Accepting credit cards is necessary if you want your business to thrive in the modern marketplace. Unfortunately, credit card processing expenses can be complicated due to the varying fees and sometimes confusing terminology used by credit card companies.
The great news is that you can still make credit card processing simple and financially viable by leveraging surcharges and cash discounts.
What Is Surcharging?
A surcharge is an add-on fee that is not listed in the initial price of an item or service. Surcharges are often added at the point of sale in response to government regulations. Sales tax is a prime example of a surcharge.
In some states, businesses can also add surcharges to offset certain underlying business expenses. Credit card processing fees are a prime example of this.
For instance, suppose that your credit card processing company charges you $2 per transaction. A customer purchases an item for $5. However, you paid $4 for the item. Due to the fee, you will lose $1 on this purchase.
You can add a $2 surcharge to credit card transactions to prevent this situation. In the above example, the customer will pay $7, and you will make a profit of $3.
What Is Cash Discounting?
Cash discounting is the opposite of a surcharge. It involves offering consumers a price discount if they make their purchase in cash.
Offering cash discounts can incentivize customers to buy more and pay for items in cash. Not only does this increase your sales volume, but it can also lower your credit card processing expenses.
Gas stations frequently offer cash discounts on fuel purchases. Those that offer cash discounts will advertise both a cash and credit price on their signage. This discount incentivizes customers who make cash fuel purchases to shop at those locations.
Can I Perform Credit Card Processing Without Surcharging?
Yes, you do not have to add surcharges to your costs. Instead, you can simply account for these added expenses when setting price points on your products or services.
Additionally, you should explore low-cost credit card processing solutions, such as Simpay. With Simpay, you can process multiple payment methods without exorbitant fees. Instead of adding surcharges, you can sell your products for the advertised price. This will improve trust in your brand and encourage repeat business.
The Bottom Line: You Need Low-Cost Credit Card Processing Solutions
Offering cash discounting can be an effective tool for boosting sales and encouraging customers to pay with cash. However, the viability of this strategy is declining due to recent consumer trends.
Over 80% of consumers prefer to make purchases with cards instead of cash. Credit cards alone account for 36.3% of in-store purchases, with debit cards and digital wallets making up the rest of cashless transactions.
What should your next step be? The answer is simple: You need to find a low-cost credit card processing solution that works for you. It’s time to ditch your antiquated payment processing methods for modern, cost-effective alternatives.