Are credit card processing fees cutting into your profits at your automotive repair center? If so, you might consider implementing a dual pricing model. With this approach, you’ll offer a second, lower price to customers who pay with cash, allowing you to avoid those pesky credit card processing fees.
But is dual pricing legal? Dual pricing is totally legal, but there are a few compliance hurdles you might need to jump over. Here's what you should know before rolling out a cash discount program.
Is Dual Pricing Legal?
The short answer is YES!
Many automotive repair shop owners love the perks of dual pricing. It's a win-win for everyone: customers who pay with cash get a nice little discount, and repair shops can dodge those hefty credit card processing fees. Plus, dual pricing is completely legal across the United States.
If your auto repair shop processes $80K per month in credit and debit charges, you're likely paying between $2,500 and $3,000 per month in credit card processing fees*. With a Dual pricing program, your customers help offset your credit card fees by paying a small percentage when they use a card. The percentage they pay reduces your overall credit card fees. Because your fees are virtually eliminated, you get to put the $2,500 to $3,000 back into your business.
When you're setting up a dual pricing model at your automotive repair shop, it's important to get familiar with the compliance landscape. Dual pricing is totally legal, but you might run into a few compliance bumps along the way.
The good news is that the Durbin Amendment has your back, letting you offer discounts for cash or check payments without any fuss from credit card companies. However, companies like Visa have their own set of rules for dual-pricing models. Here are some key compliance points to keep in mind.
When implementing a dual pricing system at your automotive repair center, it's crucial to clearly display both pricing options: one for credit card transactions and another for cash payments. For example, if you're providing a repair service, ensure the credit card price is shown as the standard rate, while offering a distinct, lower rate for cash-paying customers. Failing to do so, especially if the price difference exceeds 3%, could result in Visa imposing fines and penalties starting at $5,000.
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