help_outline What if I have a terminal lease?
Terminal leases often have incredibly high rates relative to the underlying piece of equipment you are “renting.” For instance, it’s not uncommon to see a lease on a desktop terminal for $79 per month for 5 years. The retail price of the hardware is often only $300-$400 and the cost of that terminal will be $4,740 by the time it’s all paid off!
So, when you know the truth it’s disgusting to make that $79 payment, but if we can save you $300 or maybe even $3,000 per month in processing fees, it becomes much easier to stomach. Likely better to continue making the payment and set a calendar event to cancel as soon as possible.
help_outline What if I am under contract?
Similar to the previous FAQ on terminal leasing, sometimes cancellation fees can be insultingly high but often you can wait a month after switching before the fee catches up with you, and by then you will have saved significantly on the new program. In the long run you will be far better off to switch and start saving as soon as possible.
help_outline Will a Cash Discount Program totally eliminate my monthly card processing fees?
Most merchants will see some small fees on their bill as it’s hard to get every transaction to zero out completely based on all the variances in the Interchange billing structure. That said, we typically see the monthly fees drop down below $50 per month, even if previously the fees had been several hundred or even several thousand dollars!
We will set you up with a daily discount billing plan. That means on a $25 transaction, you collect 4% for a total sale amount of $26. You will receive $25 in your account the following day and the 4% fee will have been subtracted out. At the end of the month, you’ll have the net cost of your goods and services in your bank account with minimal processing fees.
help_outline Couldn’t the credit card companies not allow a program like this in the future?
Yes, while we are currently operating under Card Brand guidelines and Loyalty Cards as well, there is nothing preventing them from making changes to their own regulations at some point in the future. The program has been in use in the US for the past 4 years with no indications that either Visa or Mastercard will make changes to prevent it, but it is always a possibility. If the program were to be disallowed, we would simply switch you to our low cost, Interchange Plus program where you’d pay some of the lowest rates possible within the normal card processing framework.
help_outline Won’t my customers be upset by this fee and want to go elsewhere?
While nobody wants to pay additional fees, more and more consumers are starting to realize just how expensive it’s been for merchants to accept credit cards. By charging a 4% fee on a sales transaction, that’s a small price for customers to pay for the goods and services you provide. And if paying that fee or Implementing the Cash Discount Program allows you to stay in business and keep your overall costs lower, it’s a small price to pay.
In fact, surveys have shown that over 80% of respondents stated they wouldn’t think twice about paying that amount (only $1.00 on a $25.00 transaction) for the convenience of using their credit card rather than carrying cash. And we all know that fewer and fewer of us are carrying cash these days…and everyone loves the rewards associated with their credit cards.
In fact, recent industry surveys of customers have indicated that 99.20% of those surveyed would prefer to pay by credit card and have no qualms about missing out on the discount.
Additionally, we’ve all become accustomed to paying $2-4 when we use an ATM and this cash discount fee is actually cheaper than the ATM fee for most transactions.
If you explain that the Cash Discount program is a way for you to keep providing quality goods and services without increasing your overall prices, most consumers have indicated they understand and are fine with it. And again, a 4% fee on an individual transaction generally has a very small impact to the consumer, but for you, the merchant, your savings are significant.
help_outline What if I don’t like the Cash Discount Program after a few days, weeks, or months?
If for any reason you wish to discontinue the Cash Discount Program, we will immediately change you back to traditional Interchange Pricing. You will still save a lot of money on your credit card fees by utilizing the National Processing low rate program, which saves business owners on average 72% over the fees your previous processor was charging.
help_outline Why does National Processing offer the Cash Discount Program?
Since our inception, National Processing has been an advocate acting in the best interest of our merchants, saving our clients millions of dollars each year. The Cash Discount Program creates a way to save our clients even more each month.
help_outline Is this the same thing as a Surcharge? I hear that’s only allowed in certain states.
No, the Cash Discount Program is actually very different being fully approved by Visa and MasterCard. The 2013 ruling against the card networks resulted in merchants now being able to implement a surcharge. The surcharge is allowed in all but 10 states (California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas, plus the U.S. territory of Puerto Rico).
Those states claim that a surcharge is not fair to consumers. It appears inconsistent that it’s not fair for consumers to pay for the cost merchants incur to provide goods and services while it’s been perfectly OK for merchants to pay for the rewards programs associated with the credit cards that consumers use.
You understand that when you see an ad on TV, in print, or hear on the radio that touts the benefits and rewards associated with a particular credit card, those benefits come in the form of higher processing costs that merchants pay to be able to accept those cards. The increase in fees is not borne by the card issuing banks or credit card processors – it’s paid for by you the merchant!
The Surcharge carries with it several stipulations:
- Only credit cards may be surcharged – no debit cards
- Signage must be posted for at least 30 days prior to implementing a surcharge alerting your clientele
- There is a 4% maximum that can be imposed
- Surcharging is only allowed in states where the program has not been excluded
With the Cash Discount program, these limitations are not in place, as you are not implementing an additional fee for accepting a credit card, you are providing a discount for those who pay with cash. This is a clear distinction, and one that Visa, MasterCard, and the courts have agreed upon:
In a Cash Discount program, all prices in your store carry a 4% Service Charge. The posted prices are your cash price. Those who pay with cash do not have to pay this fee. This is not a situation where those who pay with a credit card pay more.
As Mitchell Katz, spokesman for the Federal Trade Commission, said in May of 2011: The Dodd-Frank law prohibits a payment card network such as Visa “from inhibiting the ability of anyone to provide a discount for payment by cash, checks, debit cards, or credit cards,” said Katz. “a cash discount is NOT illegal.” Clearly, Visa, MasterCard, and the courts allow for this distinction.
Here’s the verbiage specific to both Visa and MasterCard Rules and Regulations:
From MasterCard Rules 15 November 2016
5.11.2 Charges to Cardholders A Merchant must not directly or indirectly require any Cardholder to pay a surcharge or any part of any Merchant discount or any contemporaneous finance charge in connection with a Transaction.
A Merchant may provide a discount to its customers for cash payments.
A Merchant is permitted to charge a fee (such as a bona fide commission, postage, expedited service or convenience fees, and the like) if the fee is imposed on all like transactions regardless of the form of payment used, or as the Corporation has expressly permitted in writing.
help_outline Is this a new program?
No, in fact it’s been around for decades in Europe and is used across the US in gas stations where a cash discount is offered at the pump. Gas stations have been using this program in the US for over 15 years. Many national, state and local governments including the DMV, Secretary of State, Post Offices, Schools, Courts, and the IRS implement a Service Fee.
help_outline Why don’t I just implement the program myself?
When a fee is incorrectly applied to a transaction, any additional fee charged to those consumers using a credit card is labeled a Surcharge and that is expressly forbidden by Visa, Mastercard, and the processing provider without taking very specific steps (see previous question)
The way around this process is to allow us to automate a Cash Discount Program for you which is different than the Surcharge. In the Cash Discount Program you post signage stating that all consumers will now be paying a 4% Service Fee, however for those paying with cash, the fee will be waived. We will automate your equipment so that this fee is automatically added for those customers using any method of payment other than cash (essentially credit cards). Most importantly it is aligned with the rules of Visa and MasterCard.
Additionally, you are forbidden by Visa, MasterCard, and the Processor’s rules to profit on a credit card transaction, which could happen if you accidentally charged more than you were being charged by the processor. By utilizing the Cash Discount program, we establish proper pricing for you to ensure you stay within all stated guidelines.
But you never added a customer service charge to the price of all your products & services before, why now?
Merchant fees on all credit & debit cards keep increasing and many more of our customers are using credit & debit cards. If we didn’t add the additional expenses to the price of all our products & services, we would be forced to cut payroll or other expenses which would decrease our customer service abilities. The result would be our customers experiencing unacceptable levels of satisfaction, which in turn would make us dissatisfy and possibly lose customers. We may no longer be able to serve our community with the same high level of satisfaction our customers have come to know and enjoy over the years.