South Dakota: Limit surcharges to the merchant's actual processing costs.

  • Illinois, Colorado, Montana: Impose caps on surcharge percentages.

Britt also notes the policies of credit card companies:

"Visa only allows for a 3% of the total transaction surcharge to be passed along to the customer. With MasterCard, it's up to 4%."
[22:15]

This highlights the complexities salons must navigate when considering surcharging.

Business Implications and Consumer Reactions [25:31 - 35:00]

Britt presents data from a WalletHub survey to shed light on consumer sentiments:

• 87% feel nickel-and-dimed by extra credit card fees.
• 66% would avoid using a credit card if charged a fee.
• 60% deem it unfair for merchants to pass processing fees to customers.

She reflects personally on the irritation these fees cause, even if they don't directly influence her spending habits. Britt questions the long-term impact on client loyalty and satisfaction.

Strategic Considerations for Salons [35:01 - 45:00]

Delving deeper, Britt advises salon owners to weigh the benefits against potential drawbacks:

• Client Perception: While immediate client loss might not be evident, the overarching sentiment is generally negative.

• Operational Changes: Implementing surcharges requires:

  • Clear disclosure before transaction completion.
  • Separate line items on receipts.
  • Signage detailing the surcharge policy.

• Alternative Strategies:

  • Cash Discounts: Offering a reduced rate for cash payments instead of adding a surcharge.

    "If I was given the option to pay $103 for something on my card or $100 cash, if I had the hundred in cash, I might just give it to you."
    [42:10]

Britt shares a cautionary tale of a stylist who integrated gratuity into service charges and later struggled to reverse the decision, emphasizing the importance of commitment when altering payment structures.

Financial Transparency and Business Growth [45:01 - 55:30]

Britt explores the implications of shifting to cash-heavy transactions, including:

• Tax Compliance: Ensuring all cash transactions are accurately reported for tax purposes.

• Revenue Tracking: Maintaining clear records to support business growth and wealth creation.

She advocates for focusing on increasing revenue as a more sustainable solution than offloading processing fees:

"Instead of worrying about the 3% credit card transaction fee, for me, the game I like to play is how do we increase your revenue by 10% this year?"
[50:25]

Conclusion and Final Thoughts [55:31 - End]

Wrapping up, Britt reiterates the complexity of implementing processing fee surcharges:

"It's not a light decision. I think when you're looking at it at a glance, it's easy to be like, oh, yeah, 3%. Have the clients cover it. It's not so simple."
[54:45]

She encourages salon owners to deeply consider their unique business models, client base, and long-term goals before making such a change. Britt emphasizes that while surcharging may offer short-term financial relief, it may not align with building lasting client relationships and a thriving business.

Key Takeaways

1. Legal Variations: Surcharging laws differ significantly across states, necessitating thorough research before implementation.
2. Consumer Sentiment: A majority of consumers view additional processing fees negatively, potentially impacting client loyalty.
3. Alternative Approaches: Incorporating fees into service prices or offering cash discounts may be more palatable strategies.
4. Focus on Revenue Growth: Prioritizing strategies that enhance overall revenue may provide more sustainable financial benefits than passing on processing fees.

Britt Seva concludes the episode by empowering salon owners to make informed decisions that align with their business values and financial goals, emphasizing the importance of transparency and strategic planning in navigating the evolving landscape of the beauty industry.