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What is dual pricing credit card processing?
Understanding Dual Pricing Credit Card Processing
Credit card processing is an essential part of doing business for most merchants, be it online or brick-and-mortar stores. Perhaps, you’ve heard of dual pricing credit card processing or “no-fees processing” and wondered what it is all about. Well, in simple terms, dual pricing refers to a pricing model where merchants can offer customers two payment options, one for cash paying customers and one for those using a payment card. A “customer assistance fee” is applied to transactions using a payment card, thus giving cash paying customers a discounted price.
Why do merchants use dual pricing credit card processing
There are a couple primary reasons more and more merchants are choosing to implement a dual pricing credit card processing model. The first reason is to help offset the costs associated with accepting payment cards and increase profit margins.
“Many of our clients have been able to cut their cost of accepting payment cards by over 90% once they implement our model. When our clients or prospective clients hear about these savings, they always want to learn more.” Says Tommy Fantom, Northeast Sales Manager for Bay State Merchant Services.
The second most common reason why merchants choose to implement a dual pricing credit card processing program is to reward and increase the amount of their cash customers.
The benefits of dual credit card processing
A dual pricing credit card processing model is a cost-saving strategy for merchants who accept cards as payment. This type of processing allows merchants to add an additional fee for customers who choose to pay with a credit or debit card, allowing them to recoup up to 90% of the merchant processing fees they would normally pay. The “customer assistance fee” is applied either as a percentage of the transaction amount or set flat rate fee, depending on the policy set by the merchant.
This type of pricing helps merchants save money while still offering customers an easy way to checkout with their payment cards. The additional fees can be used to cover the costs associated with accepting and processing card payments which can include interchange, assessment, and processor fees. By implementing dual pricing credit card processing model, these costs are shifted from the business onto the customer, allowing businesses to significantly reduce their overall expenses related to card payments.
Another benefit of dual pricing is that it can help protect businesses from losses that can occur due to fraudulent transactions charged on compromised cards or those made without authorization from the cardholder. By increasing the amount of cash paying customers, and decreasing the amount of payment card transactions, you will also reduce your chances of illegitimate chargebacks and fraudulent transactions.
Understanding dual pricing credit card processing is essential for merchants who rely on credit card transactions to process payments. Dual pricing allows you to offer all payment types, reduce your merchant processing fees, increase the amount of cash paying customers and limit liability and losses. Merchants should, therefore, be aware of the benefits of a dual pricing credit card processing model to determine if it would be a good fit for their business needs.
For more information or a complimentary product demonstration, please contact Bay State Merchant Services today and we will connect you with your local Certified Payment Professional.
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