As an eCommerce merchant, you know how important it is to keep an eye on managing your operational costs, and sometimes it’s overwhelming. Shipping fees, a significant expense for online store owners, can quickly chew away at profit margins if not carefully monitored. On May 19, 2025, UPS will introduce a new fee – a 2% “Payment Processing Fee” that will be applied to all invoice charges, replacing a short-lived surchage that only applied to credit card payments. This change is an example of how important it is to stay on top of supplier and service provider fees, questioning increases, and proactively managing relationships to keep costs inline.
The New UPS Payment Processing Fee: What You Need to Know
Effective May 19, 2025, UPS will impose a 2% “Payment Processing Fee” on all invoice charges. Unlike the previously mentioned fee, which applied only to credit card payments, this new fee affects a wider range of payment types, impacting shippers who had negotiated waivers for the credit card payment surcharge. This change could significantly impact high-volume eCommerce retailers. For businesses already dealing with rising shipping costs, this additional 2% could strain budgets, especially for those with tight margins.
The UPS fee is a reminder that suppliers and service providers frequently revise their pricing and fees to offset operational expenses or boost profitability. For eCommerce merchants, these changes can add up quickly, turning everyday expenses into profit-draining headaches. But you can stay ahead of them by following these tips:
- Monitor Fee Announcements: Regularly review communications from carriers like UPS and FedEx to catch fee introductions or increases early. Sometimes we become overwhelmed with emails and these new fee announcements may go unnoticed or buried in the noise, but it’s important to at least skim through them rather than send them right to the trash bin.
- Engage Your UPS Rep. Now.: Contact your UPS representative to express your thoughts on this new fee. Highlight your shipping volume and loyalty to underscore your value as a customer.
- Question New Fees: Don’t just accept fee hikes as being a cost of doing business. Engage your sales reps to understand the rationale behind changes and explore whether waivers or concessions, such as additional discounts to offset the costs, are possible. For the new UPS fee, if you’re one of the shippers who had a credit card surcharge waiver, it’s time to get on the phone and work on getting one for this new fee.
The Importance of Regular Carrier Reviews
eCommerce businesses should make carrier contract reviews a priority, ideally semi-annually or at least annually. Shipping volume and patterns fluctuate, and carriers like UPS and FedEx offer discounts based on these metrics. Failing to review your contract regularly risks leaving savings on the table.
Higher shipping volumes often qualify for better rates. An annual review ensures your discounts reflect your current activity. Comparing UPS and FedEx rates is critical, as their pricing models and surcharges differ. For example, while UPS is introducing the 2% fee, FedEx has not yet announced a similar change. However, the two carriers often mirror each other’s moves, so monitoring FedEx for potential fee introductions is prudent.
Regular reviews also let these carriers know that you’re actively monitoring costs and exploring alternatives, making them more likely to offer competitive terms to retain your business.
We all hate price increases hidden as fees or service charges, so it’s important to be vocal, push back, and request concessions – not only from shipping carriers, but vendors, supplies, and service providers your company deals with. Even if nothing is done to help offset these charges, it shows that as an owner you’re engaged and invested in making sure your bottom line is your top priority.
Scott Sanfilippo began his eCommerce journey in 1994 by co-founding one of the Internet’s first online retailers, TheFerretStore.com, which was acquired by PetCo in 2006. In 2001, he co-founded the eCommerce design and marketing firm Solid Cactus, which was acquired by web.com in 2009. Today, Scott is the General Manager of Your Store Wizards and lives in Delray Beach, FL. Scott can be contacted at scott@yourstorewizards.com.