For the past few years there’s been a battle raging in the credit card industry. What is everyone fighting about? Merchants adding surcharges to customer’s bills.
Many merchants, fed up with the need to pay often sky-high credit card processing fees, decided to simply pass these fees on to their customers as “surcharges,” “credit card processing fees” or “credit card convenience fees.” In response, some states and municipalities passed laws forbidding surcharges, based on the viewpoint that these surcharges hurt consumers.
Credit card issuers also responded with a variety of rules governing who can and cannot add these surcharges, and under what circumstances they can do so. For example, Mastercard only allows select government agencies and educational institutions to charge credit card convenience fees.
PayProTec West Coast’s Cash Discount Program Sidesteps the Battle
To provide a viable option, PayProTec West Coast has been offering merchants a solution since 2019 that has been legal in all 50 states since day one: a Cash Discount Program.
Here’s how the Cash Discount Program works…
• If a customer pays with cash, there are no fees.
• If a customer chooses to use a credit card, a “non-cash fee” that is a percentage of the total purchase amount is added to the bill.
• Either way, you as the merchant are no longer paying the credit card processing fees. Either you have eliminated them by enticing customers to pay with cash, or you have paid for them via the “non-cash fee.”
We’ve seen that the Cash Discount Program is particularly ideal for businesses where the average total sale is $200 or less.
Presentation Is Everything
As with many things that involve regulatory compliance, the big difference between our noncash fee and other company’s surcharges comes down to verbiage.
When a merchant wishes to recoup their credit card processing fees, we advise them to be very mindful of how they explain this to their customers. “We were going to raise prices across the board to cover the high cost of offering credit card payments,” they can say, “but instead we decided to leave cash prices alone and simply impose a non-cash fee for those who use a credit card. We believe that this approach is fair and reasonable, as customers can easily avoid the fee by paying in cash.”
How the fee is presented on the bill is also important. This is not a “surcharge.” It is a “non-cash fee.”
There’s Always a Solution
If you’ve been considering adding a surcharge like this, please talk to us first so you can be sure you are doing it right. And if you’re not already a PayProTec West Coast customer then you owe it to yourself to give us a call. If we cannot save you money on your current credit card processing fees, we’ll pay you $500.00!