Forum Moderators: buckworks
In our store the price a customer sees is the price the customer pays. It includes shipping and all other fees.
However a competitor is offering a discount of 2ish% if the customer pays by debit card or cheque (as they do not have to pay credit card processing fees)
Because of this we find it very difficult to match their price - they enjoy a cost advantage over us where the customer pays by debit card/cheque
Does a gimmick like this work, should we be offering the same thing?
All i can see is an admin nightmare where there are so many different prices flying around for the same product
Check your merchant account documents, or contact your merchant account provider and ask them. I think you will find it isn't allowed.
Debs
didnt realise this differential pricing was frowned upon
may well avoid
moreover it does seem a bit of a cheap and nasty gimmick ... but does it work though?
People paying by other means wouldn't incur this charge, and so would play less. It wouldn't really be a discount either, because you are just simply passing on a cost of operating which doesn't exist for non-CC payment methods.
- Tony
i know that a lot of travel agents operate like this in the uk
I feel that is unfair. For a business selling a £20000 car, a man walks into the shop and demands to buy this by credit card. The shop must sell the item at the same price (if he has that kind of a limit!), even though they they will pay a fortune in credit card fees and perhaps make a loss. But if a woman walks in and asks for credit on the car (as I imagine most people would), they company can then legally charge interest. So the man who buys the car on credit gets a cheaper price than the woman who buys her car on ... credit? They make a huge profit out of her and maybe a loss to him? Wierd, how the credit card companies view this - particularly as the car company may only have got the credit card machine for sales of spare parts and repair costs!
I would research this if I were in the US, but in the UK it is not an uncommon practice.
What you cannot do is place a surcharge on customers who want to pay by CC. Nor can you impose a minimum purchase amount for CC payments. Either of these places you in violation of your merchant agreement and is a good way to get in hot water with the credit card companies if someone complains.
It's how you word it that matters -- "discount" is not the same as "surcharge" even though the net result is identical -- those who pay with credit cards pay more for the same item than those who pay by cash or check or debit.
If you want to offer the "cash discount" just list all your products at the "normal" price and then deduct 2% or whatever during checkout if the customer chooses to pay by a discountable method.
Personally, I think it's a bit cheesy and something most consumers will see through. Credit card fees are a part of the cost of doing business.
Besides, how much difference does a 2% price differential make between you and your competitor? Is price the sole reason your customers would choose your competitor over you? If it is, I'd suggest working on ways to make yourself the place people will go to spend their money even if it costs a little more than some other "inferior" store.
average selling price has a bit to do with this too.
if your average order value is $1000. Then 2% of this - $20 - is quite a lot of money
we, and our competition sell high ticket value items. that is one of the reasons why we are considering it.
