How to Offset Credit Card Processing Fees

By Cash Discount Program on July 6, 2023
Photo of a Customer Paying Online

If you are a business owner and accept credit cards you’re probably leaving hundreds or even thousands of dollars of your money on the table. That may sound like a bold assumption, but it’s true. Many business owners are unaware that there is something they can do about the significant retail payment processing fees they are being forced to incur. Many have come to accept these payment processing fees as just another cost of doing business.

The hard fact is no matter how seemingly insignificant this fee may be per transaction, it can quickly add up. Whether in retail, hospitality, health care, or any other industry, understanding how to minimize or even eliminate credit card processing fees can make a visible difference to your profits. In this guide, we will look at how you can keep your hard-earned dollars from slipping away and keep them where they belong – in your own pockets.

What are Credit Card Processing Fees?

Before we get into how to maximize your profits by eliminating your credit card processing fees, you need to understand exactly how much its costing your business. Credit card processing fees refer to the charges merchants pay when accepting credit card payments from their customers. These fees cover the services provided by payment processors, acquiring banks, credit card associations, issuers, and resellers to make sure transactions are secure and efficient.

To simplify it, there are certain leading players in the card-processing transaction chain:


This is your customer or the party that buys your goods and services and pays for them with their credit or debit card. In order to do that, they have to obtain a bank card (a debit card or credit card) from a card issuer.


This is you the business owner – the party providing the goods or services and accepting payment by card. To be able to do that, you must have a Merchant Account that allows you to accept payment by a bank card.

Merchant Point of Sale (POS)

This POS is the software and hardware equipment which allows you to accept credit and debit  cards for payment. It’s your in-store checkouts and cash registers, card terminals, and online checkout; it’s the place where the customer pays you for goods/services rendered.

Payment gateway

A payment gateway is a service provided to merchants by an online service provider that carries information about the transaction from your POS (credit card terminal) to the payment processor and allows the credit card and debit card payment to be authorized (or tells you that it has been declined).

Payment processor

Also known as acquirers, the payment processor will  process the card transactions and communicate with your merchant bank and the card networks. Payment processors set up business with merchant accounts which will allow them to accept payments via credit and debit cards. The discount rate and processing fees are set by the payment processor. Payment processors are registered members of the card associations. will enable your business to eliminate the discount rate and all processing fees. 


Do you know the most common logos found on credit cards? These card networks or card interchanges, along with Automated Clearing Houses (ACH) for ACH payments, are responsible for managing card issuers and processors – they establish and enforce the rules for bank cards, managing and maintaining the transaction settlement systems.


The issuing bank or card issuer (for credit or debit cards) is your customer’s bank. They have given them a bank card (credit or debit card) and are responsible for paying the acquiring bank for each purchase the cardholder makes with their card. To do that, the bank must join a card network and agree to abide by its rules and procedures, including paying the appropriate fees.

Acquiring bank

The acquiring bank (also called the merchant acquirer or merchant bank) is your bank for the purposes of card transactions. It may be—and usually is—different from the bank you have your company bank accounts with.

Through a processor, they provide you with a merchant account which allows you to accept payments with credit or debit cards. They also provide you with the terminals and the software you will need in order to process transactions. It is your acquiring bank, not the card issuer, that deposits money into your checking account to settle the card transactions you have accepted.


Also known as Independent Sales Organizations (ISOs) or Member Service Providers (MSPs), resellers are responsible for selling online payment processing services and setting your business up with a merchant account. Some ISOs are large organizations, such as banks, and others are small businesses and solopreneurs. The ISOs are essentially responsible for servicing your merchant account.. Serving as the seller’s gateway to the rest of the world of card processing, it is up to the reseller to provide merchants with guidance and support. So, choosing the best ISO for your needs is critical for your bottom line. provides stellar service to all our merchants. 

Now, the processing fee you pay per transaction is made up of three different charges that are levied by the parties listed above: merchants do not pay any of the below fees. 

Interchange fees

Think of interchange fees as the “base” charges. Set by the credit card networks, these fees are a percentage of the transaction amount plus a flat fee. They cover the costs of processing and authorizing the transaction and help manage the risk involved. Interchange fees can vary depending on factors like the type of card (debit, credit, rewards, etc.), the industry you are in, whether the transaction is done in-person or online, and the volume of credit card transactions you process. The more you process, the more you are usually charged in interchange fees.

Assessment fees

Assessment fees are like supporting fees that credit card networks charge. They help cover the infrastructure and services provided by these networks. These fees are usually a percentage of the transaction amount and can differ between different card networks.

Markup fees (processor fees)

Payment processors are the middlemen who connect merchants with credit card networks. They charge markup fees to cover their own services. Markup fees can include different elements like a percentage of the transaction value, a flat fee per transaction, monthly fees, gateway fees (for online transactions), and statement fees. These fees are set by the credit card processor you choose.

It’s important to remember that credit card fees for merchant service providers can vary based on your business type, transaction volume, average transaction size, industry, and the specific terms you negotiate with your payment processor.

Understanding these fees discussed above is vital for merchants because it helps you evaluate the cost-effectiveness of your payment processing solutions. It also gives you the opportunity to find ways to reduce fees, negotiate better terms with your payment processor, or explore alternative payment options. merchants do not pay any of the below fees. 

How to Lower or Offset Credit Card Processing Fees

So now you know how the whole card processing system works, there are two main ways to cut down on your processing charges:

Implement surcharging program

More and more merchants are turning to credit card surcharging programs to deal with the increasing costs of accepting credit cards. Surcharging means adding a processing fee to the total amount when customers make purchases with credit cards. When you sign up for a merchant account with surcharging as one of the features, you get a system that includes special software for handling surcharges at the point of sale. If a customer pays with a card, they end up paying an additional fee which is capped and does not allow any debit cards to be charged a fee.

The fees show up on the customer’s receipt as a “surcharge.” Besides the amount of money you get to save, ease of use is one of the biggest benefits of surcharging. The system is designed to help you stay in compliance with any regulations, as card associations have special rules for surcharged transactions.

While surcharging is legal in most places in the US, it comes with several rules to follow. Each state has its laws, and card associations have policies to consider.  But, if you implement it properly, surcharging can actually help you offset some or even all of your transaction processing fees.

Notifying your customers of the surcharge is as simple as putting up the right signage near the register, fees are small and most customers are used to paying them. The cost to them is insignificant compared to other payment methods, like when they pay with a debit or withdraw cash from an ATM.

Even though the laws have changed over the years to empower merchants by allowing them to surcharge, as of 2023, surcharging still remains prohibited in

  • Puerto Rico
  • Massachusetts
  • Connecticut

If you are a merchant in one of the states listed above, that doesn’t mean you can’t take advantage of the financial benefits of surcharging. The answer to your problem lies in a CashDiscount

Implement a cash discount program

What if you could skip the credit card processing game altogether and get most customers to pay in cash despite their preference for debit or credit? Cash discount may help you achieve exactly that.

With a cash discount program, your posted price for goods and services is the higher (card) price. A discount is provided if a customer pays by cash.

Like with surcharging, customers are notified of your cash discount program through signage posted at the register and in other strategic places throughout your store. The signage states that all of your price tags and advertised prices are the credit card price.

Of course, not all processing equipment comes with the ability to do surcharging or manage a cash discount program. So, to take advantage of a cash discount program, you must sign up specifically for it. This is something our team at can help you with. 

We provide our merchants with all the signage and technology needed for the program to run smoothly in their business. The credit card terminal or POS system you receive will be programmed to access the fees and print the information on the receipts, as required to stay in compliance with the law.

Implement a Dual Pricing Program 

Similar to a Cash Discount Program but much easier to implement, 2 prices are presented to your customer at the point of sale. A cash price and a card price.


The ability to accept credit cards as a form of payment brings big benefits to sellers, but it usually comes at a cost, and it’s the seller who has to pay. But now you know that you can avoid much of the expense by choosing a merchant account and payment processing equipment that allows you to implement a Surcharge Program , Cash Discount Program or a Dual Pricing Program.

Many merchants spend thousands of dollars a year just on credit card transaction fees. Some spend thousands a month. Such an expense may make the players in the credit card industry a lot of money, but it can be a big financial burden to merchants. At best, it limits the growth of your business by using up capital that would otherwise be used for improvements, marketing, or expansion.  

At, we offer credit card surcharging, cash discounts and dual pricing  as 3 solutions that let the customers make up for the expense of payment processing, thus offsetting the cost the merchant has to pay on each card transaction. Most of your customers won’t mind the fee, as these programs are already being used in thousands of consumer-facing businesses nationwide. Those who do mind can simply pay another way, such as cash.

To learn more about how to implement a cash discounting or zero fee processing program in your business, call us at (855) 483-9390 or get in touch with our team online.

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