True Cash Discount, Non-Cash Adjustment and Surcharging are great options for businesses that want to lower their credit card processing costs. However, before they decide to share their fees with their customers, they must first understand the guardrails that help ensure compliance with legal and regulatory guidelines. Take this recent case out of Kansas. A restaurant followed the advice of their payment processor and added a 4% surcharge on credit card purchases. In most states this would have been fine, except for the fact that the merchant is located in Kansas. Surcharging is prohibited in Kansas, along with Colorado, Connecticut, Maine, Massachusetts and Oklahoma. The business owner made an unintentional yet very costly mistake by following their payment processor’s advice. They thought what they were doing was legal, and even displayed signage to tell customers about the fee. This mistake resulted in an enormous financial loss for the merchant. They were fined more than $60K! While Surcharging is prohibited in Kansas, the restaurant did have another option. They could have implemented a “True Cash Discount” program. This is when a business offers a discount to customers who pay with cash, instead of with a credit or debit card.
At Clearent, we have gone to great lengths to make sure that our Empower Program follows federal and state laws and is compliant with the guidelines published by the card brands, including Visa and Mastercard.
Learn more about True Cash Discount, Non-Cash Adjustment and Surcharging in our guide to the Empower Program. In it we outline the key differences between these programs and offer tips on how to pick the one that’s best for your business.