For many years merchant service companies have been charging a range of between 1.5% to 3.5% processing fees for managing credit card transactions to businesses when a customer pays with a credit card. However, there is a pricing strategy called the dual pricing program that can eliminate these transaction fees and help businesses save money. In this article, we will explain how a dual pricing program works and also discuss the benefits of implementing it to a business.
Dual pricing programs allow merchants to display two prices for their products and services: one with a higher price for customers paying with a credit card and another with a lower price for customers paying with cash. The purpose of this strategy is to encourage customers to pay with cash, thereby reducing the volume of credit card transactions and eventually eliminating the processing fees that are collected from business owners.
Before applying a dual pricing program to your business, study your credit card processing transaction data to help you estimate the potential savings and benefits if you weren’t paying any processing fees. Once you have completed your estimation, create your dual pricing structure and display both prices (credit card and cash) for your customers to see, everywhere you show prices, including menus, signs, point-of-sale screens, and itemized receipts during checkout.
When you encourage customers to pay with cash, you can remarkably reduce the volume of credit card transactions, and significantly increase your profits by saving completely on processing fees because the customers are paying them. Having the transparency and cost savings associated with dual pricing can foster customer trust and loyalty. Applying a dual pricing program allows you to have a competitive edge in your marketplace, and attract cost-conscious customers who may be more willing to choose your business over your competition that does not offer a dual pricing program.
Credit card processing fees significantly affect businesses’ profitability when customers choose to pay with credit cards. However, business owners can eliminate these fees by applying a dual pricing program by offering customers an incentive to pay with cash. Embracing this strategy, businesses can enhance customer relationships, boost profitability, and attain a competitive advantage in their marketplace.
