Surcharging is Still Alive and Well

One option merchants have is to pass on the extra fees directly to customers through surcharges on card transactions. This type of surcharging is legal in most states and territories, though not available in Connecticut, Massachusetts or Puerto Rico. However, surcharging rules have tightened recently. Previously, merchants could add surcharges of up to 4% to credit card sales. Now the cap sits at 3%.

But, while lower than before, 3% surcharges still allow merchants to recoup some of the swipe fees charged by Visa, Mastercard, and card-issuing banks. And, when faced with an extra fee at checkout, some customers may even opt to pay with cash instead. This allows the merchant to avoid the high credit card processing rates on those transactions altogether.

What Are the Benefits of Cash Payments?

Speaking of cash, accepting and encouraging cash as the primary form of payment is another way for small businesses to sidestep card processing fees. With cash, merchants keep 100% of the payment. There are no hidden swipe fees from third parties. Even better, cash doesn’t rely on electronic systems, so connectivity issues don’t jeopardize transactions.

From a customer experience standpoint, paying in cash can feel simpler when compared to chip cards. Customers don’t need to remember PINs or sign receipts. Plus, cash provides a certain psychological benefit, making purchases feel more tangible and controlled.

For merchants, cash transactions are anonymous, uncomplicated, and fee-free. However, carrying large cash volumes does pose some risks. Smart cash management and regular bank deposits are a must.

Add an ATM to Drive Cash Usage

To incentivize cash payments among customers, consider placing an ATM on-site. When customers can grab cash right where they’re shopping or dining, they’ll be more inclined to use it. Plus, you’ll earn money on every ATM withdrawal. But if your goal is to encourage cash payments at the register, consider setting a low surcharge for even better results.

Be sure to advertise the ATM and cash payment discounts prominently in the store, with outdoor signage and online for added success. And train staff to politely ask how the customer will pay and mention the cash discount.

Brace for Rate Hikes Creatively

Visa and Mastercard rate hikes will soon impact millions of merchants. While surcharging and cash discounts won’t eliminate the fees completely, they do provide creative means of offsetting the extra costs. Savvy small business owners will deploy these and other tactics to keep commerce affordable even as swipe fees hit new heights.

Don’t have an ATM?

Not sure if your current ATM will meet PCI compliance requirements?

CONTACT US TODAY!