In the last 10 years, payment processing has a multitude of new methods that people can use – cash, ACH, web check, bill pay, check, credit card, debit card, mobile, online and crypto-currency. Today’s complex payment technology requires updating existing hardware and adding state of the art software. This can challenge a business owner’s ability and finances to keep their business up to date.
One of the most common concerns facing small retailers like convenience stores, bars, and single location restaurants is the insanely high cost of accepting credit and debit cards. Businesses already operating at the slimmest of margins are challenged by nearly 80% of their customers choosing to pay with electronic payments including credit and debit cards.
No Cost Merchant Services
A recent court ruling and legislation in New York regarding surcharging leaves only 5 smaller states that have not yet allowed surcharging. Merchants who have been shouldering the burden of credit card processing fees can now pass the cost of acceptance on to their customers. Customers who have benefited from reduced rates and growing rewards programs that raise the cost of acceptance. Now our 4 most populous states, New York, California, Florida, and Texas are among the 41 other states that have legislation in place to allow surcharge, this will allow merchants to share or pass on the insane cost of electronic methods. Surcharge fees are not without risk. An alternative is cash discount program, better known as Fee Free, which is legal in all 50 states.
Surcharging vs Fee Free Cash Discount
While surcharge fees are often considered as having a negative impact on sales, Fee Free Cash Discounting has a positive image because merchants can offer to save cash customers money as opposed to the higher cost of credit and debit cards. The 2010 Dodd-Frank Law, in the Durbin Amendment, states that businesses are permitted to offer a discount to customers as an incentive for customers to pay by alternative methods.
With a Fee Free Program, merchants can give customers the option to pay a discounted price when they pay with cash. This eliminates the store wide service charge and reduces costs for both the customer and business owner.
Better for Business, Better for Customers
Most customers understand the program once it is explained to them. IF they understand that up until now, they have been paying the higher cost whether they used a credit or debit card or not they readily accept the concept.Benefits are easy to see for all parties.
Merchants NOT having to pay the INSANELY high cost of card acceptance: Most importantly merchants no longer having to have the HUGE end of the month processing costs or to be at the mercy of semi-annual rate adjustments by Visa, MasterCard, Discover or American Express.
Easy to Understand Program. Consumers can easily understand a discount and appreciate the transparency of the pricing. Employees will see that this will help reduce repricing inventory every time the card companies raise rates.
Leveraging the Savings.Merchants will retain more profit. Used properly this increased profit can be used to bring in new customers.
With so many types of payment options, credit card processing can be a challenge for businesses with smaller budgets. Retailers who are looking to reduce fees that cut into their profit margin can take advantage of cash discount programs while offering customers more affordable pricing.
The author is the Co-Founder of The Ultimate Business Systems, LLC. The team at Ultimate Business Systems works with merchants of all sizes to give them the 3 things all merchants need: 1. More Customers. 2. More Customers, More Often. 3. More Customers, More Often, Spending More Often