There are two popular types of credit card processing being used by family entertainment centers (FEC): traditional processing and dual pricing (cash discount). What’s the difference and which is right for your FEC?
Let’s look at each type of processing:
Traditional Processing
– Legal in all 50 states
– Business pays the fees
– Negative impact bottom line
– Counts as an expense
– Historically accepted by all
– Multiple rates and pricing options
– Requires posted signage
Dual Pricing (Cash Discount)
– Legal in all 50 states
– Customers pay the fees
– Positive impact on bottom line
– Savings count toward income
– May experience initial customer pushback
– One rate for all customers (up to 4% max by law)
– Requires posted signage
Why do some businesses adapt to dual pricing while others stick with traditional credit card processing? Everyone’s situations and reasons
vary but for the most part businesses who don’t switch are simply used to paying the fees and are concerned over
customer acceptance. Some simply don’t want to be “first” in their area. Some are comfortable with their rate or with
how much they are paying in fees.
Businesses switching to dual pricing cite equal and opposite reasoning. They are tired of paying the fees for customers’ card perks like flyer miles, rewards and cashback. With costs going up everywhere, cash discount is an easy way to increase bottom-line without forcing it on the customer since they have an out by paying cash. Others note the sheer amount of money as too big to ignore (~$20-30k per 1M sales).
Either way, both traditional processing and dual pricing are here to stay. FECFIN is currently seeing around a 70% adoption rate
for cash discount. Which way do you prefer and why? We would love to hear your thoughts!
