Payment Processing

In uncertain times it’s more important than ever to evaluate where you can save money. Switching to a more cost-effective payment processor can lead to significant savings and increased profitability, especially for businesses with high transaction volumes or low profit margins.

Cash discount payment processing is a proven strategy to eliminate fees, increase profitability, and encourage cash payments. It’s a legal, transparent, and simple way to keep costs down while offering customers a choice. Businesses looking to protect margins and reduce processing expenses should strongly consider this approach.

Advantages Of Cash Discount

  • Eliminates or Reduces Credit Card Processing Fees
    • Businesses no longer have to absorb 2%–4% per transaction in processing costs.
    • Savings can add up to thousands of dollars annually, increasing profit margins.
  • Increases Profitability Without Raising Prices
    • Instead of raising prices across the board, businesses only adjust pricing for card transactions.
    • Keeps products and services competitively priced while maintaining higher margins.
  • Encourages More Cash Payments
    • Customers are incentivized to pay with cash to receive a discount.
    • More cash transactions mean fewer chargebacks, lower fraud risk, and better cash flow.

 

The Bottom Line: Businesses using cash discount programs can save money, reduce fees, and increase profits while offering customers a choice in how they pay.

 Dual pricing is a payment processing model where businesses display two prices.

1. Cash Price: Lower price for customers who pay with cash.

2. Card Price: A slightly higher price for those who pay with a credit or debit card.

Advantages of Dual Pricing

  • 100% Transparent & Compliant
    • Unlike surcharging (which is regulated in some states), dual pricing is legal everywhere.
    • Customers clearly see both prices and can choose how they want to pay.
  • No Impact on Business Revenue
    • Unlike raising prices across the board, dual pricing only adjusts for card payments.
    • Helps maintain competitive pricing while covering processing costs
  • Encourages More Cash Payments
    • Cash-paying customers benefit from lower prices.
    • Reduces chargebacks, fraud risks, and reliance on credit card networks.

 

How It Works in a Business:

  1. Menu, signage, or POS system displays both cash and card prices.
  2. Customers choose their payment method and pay accordingly.
  3. System automatically applies the correct pricing at checkout.

 

The Bottom Line: Dual pricing is a legal, transparent, and effective way for businesses to offset card processing fees, encourage cash payments, and maintain profitability without raising prices for all customers.

Interchange plus payment processing; also known as “cost-plus” or “IC+” is a transparent pricing model used by payment processors to determine the cost merchants pay for each credit and debit card transaction.

Advantages of a Interchange Plus

  • Transparent & Cost-Effective Pricing
    • Businesses see exactly what they are paying (wholesale rates + markup).
    • No hidden fees or unnecessary upcharges from the processor.
  • Works for All Card Types
    • Interchange Plus applies to debit, credit, rewards, and corporate cards without unpredictable surcharges.
    • Ensures businesses pay the lowest possible rate for each transaction
  • Lower Costs for High-Volume Businesses
    • Businesses processing large transaction volumes save more compared to flat-rate pricing from 3rd party services like Square and PayPal.
    • Reduces expenses for businesses with high-ticket transactions.

 

The Bottom Line: Interchange Plus is the most transparent pricing model, especially for high-volume businesses, B2B merchants, and those processing large transactions. It ensures businesses pay the lowest possible rates without hidden fees.

Flat-rate payment processing charges businesses a fixed percentage and/or fee per transaction, regardless of the card type or interchange rate. Popular providers like Square, PayPal, and Stripe use this model.

Advantages of a Flat Rate Payment Processing

  • Simple & Predictable Pricing
    • No complex fee structures—businesses know exactly what they’ll pay per transaction.
    • Easy for startups and small businesses with low processing volume.
  • Good for Low-Volume Businesses
    • Businesses processing less than $10,000/month may find flat-rate pricing more convenient than interchange plus.
    • Avoids the complexity of interchange fees, assessments, and variable pricing.
  • Easy Setup & Integration
    • Popular flat-rate processors offer plug-and-play solutions with POS systems and online payments.
    • Ideal for e-commerce, mobile payments, and service businesses.

 

Potential Downsides: 

  • More expensive for high-volume businesses compared to Interchange Plus.
  • Doesn’t allow for lower B2B rates (e.g., Level 2 & Level 3 processing).
  • Not ideal for businesses with high-ticket transactions

 

The Bottom Line: Flat-rate processing is best for small businesses, startups, and companies with low transaction volume that want simple, predictable pricing. However, businesses with high sales volume may save more with Interchange Plus, Cash Discount or Dual Pricing models.

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