DUAL PRICING TO OFFSET PROCESSING COSTS

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Dual pricing is one of the hottest topics in hospitality right now as businesses look for ways to increase profits and mitigate rising payment processing costs.

What is Dual Pricing?

At its core, dual pricing is an approach to managing payment processing costs by offering customers two different prices based on their payment method.  You can either provide a discount when a customer pays with cash or add a card surcharge when a customer pays with a credit card. Union handles either method in a compliant manner through your Manager Portal.

Option 1: Cash Discounting - A Friendlier Choice for Customers

The cash discounting process is straightforward: your menu displays pricing in credit card prices, and customers who pay cash, pay less. It is common to see cash prices 3-4% lower than credit card prices. This approach typically generates more positive customer responses since it frames the price difference as a reward and is legal in all 50 states. When customers see they can save money by paying cash, they appreciate having the choice.

Option 2: Credit Card Surcharging

Credit card surcharging displays prices on the menu and adds a fee for credit card transactions. While this achieves the same goal of managing processing costs, the regulations are complex at times, vary by state and subject to constant regulatory change. Here are just a few of the regulations as of the time of this writing:

  • Federal law caps surcharges at 4% of the transaction amount 
  • For any transaction using a Visa branded card, the surcharge is capped at 3% of the transaction amount
  • Surcharging is prohibited in some states altogether such as Connecticut, Maine, Massachusetts, and California
  • New York, New Jersey, Nevada, and South Dakota require surcharges to match actual processing costs
  • Other states may have specific restrictions and requirements
  • The payment card associations (Visa, MC, Amex, Discover) maintain strict disclosure rules to customers imposing penalties and in some cases removal of card acceptance altogether.
  • If you aren’t using Union for your processing, you will need to notify your processor and get approval ahead of time.

Important: Surcharges can only be applied to credit card transactions, not debit cards. Your Union POS is set up to handle this difference. It is very important that if you implement this strategy, you communicate this surcharge with proper signage. Customers can be turned off by seeing new fees at the end of their experience.

Implementation with Union POS

Setting up dual pricing is straightforward with Union’s automated system:

  1. Update Menu Pricing
    • For cash discounting, increase menu prices by your desired percentage, typically 3%
    • For surcharging, maintain current prices
    • Our support team can assist with all price updates
  2. Enable Your Choice in the Manager Portal
    • Access Manager Portal Settings
    • Select Cash Discounting or Surcharging
    • Set your desired percentage, typically 3%
  3. Display Signage & Train Staff
    • Post clear pricing notices
    • Train staff on customer communication

Union’s system automatically handles all calculations, ensuring compliant receipts and displays for your chosen strategy. 

Ready to Get Started?

Our support team is always available to help.  Remember: The key to success with either strategy is clear communication with your customers. Whether you’re offering a cash discount or implementing a credit card surcharge, transparency builds trust and helps customers understand their payment choices.