Nowadays, businesses of all sizes are looking for more ways to save and adjust to new buyer preferences. The good news is, when implemented properly, ISVs can use enhanced pricing programs coupled with integrated payment technologies and their software to quickly provide their customers with much-needed savings.

Before we dive into the various enhanced pricing programs, it is worth revisiting the definition of a payment processing fee. At the most basic level, any business that accepts credit or debit cards will pay a payment processing fee. These fees have been put into place to cover the operating costs that banking and other financial institutions incur to ensure that every digital transaction is processed across their secure networks.

What are enhanced pricing programs?

While there are multiple variations of enhanced pricing programs to choose from, we recommend that ISVs start by offering a cash discount, convenience fee or surcharging program because these pricing strategies are more straightforward, making them simpler to manage across an entire customer portfolio.

How does enhanced pricing offset processing costs?


Cash discounts occur when a price reduction is applied to goods or services that are paid for with cash instead of a credit or debit card. When a cash discount program is implemented, the businesses that are running them are required to disclose the reduction and the cost of the goods or services before it is applied.

USE CASE: This program has grown in popularity across all industries (think field services or quick-service restaurants). Where you’ve likely experienced this in the past is at a gas station. Here you might remember that it costs a little less when you pay for gasoline with cash in the store rather than when you pay by card at the pump.  


Convenience fees are itemized fees that are charged to customers for the ”convenience” of paying through an alternate payment channel. They are a great option for businesses who typically accept payments face-to-face, but there are a few things you should know. Convenience fees can only be added to card-not-present transactions and cannot be charged by businesses that operate exclusively in card-not-present environments. Businesses are also required to disclose the convenience fee and the cost of the goods or service before it is charged.

USE CASE: Let’s say you want to buy concert tickets. Tickets are available for purchase online, in-person, or over the phone. The concert venue could charge an additional fee to buy tickets online or over the phone because it is a more convenient way for their customers to pay. As you can see, the convenience fee program can work well with event management software but the use cases are endless. All software companies need to do is offer users greater flexibility when accepting payments.


Surcharging is when a customer is charged a fee for paying with a credit card, instead of by cash or check or with a debit card. Surcharging programs can be a great way for business owners to eliminate nearly all of their credit card processing fees, but it’s also the most heavily regulated. For example, the card brands require business owners to register online 30 days before introducing a surcharging program. Additionally, some states have laws that prohibit surcharging, including Colorado, Connecticut, Maine, Massachusetts and Oklahoma. 

USE CASE: Industry rules set a maximum of a surcharge rate of 3%. On a $2.00 sale, for example, the surcharge couldn’t exceed $0.06, and therefore is unlikely to cover credit card interchange costs which is where you customers realize savings. For this reason, the surcharging program is better suited for ISVs with a portfolio of customers that frequently process large sales like medical, insurance, or other professional services providers.  

How can ISVs adjust their software to easily deploy enhanced pricing programs?

To implement enhanced pricing programs, software companies should look to develop buttons and supporting logic that can be used to automatically apply a cash discount, convenience fee or surcharge to products or services. Additionally, all receipts must include line items showing the discount, fee or surcharge that was applied and the original cost of a good or service.

While it is possible for software companies to build and manage these programs on their own, many work with a payment processor to ensure programs meet recommended pricing guidelines which can vary state-to-state. Another beneficial aspect of this relationship is that software companies are often able to lean on their processor’s support teams to educate customers and answer any questions they have about the programs. This reduces the overhead and the time needed to maintain these programs.  

What payment technologies are required to support enhanced pricing programs?

In short, different programs require different technologies. Convenience fee and surcharging programs require phone, online, and in-person payment technologies, while a cash discount program can be executed by businesses that accept card present payments, such as with a physical terminal or a virtual terminal. This is why it is recommended that software companies take a comprehensive approach to their payment integration to meet buyer preferences.

If you think you are ready to get started with enhanced pricing programs, get in touch! We’d be happy to help you determine which program would work best for your business and show you just how much your customers can save

Article by Clearent by Xplor

First published: April 09 2021

Last updated: May 30 2024