What’s the difference ? How do you know which one is best for your business ?

You’ve likely heard about the three methods that can help you recoup processing fees: Cash Discount, Dual Pricing, and Surcharging. But how do you know which one is best for your business? Or are you unsure about the differences between them? At Navidor, we’ll guide you through the options in a few simple steps.

Let’s break it down with a quick example:

Imagine you own a store that accepts both credit card and cash payments. Like most businesses, you incur processing fees for credit card transactions, and you’d prefer to pass these fees on to your customers rather than absorbing them yourself. Here’s where these methods come into play:

  1. Surcharging: This is where you add a small fee (up to 3%) to credit card transactions. This fee helps cover your processing costs, but keep in mind, it’s only applicable to credit card payments—not debit cards.
  2. Cash Discount: If you want to encourage customers to pay with cash and increase liquidity, this method allows you to offer a discount for cash payments. It’s an effective way to reduce your reliance on credit cards and minimize processing fees.
  3. Dual Pricing: With this option, you offer two different prices, one for cash payments and another (slightly higher) for card payments. This gives customers the flexibility to choose their preferred payment method while making it clear that card payments come with a small added cost.

In summary, while Surcharging raises the overall cost, Cash Discount and Dual Pricing effectively lower it. This distinction is important because each approach can influence customers’ perception.

Moreover, Cash Discount and Dual Pricing are legally allowed across the entire country, whereas Surcharging is banned in certain states and regulated in others, with different limits on the maximum surcharge rates. Additionally, credit card companies may have their own guidelines regarding surcharging practices

Each of these methods serves the same purpose: encourage customers to pay with cash / recoup processing fees. However, they all require clear disclosure, including store signage, so customers know about their payment options upfront. Also, not all terminals or Point of Sales (POS) support all 3 functionalities.     

Still unsure which method suits your business best? Contact Navidor today, and we’ll help you make the right choice.