Zero Fee Credit Card Processing vs. Cash Discounts

Retail merchants have many options available to help curtail the costs of credit card processing. Two of the options many retailers are considering these days involve zero fee processing for credit cards or offering cash discounts.

Understanding Zero Fee Processing

Instead of paying the fees associated with processing credit card transaction, your business passes them along to your customers. The process is known as “surcharging”: when the customer swipes their card, the terminal notifies them of the fee and gives them a chance to accept or choose a different form of payment. You get 100% of the sale and 0% of the transaction cost.

The benefit to retailers is a significant reduction in costs associated with processing credit cards. In fact, many industries from gas stations and cell phone carriers to healthcare and non-profits have found success with zero fee processing and continue to give their customers the option to decide which card payment is most convenient.

But keep in mind that you’re unable to pass on the fees associated with debit card transactions. Though, if your business processes numerous credit card transactions each month, it may be worth considering.

Understanding Cash Discounts

Cash discounts have been getting a lot of buzz, but it tends to be frowned upon. A cash discount works by applying a small customer service fee to all transactions. This fee is removed if the customer pays with cash or in-store gift card.

While there are clear regulations in place for zero fee processing, cash discount programs come with a lot of confusion for both consumers and employees. The truth is, not all cash discount programs are built the same, and many don’t adhere to federal compliance laws.

On top of that, there are extra considerations that come into play with cash discount programs. For example, cash discount technology doesn’t work on all equipment brands and it’s important that the correct wording is used in signage and verbally at the register. Not to mention that cash is losing popularity among the buying public.

You need to understand how customers for your business pay and how you believe they will respond to surcharges vs. cash discounts. For many businesses, especially with higher dollar items, like home furnishings, electronics, etc. you might enjoy higher savings by choosing zero fee credit card processing.

At Zenti, we understand the challenges your business faces when it comes to choosing payment processing partners. We believe in offering transparent pricing and honest, ethical billing practices so you understand what you’re paying for. Contact us today with all your questions and concerns about payment processing and to learn about the variety of products and services we offer on a month-to-month basis without any long-term commitments.