Two in three small businesses in the U.S. say they’re likely to close if inflation continues at its current pace, cites a report by Digital in 2023 based on a survey of 1,000 SMB owners. 

The hydra of economic hardship these last three years — from the pandemic to supply-chain limitations to inflationary pressures — have pummeled the SMB sector. For business owners already operating on razor-thin margins, the uptick in interest rates and cratering consumer buying power represent yet another head of the economic beast.

But the call for help has been met with a resounding response. CardX, a Chicago-based fintech company, is looking to equip small businesses with the tools to fight back and retain revenue.

The team specializes in surcharging technology, where merchants are able to recoup costs when a customer pays with a credit card by passing along the credit card processing fee to the cardholder. Built into every transaction is the ability for SMB owners to boost their profit — they just need to know how to use it.

“In the U.S., there’s an arms race between credit card perks and the cost of accepting cards,” explained Austin Kelsch, lead software engineer at CardX. “With more perks, the cost is higher for merchants. Surcharging is a way to combat that.”


How Does Surcharging Work?

CardX’s portal is focused on merchant reporting, which is critical to the surcharging process. Instead of a 3-to-4 percent cost per credit card transaction, there’s an effective cost of zero when offset by a surcharge. The goal is for the report to always reflect the whole amount, easily seen by both CardX and the merchant.


The problem, according to the team, is that not many SMB owners possess the know-how to tap into that extra profit, or they conflate the process with practices that violate compliance such as convenience fees and cash discounting. 

As senior director of sales, Matt Lonk observes such situations in his client-facing duties. “Seeing how our technology can tap into the market and help merchants with their bottom line, I realized our potential as a company.”

Maintaining state-legal compliance and ensuring that the surcharge amount is accurate can be cumbersome, which is where CardX’s platform comes in. 

Laura Toal, director of surcharging operations, believes her founder’s background as a lawyer gives the company an advantageous position. His direct participation in the legal changes around surcharging compliance enables CardX to keep its product updated and Toal’s team in the loop.  


Staying Abreast of Legal Updates

To help the development team navigate the granular laws around surcharging, CEO Jonathan Razi is heavily involved with driving broad-level strategy in the legal arena. In fact, he can often be found at the courthouse. “The rules aren’t widely publicized, so it helps to be close to those changes and implement them quickly into our service,” said Toal.


The end result is a product that unearths a latent source of profit for struggling businesses. No matter the legal or technical complexities under the hood, the CardX team works with one goal in mind: taking the guesswork out of compliant surcharging. This clear mission statement puts the company in an optimal place to lift up one of the central pillars of the economy. 


stock photo of store owner holding out credit card machine for customer to pay



The Secret Ingredient Is Compliance

Software tailored to surcharging isn’t unique to CardX. Its parent company, fintech giant Stax, also dabbled in this form of surcharge fee before acquiring the team. As economic conditions drive merchants to adopt novel ways of offsetting costs, both competitors and consumers are taking note of what Lonk refers to as the “low-hanging fruit.”


Part of the Stax

Stax, the all-in-one payment tech provider, acquired the CardX team back in 2021, a testament to how well the team has flourished in the surcharging space, and the potential of the fintech niche. The CardX team brought its knowledge of compliance and pricing tech to the table; in turn, Stax supported them with resources and marketing know-how to expand the technology’s potential.  


CardX’s compliance policy is an ever-changing pillar of the business model. In order to lower the effective cost that merchants incur without friction, a variety of factors have to be maintained at all times.

“There’s existing public data about cards that can be surcharged,” explained Kelsch. “But a lot of it is outdated, so we spend a lot of time on the service to make sure we’re as compliant as possible, using real-world settlement data and data that comes from card brands themselves.”

On paper, surcharging is a straightforward concept. But beneath the numbers, a matrix of compliance-driven requisites have to fulfill state and industry-specific regulations before the customer walks out the door.

It’s a burdensome process, and one that many companies expect merchants to figure out on their own. “The product takes the guesswork out of understanding the rules, and our onboarding and support teams hand-hold merchants through compliance.” said Toal. 

The team does just that using tooltips to let users know what’s compliant, as well as language built into every payment page so they understand what cost is being passed on and specific options. The technology ensures the appropriate surcharge is leveraged at the point of sale, depending on the payment option. 


The Feedback-Driven Mission to Keep Businesses Afloat

On the sales floor at CardX, the easiest marketing tool at their disposal is SMB owners’ credit card statements.

“The savings are easy to show,” said Lonk. “We can run a comparison to show them exactly what they would have saved — sometimes thousands per month.”

One concern clients often have is keeping customer relationships. And though the surcharge is passed off to the customers, it’s a more palatable option than hidden fees or raised prices. 

“We’re putting power back into the business owners’ hands,” Lonk explained. “And our data shows that given the option between credit card and alternatives like cash or debit, people still want to use the former.”

As education around surcharging improves from CardX’s marketing team picking up relevant leads, the support team gains more insight into client demands. The feedback is then fed to the technical team, who can bolster the platform with additional features, setting up a positive loop that reinforces the business model. 


“We’re putting power back into the business owners’ hands.”

illustration of a person with gold coins and an economic line going up


Spreading the Word of Surcharging 

While CardX’s main area of support is small businesses, the team fine-tunes the versatile platform depending on the client. True to the company’s commitment to streamlining the process, the software caters to businesses of different scales.

There’s the mom-and-pop shop, where the tech needs to be as easy as possible; proprietors of these establishments often lack the time or resources to delve into the product’s complexities. 

Then there are accounts with multiple locations, where a point of contact can streamline visibility into daily reporting, but without the need for customized software.

Enterprise clients, on the other hand, require a more collaborative approach. There’s a specificity in how they integrate with the CardX platform based on their product offerings and how they receive payments. This means CardX and its team has to customize features such as recurring billing and reports to handle the transaction volumes. 

“The overarching support is the same regardless of the size of the business, but each tier has unique integration requirements that we have to be able to adapt our technology to as we scale up.” Toal said.

On the backend, Kelsch and his team take feedback from Toal’s support crew and integrate it into the pipeline for the SMB side of things. The enterprise level requires sitting down with the development team from the client end to lay out integrations and custom features.

The end result often belies the complex interplay of field support and backend maintenance required. For clients, the process will seem all but automatic — which is the goal.

“If it sounds simple, it’s music to our ears,” Kelsch laughed. “Reconciling payments should be simple. As a long-term goal, I see us impacting the market by lowering costs for merchants.”


photo of CardX's products


Great Companies Need Great People. That's Where We Come In.

Recruit With Us