Fee-Based vs. Zero Fee
The rules have changed for
Credit Card processing
- More than 12 million U.S. merchants sued Visa/Mastercard for the right to pass on credit card fees to their customers and in 2013, they won.
- The Durbin Amendment to the Dodd-Frank Act now legally allows U.S. merchants to pass credit card fees on to their customers.
- Many merchants, including those in the government, education, entertainment (online sales) and banking industries, have been passing on these fees to customers for years.
- In March of 2015, Italian Colors Restaurant et al. v. Harris decided favorably for merchants in California – allowing them to pass on credit card fees either as a surcharge or a cash discount program.
- Though the surcharge and the cash discount programs accomplish the same thing — having your customer pay for credit card processing fees — we, at Commerce Consulting, believe that employing a cash discount program creates more customer loyalty.
How it works
Traditional, fee-based processing is what you’ve done for years – essentially paying for all the costs associated with processing credit cards. Now that the rules have changed, you have an exciting new option – one that can save you thousands of dollars and visibly improve your bottom line.
Zero Fee Cash Discount Program
It’s the right time for a Zero Fee Cash Discount Program
- Customers have become accustomed to paying for credit card fees for a long time now. Fees are added when they pay for a parking ticket online, pay their utilities bill using a credit card, cover interchange ATM fees, and even buy a movie or concert ticket online — the fact is that the government, education, entertainment and banking industries have been charging fees for years.
- The fees for credit card processing, up to a 4% charge, are ultimately very reasonable. Adding this fee, at a 4% rate, would change your customer’s bottom line by a mere 40 cents on a $10 purchase — $4 on a $100 purchase. And because transparency with your customers is crucial, we provide the appropriate signage explaining the program for your brick and mortar locations.
- Today’s customers are savvy and they understand that it simply costs more to do business when merchants accept credit cards. Offering the Cash Discount as an option for your customers allows them to choose the convenience of using a credit card or the savings of paying with cash.
- Credit card fees, as every merchant understands, can seriously erode your profit margin. Passing along those fees can help you grow your business and improve your bottom line — all while you offer transparency and a discounted payment option to your customers. It's a win-win.