Accepting credit cards typically carries a 2-4% processing fee, paid by the merchant. With zero-cost processing, merchants “pass along” these costs to their consumer. Zero-cost processing can utilize several different methods – surcharging, cash discounting, or non-cash adjustments. Some merchants can offset 100% of their processing fees! Most merchants can expect at least an 80 to 90% reduction in their monthly fees.
Many consumers are familiar with this approach from gas stations which offer two different prices based on whether you pay with cash or card. Cash-discounting and non-cash adjustments are available nationwide, and surcharging is currently legal in 46 states. To find out if your business qualifies for these types of pricing programs, our small business consultants are ready to assist.
Ease of Setup
Cash discounting (as well as non-cash adjustments) allow merchants to give a discount to their customers for paying cash. Modern payment systems and software automatically applies a “cash-discount adjustment” line item to all cash transactions, allowing qualified merchants to access this type of pricing model. When customers pay with cash, that line item stays in place, providing the customer a 4% cash discount. If the customer pays via any other means, the discount is “removed” and they will pay full price.
Surcharging is the addition of a fee to a consumer’s credit card, with the intention of offsetting the processing costs. Surcharging has historically been frowned upon by the card associations, but that has recently changed with the outcome of several recent Supreme Court rulings. While this pricing method is now legal in some states, doing it in compliance with state implementations is where our specialty lies. Things to know:
- You can only surcharge credit cards in particular. You may not add a surcharge to debit or prepaid cards.
- You must post signage that clearly informs your customers prior to the sale taking place.
- You may only surcharge a maximum of 4% of the value of the sale.
- You must register with the card associations to inform them of your intentions.
Working with a provider trained in surcharging is the best way to protect your business. Learn more about the exciting new options available to business owners with one of our small business consultants.