What is Dual Pricing?
Learn about dual pricing, also known as cash discounting, and how it can be employed to offset credit card processing fees in your business, enhancing your overall profitability.
For many small business owners, accepting credit card payments has both benefits and drawbacks. While providing customers with the convenience of paying with their preferred methods is great, the associated credit card processing fees can significantly impact profits.
But what if there was a way to incentivize customers to opt for cash payments and thereby avoid these fees? Well, there is – it’s called dual pricing.
In this article, we explore the concept of dual pricing, common mistakes to avoid, and how you can effectively implement it in your small business. Let’s dive in!
Understanding Dual Pricing:
Dual pricing, or cash discounting, is the practice of charging customers less when they choose to pay with cash rather than a credit card. Widely adopted across various business sectors, this approach is often observed, for example, at gas stations where profit margins on gasoline sales are notoriously tight.
Unlike the heavily regulated surcharging practice, which adds a line item to receipts for credit card transactions (subject to federal and state laws), dual pricing operates as a discount for cash payments. It provides a less-regulated alternative to surcharging.
Cash Discounting Done Right:
To successfully offset processing fees while remaining compliant, follow these guidelines:
- Displayed prices should represent the cost if paid via credit card or include both credit card and cash prices.
- Adjust prices only at the register when customers pay in cash.
- Clearly communicate the discount opportunity through signage.
- Use a POS system supporting dual pricing with separate card and cash prices.
- Partner with a reputable and licensed payment processor like Premium Payment Systems.
- Implementing Dual Pricing with Premium Payment Systems:
Premium Payment Systems offers a seamless implementation of dual pricing through their merchant services. The process involves setting up a white glove service and utilizing payment devices with built-in capabilities to distinguish between credit card and cash payments, allowing for accurate price adjustments.
For businesses interested in dual pricing or cash discounting, Premium Payment Systems can help. Contact us at 317.732.7675 or book a free consultation for more information.
FAQs About Dual Pricing:
For common inquiries about dual pricing, consider the following:
- Cost of Implementation: Premium Payment Systems does not charge additional fees for dual pricing implementation and provides 100% support throughout the process.
- Terminal Compatibility: Most modern credit card terminals and POS systems support dual pricing, with guidance available for older models.
- Determining Prices: Premium Payment Systems’ POS system automatically calculates card and cash prices based on the selected payment method.
- Legal Requirements: Transparency is key; clearly communicate dual pricing, advertise credit card prices, and optionally display cash prices to comply with legal requirements.
In Summary
By following these guidelines and leveraging the services of reputable providers like Premium Payment Systems, businesses can harness dual pricing as a valuable and legal strategy to boost their bottom line.