Fees, fees, fees—they sure do add up. But when it comes to exorbitant credit card fees, it’s getting to a point where it’s affecting lots of business owners’ bottom line.
The average credit card fee is 1.3 to 3.5% per transaction, according to Fool. This doesn’t include the mandatory $.05 or $.10 flat fee tacked on by many big name merchants. Statistics show these charges are rising quicker than ever, which simply takes money out of your pocket and can create fear for the future.
Now more than ever, business owners are searching for ways to lower payment processing fees. Enter dual pricing. Here’s what it is and why you should consider utilizing it.
What Is Dual Pricing?
Dual pricing offers customers an option at the point of transaction to pay more with a credit card or less with cash. Instead of dealing with ridiculous credit card merchant fees, the customer gets to choose how to pay—and covers the charge if they still prefer to use a credit card, leaving more profit in your pocket as a business owner.
Maybe it seems like a familiar tactic: after all, gas stations have been doing this for years to lower expenses. Now, retail and other brick-and-mortar small businesses are grabbing hold of
the strategy.
Benefits of Dual Pricing
●Eliminates worries about rising merchant/vendor costs.
● Offers an additional/alternative route for cash discounts.
● Customers receive a cash reward, which may increase loyalty.
● Offers your customers full transparency when shopping.
● May not require a total overhaul of your POS system.
Why You Should Switch to Dual Pricing
Here are five reasons to consider making dual pricing your cash discount program going forward.
1. You Probably Won’t Have to Worry About Angry Customers
Let’s address the elephant in the room: you’re probably assuming dual pricing will bug your customers. You’re thinking that they are going to be annoyed at paying your credit card fees. That they are going to be frustrated when they see exactly how much extra they have to pay as compared to the cash price. Right?
It’s not as bad as you might think. The initial switch might create a minor stir with a few folks, but repeat customers will adapt quickly. You might actually be surprised how fast your regulars start paying in cash.
What customers don’t like is being taken advantage of—and this forward method of conveying information is the opposite of that. So the first reason to switch to dual pricing is that the perceived downside isn’t really a downside at all.
2. Money Savings
Dual pricing works best for retail businesses where lots of in-person transactions take place. These types of businesses are getting hit really hard with merchant fees, so much so that CNN reported in 2022 that retailers are actually calling out Visa and Mastercard for the increases.
The rising costs of in-person and online merchant processing is troubling for small businesses. At the mercy of companies like Visa, these price hikes make it harder for a small business to compete because they have to raise prices to make a profit.
3. You Can Accept More Payment Options.
Each vendor offers a different rate. Some businesses simply have to stop using merchants that offer rates that take away profits.
Making the switch to dual pricing, you can add back those payment options. If someone wants to pay with an expensive credit card, no problem. They can cover the fee.
4. The Buy In Is (Potentially) Low
Making the switch might not cost as much as you’d think. You really just need a POS system that supports both cash and credit card payments.
If you already use a merchant processing service, you can implement the system and start accepting credit cards in as little as a day. If not, you may need to upgrade systems, but it’s probably getting to the point where you are going to need to upgrade soon anyway.
5. An Opportunity to Tighten Staff Communication
Even in the best circumstances, speaking to some customers about the switch could be delicate. Spin it into a positive: your staff needs to be really on board and clear on the messaging for this switch.
Maybe switching to dual pricing is the excuse you need to bring your staff together and align yourself on 2023 goals and objectives.
Contact us to learn how to get set up with dual pricing today!
