There is a lot of buzz in the marketplace currently around this question. It’s a good one, especially in the current business climate where inflationary costs coming in the form of mandated wage increases, higher food and beverage costs are coupling with other increasing operating expenses. It’s getting harder to remain profitable!
So, let’s get to it. Can I pass on the fees, or let my customers know I prefer other payment options like cash? Put simply, yes you can.
As Mitchell Katz, spokesman for the Federal Trade Commission, said in May of 2011: The Dodd-Frank law prohibits a payment card network such as Visa “from inhibiting the ability of anyone to provide a discount for payment by cash, checks, debit cards, or credit cards.” … Neither surcharging, nor a cash discount is illegal.” As of Jan, 27, 2013 several Card industry changes also went into effect after a federal class action lawsuit settlement. The settlement required Visa and MasterCard to change some rules allowing merchants to offer discounts to customers who pay with less expensive options.
So why now is the market responding to these changes and is it right for my business?
I think the timing is right. Back when the laws changed, the country was coming out of the worst recession since the Great Depression. Passing on these costs might not have been taken in the same light. Today, as costs continue to increase many business owners are realizing that this law was intended to allow them to do what was best for their business and no card network could dictate otherwise as law in most places allows for that stated preference.
With the clear reporting on receipts, and signage and official registration with the card brands, you do have the right to implement a change. Raising prices across the board is not popular as well, but this might just be a step towards preventing that move as how a person pays is a choice. If one doesn’t want to pay for the cost of convenience, then they can choose to pay with cash instead.
With Cash Discounting, customers who pay with cash or store-branded gift cards receive a discount from the listed and stated price. Customers who prefer to pay with credit or debit card will see a non-cash discount adjustment on their receipt. Surcharging is similar in that your customers help cover credit card processing fees, but it’s only allowed on credit card transactions and is prohibited in six states currently (Colorado, Connecticut, Kansas, Maine, Massachusetts and Oklahoma).
It is right for my business?
No one can tell you what is right for your business but you. You are the one that serves and knows your clients best, but what we are seeing is that in most businesses who already put the program in place, very little resistance has been seen and those that do care are just using cash instead. Most business owners know they need trusted partners to lead in the industry, not just follow trends. If you have any questions about how to implement a compliant program, feel free to reach out. I’d be happy to help.
There’s a short video explaining the program as well. Just click here for a YouTube video on the “Clearent Empower Program”.
Best wishes for continued success and growth!
Ross Erickson
[email protected]
612-965-4176