|
Author: Jack Lang Article source: http://www.linkgrinder.com/. Used with author's permission.
Imposing surcharges on credit card transactions is illegal, and it will only lead to problems. The secret to beating the credit card processing system is not charging more for credit card sales, but instead is charging less for cash sales. It may sound like the same thing, but there is a big difference.
The increasing costs associated with accepting credit cards are leaving many merchants searching for ways to pass along at least a portion of processing expenses to their customers. Card originators such as VISA and MasterCard are becoming wary of this new trend and are enforcing strict regulations specifically designed to hinder any such efforts by merchants to impose surcharges on credit card purchases.
Discount fees, transaction costs, and other expenses associated with the acceptance of electronic bank cards (credit and debit cards) are putting a strangle hold on to the NET profits of businesses of all sizes. To help minimize the impact that processing costs are having on profits, many businesses are charging a surcharge to customers that choose to pay for products or services using a credit or debit card.
Card originators such as VISA, MasterCard, American Express, and Discover have a lot to lose if the practice of imposing surcharges on credit card transactions becomes popular among merchants. When merchants impose surcharges on credit transactions, they make purchasing on credit a less appealing option to consumers, and many consumers choose to avoid the additional cost by simply paying with cash or a check. A decrease in the use of credit cards by consumers translates directly into lost revenue for processing banks. Not only do banks lose out on the processing fees that they would have collected from the merchant, but they lose any finance charges that would have been incurred by the customer as well.
You may wonder why so many businesses still choose to place a surcharge on credit transactions, even though it is strictly forbidden in the processing agreement they had to sign when opening their merchant account. Quite frankly, many business people choose to ignore this clause in their processing agreement and impose a surcharge anyway. This approach is not recommended. When and if these businesses are discovered, their merchant accounts will be terminated, and they may even be placed on the Terminated Merchant File (TMF) which will make it nearly impossible for them to acquire another merchant account.
Card originators and banks have control over credit card (bankcard) transactions, and they can legally ban a merchant from imposing surcharges. However, they do not have any legal control over other forms of payment such as cash and checks. The largest card originator (VISA) has even published information stating that, "You may, however, offer a discount for cash transactions, provided that the offer is clearly disclosed to customers and the cash piece is presented as a discount from the standard price charged for all other forms of payment".1
Most merchant accounts operate on a tiered discount pricing grid and, ironically, the secret to beating credit card processing fees is to impose tiered pricing on your products and services as well. The old saying, "if you can't beat em', join em'" applies perfectly.
While you can't charge extra for credit card sales, you can charge less for cash as long as all prices are clearly stated to customers, and the cash price is reflected as a discount from the original purchase price. For example: if the price tag on an item states that the item costs $10, the cash price must be represented as a discount from that price. The price tag for this particular item should look something like this:
Price: $10.00
5% discount for cash payment @ $9.50
5% Discount for Check Payment @ $9.50
By utilizing a tiered pricing grid, merchants can alleviate the cost of accepting credit cards, while still providing their customers with the freedom to choose their preferred method of payment.
1. Published by VISA in the Card Acceptance and Chargeback Management Guide for VISA Merchants, ©2004
Copyright 2005 Jack Lang About the Author:
Jack Lang is the senior contributor member at http://www.merchantcouncil.org. The Merchant Council is a free resource dedicated to assisting businesses obtain and manage credit card processing and merchant account services. A wealth of merchant account information can be found at MerchantCouncil.org.
10 Ways To Make Your Business Unique
How can you differentiate your business from others like it in the marketplace? This article will give you 10 different ways to make your business unique.
Exercise: Why YOU Should Do It
Find out why EVERYONE should be exercising, regardless of their health and fitness goal!
Bad Credit Debt Consolidation - What Are Your Options to Reduce Your Debt With Poor Credit?
If you have bad credit and are looking to consolidate your debt, here are some tips to help you get started.
Free Traffic Course - Day 7
When you work with web site traffic, you must have the tools that show you the real picture about this traffic. You must know for sure how targeted your visitor...
Mid Life Crisis, Life Transitions, & Ontological Coaching
Performance improvement can be characterized by a simple process of observation. In the process one typically observes an action, the results are assessed, a de...
Writing Articles for the Search Engines
This is precisely what I am doing here today (and every other day in my life)! I am writing to share my experience and hopefully, my knowledge and information c...
ADHD - Its a Wonderful Life
Relates ADHD to the classic Christmas movie starring Jimmy Stewart and Donna Reed "Its a wonderful life"
How To Turn Your Life Around FAST!
If we want to change our life, we have to change how we feel, because how we feel changes everything!
10 Reasons To Buy Drugs From An Online Canadian Pharmacy
Online Canadian pharmacies offer overall best prices on Canadian drugs, as well as on international drugs. This is due to the fact that there are many online Ca...
Magic Words That Sell and What Words to Avoid
We all know words are powerful. Here are some of the most persuasive words to use in marketing are, according to advertising legend David Ogilvy.
Some Gals Have All the Luck: How to Create Your Own Good Luck
You probably know a few. These gals marry the millionaire. Meet the talent agent in the drugstore. Stroll off into the Tahitian sunset with the guy who looks li...
Functional Pottery Makes a Great Gift, Plain and Simple
Are you looking for something unique to give a friend or family member for an upcoming birthday or holiday? If you really want to wow that special someone, why ...
Corporate Coaching - Why Coach? C(5)+ED
The need for corporate coaching certainly depends on the situation. In some cases, it could be argued that time spent learning and doing coaching provides only...
Repairing Your Own Machine Components
A skilled Maintenance Engineer should know how to use all these
machines in order to make his own repairs in a safe manner. Very
often he has to supervise mac...
Why You Need To Have Your Prices Upfront
You're darned silly if you hide your prices. Call us for a price quote, you say. Well get over it. You're losing customers, by the truckload, so here are some s...
Edible Wild Plants For Backpackers
Learning to identify a few of the most common edible wild plants can make for a much richer backpacking experience.
Press Release, An Alternative For Paid Advertisement. Step 1
What's a press release? This is generally a one page story about your business, your product/service or an event happening related to your business that is abou...
Calming Teenage Acne: How to Smooth Troubled Skin with a Holistic Approach... 7 Key Steps
Solve teenage acne problems by getting back to nature A holistic
approach to skincare addresses the whole person, body, mind, and
spirit, balancing the skin f...
Do Open Houses Work?
What are the odds that you'll find your dream at a Sunday open house? What is the likelihood that your home will sell at an open house? Open houses are an integ...
Relationship Advice - Conquering Boredom
You've been together for several years now. Sex has become routine and your relationship is in a rut. Those early days of euphoria that you felt when he/she loo...
Search Engine Optimization Tips For 2005 - Part Three
If you've wanted to learn the basics of search engine optimization but didn't know where to start these articles will teach you what you need to make a good sta...
Affiliate Programs and Picking the Best One!
Get the 7 tips for choosing the best affiliate program for you.
How to Choose the Right Bulbs for Your Spring Flower Garden
Good gardening is planning ahead. So now, when the summer is still in full swing it's time to start planning for planting your flower bulbs in Fall...
Does Your Dog Have a Barking Problem? Ask Your Neighbor, They Will Tell You!
Have you tossed and turned in bed at night because the sound of a barking dog is keeping you awake? How about the dog that barks off and on throughout the night...
|
Print this page