Credit card fees appear small when taken individually but they eat profit like termites. Two cents are stolen by one tap. Four more are taken by another swipe. By the time you close, the stack of lost pennies is large enough to hire a part-time employee. Dual pricing converts that hidden leak into found money by allowing customers to choose between a cash price and a card price. They feel that the decision is fair to them and it gives you better margins.
Card Fees Are Quietly Killing Your Profit
Swipe fees are about one to four percent of each credit sale in the United States. They run during busy and slow periods, and they increase along with the size of tickets. Maria is the owner of a small sports store that crossed the $50,000 mark in monthly card sales last spring. In May alone, her processor took about $1,750. That one charge was more than her entire electric bill and a pallet of new product.
The Slow Drain You Don’t See
Card fees are a kind of tax that is paid only by merchants. They are automatic, unseen, and difficult to avoid without a strategy. They can be overlooked by a new owner initially since the deductions are small daily charges. Six months down the line those debits become a five-figure amount that never was spent on stock or payroll. Most retailers fail to notice the impact until their accountant sums up the year.
The Real Math Behind the Pain
Take your final statement and multiply the card volume by three and a half percent. A shop that receives $25,000 in card transactions loses about $875 per month. A store that makes $100,000 loses $3,500. In a year, the smaller store gives up approximately $10,500. The larger one loses $42,000. That money could have paid for new equipment, a new web site, or pay raises that retain good employees.
Dual Pricing Gives You the Money Back
Dual pricing charges a lower price on cash and a higher price on cards. The difference in the numbers shows the fee you have been absorbing. Customers can see both prices and make a decision, and nobody will feel cheated. Card brands allow this in all of the fifty states so long as the merchant displays both prices prominently and adheres to the rules of simple signage.
Two Prices, Clear Choice
Imagine a hoodie on a rack. The price tag is $48.00 cash and $49.92 card. A customer that prefers the lower total can use cash or a store-branded gift card. A customer who is in pursuit of the reward points on a credit card or does not have cash will take the larger figure. Both consumers are informed. Both do not grumble at the counter since the information was transparent from the beginning.
Steps to Flip the Switch
The point-of-sale is the first step of switching to dual pricing. Your terminal requires the ability to display two amounts per item, and display those amounts on the screen and on the receipt. Once updated, you put up clear signs on the door, the counter, and any menu boards. The signs state that cash buyers pay the lower price and card buyers pay the posted price. Train employees to lead with the cash amount. A like this works great: Your cash total is $48.00 and your card total is $49.92. Which do you prefer?” Most employees master the script after just a few transactions.
Why Customers Accept Dual Pricing
Gas stations have displayed two prices for decades and people barely ever complain, if at all. The same logic is used by shoppers in retail. They see a direct benefit for cash and a direct cost for card. Trust is maintained because the numbers are never hidden. Surveys conducted by payment processors indicate that more than eight out of ten consumers are okay with dual pricing as long as there are signs at the entrance and at the register [1]. Some even consider the cash number to be a sale price and this pushes them to pay using cash.
What Happens to Your Cash Flow
The more buyers use cash, the faster the money enters your business. It takes seconds, not days. You avoid the hold period with card settlement and immediately have readily available funds. The increase in cash also reduces the requirement of short-term loans or high-interest credit lines to meet seasonal requirements. Retailers using dual pricing have been known to show an increase of 20% in same day cash deposits in the first quarter following the implementation.
Compliance Made Simple
The most important thing that card brands are concerned with is transparency. Display both prices wherever you have a price listed, print both on all receipts, and never include the card markup on store-branded gift cards. In case of price changes, modern POS systems allow you to instantly update the tags on the shelf as you update the price in the system. Inform your processor of the date the program will start. Do that and the card brands will not see a hidden fee, but a compliant discount.
Debunking Common Myths
Some owners are afraid that customers will run away. Data from processors that use dual pricing indicates that the foot traffic remains steady and the cash usage increases by 20% upon launch [2]. Others fear that the approach is sketchy. Dual pricing is permitted by law and card-network rules, provided that prices remain transparent. Others believe it would take weeks to rewrite all the tags. Modern point-of-sale systems can bulk-update electronic tags with a single file import, so the hard work is done in an afternoon.
Ready to Keep Your Profit?
You do not need a degree in finance to see the upside. Look at a month of statements, calculate the fee number, and imagine what that additional money can be spent on. Card Systems show you the exact savings for your shop in a five-minute telephone call, program the terminal in twenty-four hours, and provide all the necessary signs. Call 866-207-3298 to speak to a rep or book a demo with us. Let your customers have a choice and quit paying silent fees, and you will see your profit increase with the very next sale.
