Blog Posts Tagged as free credit card processing

When a business owner wants to charge their customer a 4% surcharge then they need to pay a 3.84% fee to their processing company to guarantee the charge is being properly offset. 

Look at the following examples:

The merchant runs the card for a $100 sale.  The cardholder is then charged a total of $104.

If we then take 4% out of the $104 transaction the business owner will pay $4.16 in fees - an effective rate of 4.16%

$104 * 4% = $4.16

$104 - $4.16 = $99.84 deposit

If we instead take 3.84% of the transaction out then the business owner pays $4.00 in fees on the $104 sale. 

$104 * 3.84% = $4

$104 - $4 = $100 deposit. 

This ends up being a 4% charge on the original $100 sale.  The business owner is charging 4% to the client and exactly 4% is being paid to offset by the 3.84% processing charge. 

1. What is cash discounting?  Cash discounting allows the business owner to charge all clients using all card types a fee for using their credit card.  ( Typically 4%) The business needs to make it abundantly clear that all of the prices in the store are discounted cash prices and that non cash transactions carry an additional 4% fee.  This needs to be posted on their door and should be posted at the point of purchase as well. 

2. What is surcharging? Surcharging is only allowed in certain states and only allows credit cards to be charged, not debit cards.   When the customer swipes their credit card a fee is then added to that transaction.  (Again – typically 4%)

3. Can this be done with a tip line? On the Dejavoo Z8 you can add the 4% to the total amount before  the tip is added.

4. Can you bypass the 4% fee? The card holder has the option to decline the charge on their card.  It is typically in the best interests of the business owner to not argue with them if they refuse to pay the fee. They risk losing the entire sale if they do. 

5. Is there a wireless terminal option? Yes  - the Dejavoo Z9 can run over a 3G network.   

6. Do you have the option to charge ONLY credit and NOT debit cards? If the client prefers to surcharge rather than do cash discounting then this can be requested on the terminal.  ONLY credit cards will be charged the 4% fee.  We recommend writing the debit cards sat a lower rate since the business owner will not be recouping these costs. 

7. Does the batch report show the 4% charges? Yes – at the end of the day the report will show total sales and on a separate line item it will show the total collected in fees.

8. Does the 4% get taken out daily? Yes – every day the business owner will receive a deposit for their daily sales less the 4% that they have charged cardholders. 

To learn more please review the following blog posts:

1. What is Free Credit Card Processing?
2. How Much can a merchant Surcharge?

We have been getting this question a lot in the past few months so we thought it was about time we addressed it. The short version of the answer is that nothing in life is actually free – but – by changing who pays for something it can in fact feel free.