![In 2005, millions of merchants joined a class action antitrust lawsuit against credit card
giants Visa and MasterCard. There was no option until 2010. Credit card companies
forced businesses to pay their transaction fees.
Then Federal law changed
• The Dodd-Frank Wall Street Reform and Consumer Protection Act (Public
Law 111-203, “H.R. 4173”) became federal law on July 21, 2010, restricting
misconduct at the root of the Great Recession of 2008.
• As part of the Dodd-Frank financial reform legislation, the Durbin
amendment mandated the Federal Reserve to limit fees charged to retail
merchants for debit card processing.
• This amendment awarded retail merchants the freedom to charge customers
for card processing fees.
• “The Dodd-Frank law prohibits a payment card network such as Visa
‘from inhibiting the ability of anyone to provide a discount for payment
by cash, checks, debit cards, or credit cards.”
–Mitchell Katz, Federal Trade Commission
• “Retailers offer cash discounts because they want to reward customers for
taking [transaction] costs out of the system.” –Jeff Lenard, National
Association of Convenience Stores](https://image.slidesharecdn.com/zerofeeprocessing1-180522171225/85/Zero-Fee-Processing-4-320.jpg)
Zero Fee Processing
- 1. Zero Fees That means none! No Minimum fees. No Batch fees. No Report fees. And, No Hidden fees!
- 2. 2% to 4.5% Your current merchant processing fees become Net Profit
- 3. FREE Merchant Processing What would truly “free” merchant processing mean to your business? • New expansions? • Pay down debt? • Hire new employees? • Repay investors? • Bonus shareholders? • Bonuses for you and your staff?
- 4. In 2005, millions of merchants joined a class action antitrust lawsuit against credit card giants Visa and MasterCard. There was no option until 2010. Credit card companies forced businesses to pay their transaction fees. Then Federal law changed • The Dodd-Frank Wall Street Reform and Consumer Protection Act (Public Law 111-203, “H.R. 4173”) became federal law on July 21, 2010, restricting misconduct at the root of the Great Recession of 2008. • As part of the Dodd-Frank financial reform legislation, the Durbin amendment mandated the Federal Reserve to limit fees charged to retail merchants for debit card processing. • This amendment awarded retail merchants the freedom to charge customers for card processing fees. • “The Dodd-Frank law prohibits a payment card network such as Visa ‘from inhibiting the ability of anyone to provide a discount for payment by cash, checks, debit cards, or credit cards.” –Mitchell Katz, Federal Trade Commission • “Retailers offer cash discounts because they want to reward customers for taking [transaction] costs out of the system.” –Jeff Lenard, National Association of Convenience Stores
- 5. Fair? • Yes. In fact, your pricing becomes transparent because a cash discount establishes a merchant’s retail prices based on actual costs. • Every business prices their goods and services based on the competitive marketplace. Business is about pricing goods and services to achieve a profit margin while accounting for both variable and fixed expenses. These include the cost of goods, rent, wages, utilities, taxes, credit card fees, etc. • So if businesses already calculate into their pricing the cost of credit card fees, aren’t cash-paying customers paying higher prices to subsidize customers who choose to pay with an alternative? Simply put, offering a discount rewards cash payments because they’re less expensive to process than card transactions. How can anything be more fair or transparent? Is an additional customer service charge added to the price of all our products and services fair when offering an equal discount to cash paying consumers?
- 6. Legal? The Texas State Attorney General stated: “businesses can discount the regular retail price of an item for consumers who pay cash.” In the June 25, 2015, Advisory Bulletin from the Texas Office of Consumer Credit Commissioner noted that the Texas Finance Code allows Cash Discounts and card payments to assess an increase in the ‘regular’ price of the product or service: • In note 3. Cash discount: Section 339.001 prohibits surcharges for paying by credit card, but it does not prohibit discounts for paying by cash, check, debit card, or other methods. A surcharge is an increase from the regular price of a good or service, but a discount is a decrease from the regular price. The federal Truth in Lending Act allows sellers to have two prices (one for cash and one for credit), as long as the credit‐card price of the good or service is also the regular price. 15 U.S.C. §§ 1602(q), (r), (y), 1666f. Is an additional customer service charge added to the price of all our products and services legal when offering an equal discount to cash paying consumers?
- 7. Distinction among processing fee types Surcharge Convenience Cash Discount There are very strict rules in this area. In 2013, the card issuing banks decided that business owners would be allowed to add a SURCHARGE of up to 4 percent to all Visa and MasterCard Credit purchases. All Debit transactions, as well as all Discover and American Express transactions, are excluded from the SURCHARGE program. Since the surcharge program has been released, 12 states have made SURCHARGES illegal: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, and Texas. Surcharging is not permitted in any state on a debit transaction. Convenience Fees have been around for some time to help Mail order / telephone order (“MOTO”) and e- commerce companies offset the additional fees because the “card is not present” in that type of transaction. This is only an option for businesses that sell products online, through catalogs or take payment over the phone. Because of the increased risk of fraud, higher fees for these businesses occur than typical face-to- face retail merchants operating brick and mortar businesses. This fee is illegal in typical face-to- face transactions known as “card present.” Every state permits a merchant to assess a Service Fee on all transactions, both debit and credit, that rewards customers for paying in cash (aka Cash Discount Program). This is different from a penalty for paying with a credit card called a surcharge. The Cash Discount rate must be clearly stated on the front door and the checkout counter, as well as printed on the receipt. Note: It is important to recognize that the combination of the proprietary hardware/software solution makes this Cash Discount program 100% compliant.
- 8. What is a Cash Discount Program? A Cash Discount Program enables a merchant to offset some or all of their current merchant service fees without increasing their overall rates by assessing a service fee to all customers while simultaneously providing a discount to those who pay with cash. • Posted rates now become the rate for customers who pay with cash. • Legal disclosure includes a line item—“SVC FEE”—on their receipt in addition to signage placed on the door and near the register.
- 9. Cash discounting is no different than what everyone in already used to at fuel stations In 2016, several patents combined software and hardware (countertop card swipers) to reward consumers instead of a penalizing them for the use of credit/debit cards. Approved in all 50 states, this reward method is known as a “cash discount” program because it encourages consumers to enjoy a discount for paying with cash.
- 10. Big Banks Made a Ton of Money Last Year From SERVICE FEES TIME Money article February 23, 2017 • The nation’s three largest banks collected more than $6.4 billion in such charges last year, according to an analysis from CNN. • The average ATM service fee is now $4.57, according to a survey from Bankrate.
- 11. Are You an Early Adopter? Since 2016, thousands of merchants have become the “Early Adopters,” paying 0% for processing any brand or type of plastic. These fees become profits. Or, use them for hiring new employees, expanding inventory, reducing debt, opening new locations, or paying stockholders. And, none of their customers complained! A few that actually read their receipt asked about the line item “SVC FEE” and were pleased with the truthful response from one retailer: “For years, I had to raise all my prices in my business so that I could afford to pay VISA/MasterCard for processing. That included my cash-paying customers. That was wrong! But I didn’t have a better solution. I do now! Instead of raising all my prices, they stay the same. If my customer pays with cash, they enjoy a discount.”
- 12. Zero-fee Merchant Processing An exclusive arrangement through Wells Fargo Bank