By: Stephanie Stott at CerTek Software
Both merchants and customers are frustrated with rising payment processing costs. How can you ease this tension, while rewarding the consumer for paying with an alternative method – and saving on fees yourself? With a Cash Discount and Dual Pricing program in place, it’s possible.
The Typical Approach to Covering Payment Processing Fees – and Its Disadvantages
Over the past few years, more and more retailers have been looking for a way to cover the rising costs of accepting credit card payments. One way retailers have been doing so is by adding a fee, called a surcharge, to the customer’s order. While this balances out the credit card fees, the charge usually takes many customers by surprise, as they end up not paying for the same price posted in the store.
Another downside? VISA and other credit card companies are implementing strict regulations. VISA in particular now requires merchants to provide a 30-day notice via a form on their website before implementing any surcharges. Merchants are also often limited in how much that surcharge can be – typically no more than 3% of the total sale. Some payment processing companies also forbid retailers from adding surcharges to debit cards, which leaves merchants without a way to offset those payment processing costs.
An Alternative to Surcharges
With so many restrictions in place, it’s no wonder why business owners are looking for a different approach to covering payment processing fees. One approach that’s gaining favor due to its ease of use and transparency is Cash Discounting with Dual Pricing.
To utilize Cash Discounts, retailers apply a markdown percentage to all items paid for with cash. Since they’re receiving a discount on the sale, this incentivizes customers to use cash tenders instead of their credit or debit card. Dual Pricing is when retailers post the price of items in the store when paid for with a credit or debit card versus the price when paid for with cash. A common example is at gas stations, where the price for paying in cash versus paying with a card is clearly stated.
The easiest way to introduce Cash Discounts and Dual Pricing in your business is to use a point of sale program with these features built-in. Trying to keep track of credit card and cash payments by hand is far too complicated. Plus, being able to list these costs right on the receipt is a great way to keep your customer informed about different payment prices.
CerTek Software, the creator of Artisan POS, has recently implemented Cash Discount and Dual Pricing into their point of sale program. After spending hours researching and meeting with payment processing professionals, they are excited to provide these features in their latest version, 4.8.
Who Should Implement Cash Discounts and Dual Pricing?
While Cash Discounting does seem to have plenty of benefits for retailers, it’s true that it might not be a solution for every business. We have generally found that higher-end establishments have a much harder time implementing surcharges. Although cash discounting helps in this situation, it still might not be right for every store. Fewer people keep cash on-hand than they did years ago, and prefer to reach for their credit card. For customers who do like to shop with cash, however, including this method might make all the difference.
At the end of the day, it’s up to the retailer to decide how they’ll move forward. But with surcharges becoming even trickier to navigate and harder to employ, it might be worth implementing a different solution to tackle credit card fees – without leaving customers in the dark.
About the Author
Stephanie Stott is a Technical Writer and Marketer at CerTek Software. She creates instructional and educational material about point of sale technology, the retail world, and beyond.
