Being a merchant, you may know that you have to pay an fee every time a consumer uses a credit card to pay his bills. But, no worries! There’s a solution for merchants to avoid these credit card processing charges, i.e., zero fee processing.
The data shows in the US alone; merchants pay around $80 billion every year to credit card service providers, such as MasterCard and Visa, just in credit card processing fees. However, by incorporating a zero fee processing system into your business transactions, vendors do not have to pay a single penny as fees. After years of legal battle, courts have decided to go with business owners to make it happen.
Nowadays, businesses in a few states that accept credit card payments may save some money, leading to increased revenue. This is because the zero fee processing, also called surcharging, is not enabled in all but a few states. But experts say that it will likely be legal across the US by 2020.
In this post, we will talk about zero fee processing in detail. So let’s start with the basics.
What is Zero Fee Processing?
Also known as No Cost Processing, Zero Fee Processing is a system in which a credit card processing fee is automatically passed to a consumer. That means your customers have to pay those charges instead of you. Passing these credit card processing expenses to consumers is called surcharging. Under this, when a customer swipes his credit card to pay for his purchases, he gets a notification about the credit card processing fee. This notification gives them the option to go with that extra fee or pick a different payment form. With this, you get 0% of the transaction fee and 100% of the sale.
Several credit card companies in the market provide “zero fee” processing to get around interchange charges and attract merchants from different industries to use their services. As mentioned above, your customers will have to pay these charges, which might adversely impact your business sales and customer satisfaction. But, before you sign up for any of these “zero-fee” processing programs, it is essential to understand them wisely.
What Does Zero Fee Processing Cost Consumers?
The fee varies from one processor to another but cannot be over 4%. Do not forget that these charges will appear on the purchase receipt, and your customers can clearly see them. There are chances that higher credit card processing fees on the bill may result in a decreased sales rate.
Benefits of Surcharging for Businesses
As discussed, surcharging allows businesses to pass the fees associated with dispensary credit card processing to customers instead of paying them on their own. The benefit to merchants is a reduction in expenses related to processing credit cards. As per reports, many industries, including healthcare, gas stations, non-profits, and cell phone carriers, have succeeded with zero fee processing setup. They also continue to provide their consumers with the option to choose a convenient card payment service if they don’t want to pay extra credit card processing charges.
In addition, remember that you are not allowed to pass the fees linked to debit card transactions to your customers. But if your business processes a considerable number of credit card transactions every week, you can consider how to lower or eliminate these additional charges.
Lowering Credit Card Processing Charges
Yes, it is possible to lower your dispensary credit card processing fees. You may reduce credit card processing charges without passing them on to your consumers. Instead of transferring fees to your customers, you can apply minimum purchasing limits for credit card usage. Enabling credit card payments above $10 has the benefit of encouraging clients to spend more. This method not only increases your sales rate but also allows you to save money by neglecting card processing fees on low-value, low-margin transactions.
There’s no doubt that credit card processing is critical for any business, but remember, it should not hurt your bottom line. With the right dispensary credit card processing solution, merchants will not have to worry about credit card payments’ processing fees and losing customers.
Besides, it is recommended to closely talk to your credit card service provider to determine whether they provide zero fee processing or not. Overall, pick your credit card processor after proper analysis to take your business to the next level.