Have you ever noticed at a gas station two sets of prices on the sign—one for cash and another for credit? That’s dual pricing at work, a strategy that has evolved from traditional cash discount programs to offer more flexibility for both consumers and businesses. With Intelisource, you can implement this compliant pricing model that helps manage the overhead of credit card transactions while ensuring customer satisfaction.
The Evolution of Payment Strategies
Since the introduction of discount programs, the landscape of merchant pricing models has significantly transformed. Increased scrutiny from card brands, alongside evolving state laws and consumer expectations, has pushed these programs to adapt. The result is a shift from traditional cash discount programs to what we now call Dual Pricing, providing a consumer-friendly approach while ensuring compliance with regulatory bodies. With Intelisource, this evolution means merchants can focus on running their business rather than worrying about payment acceptance complexities.
Traditional Pricing vs. Surcharging and Dual Pricing
Merchants have long sought to reduce the costs associated with card transactions. Tactics like setting minimum transaction amounts or not accepting certain card types have limitations, such as a $10 cap for minimums and restrictions on card discrimination. Here’s how pricing strategies have evolved:
- Traditional Processing: Merchants bear all processing fees, with models like Three Tiered Pricing or Interchange Plus, where fees can average 4% of sales, including various costs from card brands and acquirers.
- Surcharging: This involves adding a fee to credit card transactions at checkout. It’s only applicable to credit cards, requires registration, a 30-day waiting period, and clear disclosure. Surcharging is illegal for debit, EBT, and gift card transactions.
- Dual Pricing: An evolution from cash discounting, dual pricing offers two price points – one for cash and one for card payments. It’s designed to be transparent, showing customers the cost difference based on payment method without adding a fee to the transaction.
The Dual Pricing Difference with Intelisource
Dual pricing, as supported by Intelisource, offers:
- Compliance and Clarity: Merchants can display either the card price or both prices, ensuring customers know exactly what they’ll pay. Intelisource’s POS systems are equipped to show both prices, providing clear options at checkout.
- Customer Engagement: By showing price differences upfront, customers can choose how to pay, potentially saving money or opting for card rewards, thus engaging more with your business.
- Savings for Businesses: By shifting some of the processing fees to card users, businesses can significantly reduce their costs, which include interchange fees, card assessment fees, and more.
State and Card Brand Compliance
- Visa’s Strict Guidelines: Visa considers any price increase over the advertised price as a surcharge, which is not allowed unless legally mandated. Dual pricing, however, is seen as a compliant form of discounting where the cash price can be less than the posted (card) price.
- State Laws:
- New York: Requires clear display of both cash and card prices.
- Maine: Allows dual pricing under its surcharge ban, encouraging dual price display.
- Connecticut & Massachusetts: Prohibit surcharging but allow for cash discounts.
With Intelisource, merchants can navigate these regulations confidently:
- Price Disclosure: Intelisource ensures your pricing is transparent and compliant.
- Signage: Provides materials for clear communication of pricing strategies.
- POS Configuration: Tailors your POS to handle dual pricing seamlessly.
Implementing Dual Pricing with Intelisource
To leverage dual pricing effectively:
- Understand Customer Preferences: If your customer base prefers cash, this model can be advantageous.
- Set Up Correctly: Work with Intelisource to configure your POS and set pricing that reflects your business strategy.
- Educate Your Team: Train staff on explaining dual pricing to customers to enhance the shopping experience.
- Monitor Compliance: Regularly review your program with Intelisource to stay in line with evolving rules.
Conclusion
Dual pricing, when implemented with Intelisource’s guidance, not only helps manage transaction costs but also improves customer interaction by offering clear pricing choices. By understanding and adapting to the payment landscape, you can focus on what matters most – running your business efficiently and profitably.
Disclaimer: For specific advice tailored to your business, consult with Intelisource to ensure full compliance with current regulations and laws.