Surcharging Without Fear: Successfully Shifting the Hidden Burden of Credit Card Processing Fees

For decades the standard response to rising operational expenses in veterinary medicine has been simple: raise overall prices across the board. But as national media attention increasingly focuses on the escalating costs of pet care, blanket price increases run the dangerous risk of driving clients away.

To protect your margins without inflating your core medical service fees, it's time to take a hard look at a line item that typical US veterinary hospitals underestimate: credit card processing fees.

Credit card swipe fees aren't standing still: the average Visa and Mastercard rate climbed nearly 4% in a single year, from 2.26% in 2023 to 2.35% in 2024, according to the Merchants Payments Coalition. That means a 4% reduction in revenue from credit card transactions for practices without any benefit¹. In Scratch’s recent webinar on veterinary financial strategy, hospital manager Brian Carlson, MBA, and veterinary accounting expert Mark McGaunn, CPA, CFP^®, outlined why these costs are surging and how a transparent mechanism called surcharging is changing the financial landscape.

The hidden impact of premium reward credit cards

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Credit card fees are quietly rising because of consumer behavior. Pet owners, like most consumers, are increasingly adopting premium reward cards for cashback options and travel-mile credits. What most consumers don't realize is that the clinic pays a significantly higher merchant processing rate to clear those premium cards.

As Brian puts it: "When a client swipes their luxury travel platinum card at checkout, your practice is directly paying a higher fee to fund that client's future vacation." This processing fee eats away at your bottom line and severely harms your practice valuation. Because practice valuations are based on a multiple of earnings, saving $24,000 in credit card fees can instantly inject an estimated $120,000 in equity value back into your business under a standard 5x valuation benchmark.

Surcharging: The new "biohazard waste" line item

To combat rising processing fees, more and more practices are implementing credit card surcharging. In fact, internal Scratch data shows that over 50% of new Scratch Checkout™ customers implemented credit card surcharging to actively offset rising merchant fees².

Surcharging functions by automatically adding a small compliance fee (typically around 3%) exclusively to credit card transactions. Debit card transactions, cash, checks, and payment plans are completely exempt from the fee.

Brian draws a powerful historical parallel between surcharging and old veterinary billing practices:

"Years ago, clinics didn't charge a separate biohazard waste or sharps disposal fee; they simply lumped that cost into the general exam or vaccine prices, which drove up basic service fees across the board. Eventually, the industry shifted to a transparent, separate line item for biohazard waste. Credit card surcharging is the new biohazard fee. It brings complete transparency to the distinct cost of processing plastic, rather than hiding it inside medical care."

The crucial difference is that while a client cannot choose to skip a biohazard fee, surcharging puts the financial power back in the client's hands. If they wish to avoid the 3% fee, they can freely choose to swipe a debit card or write a check. This levels the playing field for cash and debit payers who have historically been forced to unfairly subsidize the rewards cards of other clients.

Will surcharging alienate your clients?

The number one anxiety holding veterinary practice managers back from surcharging is fear of client backlash. However, real-world consumer behavior data completely debunks this fear.

When surcharging is clearly disclosed with proper clinic signage, the vast majority of clients adjust seamlessly:

• 71% of credit card users choose to pay exactly as usual and willingly absorb the small surcharge to keep racking up their personal card points.
• 22% of clients seamlessly shift their behavior, choosing to pay with a standard debit card to completely avoid the fee.‍
• 6% of clients switch to cash or check
• ‍Less than 1% of surcharging transactions have any measurable impact on client retention.

Processing fees are already normalized across society—consumers see them every time they register a car at the DMV, buy concert tickets, or pay medical bills online. Surcharging is currently legal and operational in 47 states (excluding Connecticut, Massachusetts, Maine and Puerto Rico).

By leading with confidence, communicating transparently, and partnering with a veterinary-specific payment platform like Scratch Checkout, you can successfully reclaim thousands of dollars in lost margin and safely reinvest those funds directly back into your team's wages and advanced hospital equipment.

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