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Navigating dual pricing with

technology-driven strategies

Now, with the advent of dual pricing on a much wider
scale, the legislative scrutiny has shifted to merchants, and
it is now their obligation to inform their customers when
distinguishing between cash and credit card prices at the
product level. This expansion is likely a catalyst for new
policies, procedures and guidelines, and the recent drive
for increased enforcement of the same by the card industry
itself.

With merchants facing a perfect storm of economic chal-
lenges; technical changes; and at times new, yet conflict-
ing regulations and expectations; clear, concise and timely
communication becomes essential for merchants. Unfortu-
nately, this is where the payments industry does not have
a history of success.

The terms "cash discount," "credit surcharge" and “non-
By Gregg Aamoth cash adjustments” were essentially used interchangeably
POPcodes to describe the same concept: charging consumers a higher
cost for credit card transactions or a reduced price for cash
s economic uncertainties and pressures contin- payments.
ue to build, more merchants have implemented
or are now considering dual pricing, cash dis- This terminology creates confusion and challenges for
A counts or credit surcharging as a way to attract merchants who are unsure about whether they could im-
customers and reduce their credit card processing fees. plement surcharges or just offer cash discounts, as some
This often involves the addition of POS software features issuers had differing views on what was permissible. The
sold as value-added capabilities by their merchant service lack of clear guidelines made it difficult to distinguish be-
provider. tween the two pricing practices easily.

However, the guidelines surrounding these processes have Eventually, card issuers began making exceptions because
recently become a subject of intense debate within the in- some merchants were charging substantial incremental
dustry and government levels. Consequently, many mer- percentages, sometimes as high as 5 percent, for credit card
chants are now uncertain about what is allowed and what transactions, and they were actually making a profit.
is not. They may be unaware of the potential implications
and compliance requirements associated with these value- In response to this, Visa set a maximum limit of 3 percent
added capabilities. per transaction back in April 2023, explicitly stating that
charging more than this under the guise of a "cash dis-
Limited awareness of the guidelines and surcharge fees count" would be a violation of Visa policies, resulting in
further complicates the situation, leaving merchants un- additional confusion for merchants.
sure about permissible actions regarding dual pricing. To
overcome these complexities, avoid costly fees and ensure Now, failure to comply with the surcharge rules may result
compliance, it is imperative to help merchants gain a clear in fines amounting to $25,000 per month. As a result, con-
understanding of these guidelines and uphold transpar- flicts emerged when Visa enforced these limitations and
ency in their pricing practices. pushed back against merchants who attempted to exceed
the allowed threshold for cash discounts.
History of pricing guidelines
With potential fines hanging over merchants' heads, en-
Over the last 50 years, most state attorneys general issued suring compliance, and gaining awareness becomes even
guidelines requiring businesses to adopt fair and trans- more critical. However, finding clear guidelines and rules
parent pricing structures. The initial purpose was to en- related to surcharging and dual pricing is not as straight-
sure that advertised prices were legitimate sales and that forward as it should be.
in-store signage had pricing that matched what was being
charged at checkout.
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