A Decision that Will Impact Your Bottom Line
Cash use is declining. The Federal Reserve’s 2023 Diary of Consumer Payment Choice found that cash use continues to decrease, with consumers using cash in only 18% of all transactions in 2021. As a result, most consumer-facing businesses, from retailers and restaurants to service providers and entertainment venues, need to accept digital payments to offer the experiences customers want. However, you know the downside. Every time a customer taps a contactless card, uses a mobile wallet, or inserts a card with an EMV chip, you pay a fee. Compliant dual pricing can help you control those costs.
What Is Compliant Dual Pricing?
Dual pricing is the practice of setting different prices for products or services based on various factors. If you are a merchant looking for ways to control payment processing costs, it allows you to offer a discount for customers who pay with cash and charge regular prices for customers who pay with credit cards. In some cases, you can also discount other forms of payment like ACH.
Merchants must also comply with card brand rules. For example, Visa rules include notification of intent to offer dual pricing to the card brand. Also, Visa does not permit adding any amount over the advertised price; Visa states that merchants must give a discount on the posted price. Gas stations are a common example of how to offer dual pricing compliantly. They have signage, often visible from the highway, that clearly displays the credit and cash prices. There is never a question of the amount due based on the consumer’s payment method.
Although you probably won’t have large signage outside your store or restaurant advertising prices, there are requirements you must follow to run a compliant program, including the following:
Door and Point of Sale (POS) Signage
You must inform customers with signage at the door and at the point of sale that the cash discount is available.
Receipt Formatting
The receipt must show the regular price, the discount, and the proper addition of taxes based on local and state laws.
Verbal Notifications
Cashiers and sales associates should consistently offer customers the discount with no discrimination.
The Benefits of Dual Pricing
When you offer customers a cash discount, one of the most significant benefits is decreasing the payment processing fees you pay. However, it can provide your business with additional benefits. For example, budget-conscious consumers will factor price into their buying decisions, and a cash discount can attract new customers and help to build their loyalty. Additionally, dual pricing can give smaller businesses the edge they need to compete with big-box store pricing and enhance customer experiences with their personalized, one-to-one service.
Another advantage is decreasing chargebacks and fraud. When a fraudster pays with a credit card, that person can appeal to their bank to recover the amount based on dissatisfaction or even by saying the charge was not properly authorized. A cash payment is indisputable, and customers need to deal directly with you if they want refunds.
Choose a Provider with Expertise in Dual Pricing
Managing a compliant program manually is extremely time-consuming and error-prone – and probably impractical for your business. Fortunately, you can leverage a solution from a provider with a proven track record of helping merchants implement and manage a compliant program efficiently and accurately.
Paradise POS’s compliant dual pricing program solution automatically displays cash vs. credit purchase totals, allowing you to accept partial cash and card payments. It also formats receipts to meet regulatory requirements. The solution is also compatible with POS systems, mobile POS, pay-at-the-table systems, our online ordering system, and shelf tags to integrate seamlessly with your IT environment.
By choosing Paradise POS, you also gain the advantage of working with our experienced team to help you weigh your options for dual pricing and make the right choices for your business. Ready to learn more? Contact us!