Legally Avoid All Credit Card Processing Fees

By Ken Givens, Director of Sales, US Merchant Payment Solutions LLC

Credit Card Surcharge Ban MapPeter Freeman, the co-owner and “head jerk” at a Pharmacy and Soda Fountain shop, said credit card swipe fees are his biggest business expense after rent and payroll. He estimates he spends $15,000 a year on the 2 to 4 percent swipe fees that credit card companies typically charge to cover the cost of processing payments.  Many business owners agree with him!

But now, due to a recent settlement between merchants and credit card giants Visa and MasterCard, businesses in Texas and 9 other states are allowed to offer a discount for customers paying with cash avoiding the Credit Card Transaction costs.  Forty states allow surcharges for card charges as well as cash discounts.

“Retailers offer cash discounts because they want to reward customers for taking [transaction] costs out of the system,” said Jeff Lenard, a spokesman for the National Association of Convenience Stores in Alexandria.

In Australia it took several years for similar action to catch on, but many companies, and then entire industries, began dipping their toes into surcharge territory.  It evolved gradually — one airline would try it and see if they could pull it off, and then you’d see all the other airlines start to do it, too. Then hotels and so on. Now a large portion of the world’s merchants give cash discounts or charge card payment surcharges, saving them thousands in overhead.

Mitchell Katz, spokesman for the Federal Trade Commission, said: “The Dodd-Frank law prohibits a payment card network such as Visa ‘from inhibiting the ability of anyone to provide a discount for payment by cash, checks, debit cards, or credit cards.”

However, it must be disclosed, either with a written policy or conveyed verbally to customers before the transaction.

In Texas, the State Attorney General stated: “businesses can discount the regular retail price of an item for consumers who pay cash.”

The Texas Finance Code also allows for Cash Discounts, and card payments to be assessed an increase to the ‘regular’ price of the product or service.

Section  339.001  of  the  Texas  Finance  Code states:

  1. Cash discount

Section 339.001 prohibits surcharges for paying by credit card, but it does not  prohibit discounts for paying by cash, check, debit card, or other methods.

Definition of Discount: A surcharge is an increase from the regular price of a good or service, but a discount is a  decrease from the regular price.

The federal Truth in Lending Act allows sellers to have two prices (one for cash and one for credit), as long as the creditcard price of the good or service is also the regular price.

IMPORTANT TO NOTE: The processing system must have special software so that the ‘regular price’ must show in the point of sale system or the credit card machine receipt to the customer. Per regulations it cannot be added to the price total by hand and then entered into the POS. The receipt must clearly show the original ‘cash discount’ price, and the fee that brings the ‘cost’ to the ‘regular price’.

Want more information on how you can eliminate credit card transaction and processing fees in your business? Ask us for a free information packet called “Reverse Processing”.  Call 888-995-3995 or email or complete a contact form at mention ‘Reverse Processing’ to receive the free information.



About the Author:

Ken Givens is the Director of Sales for US Merchant Payment Solutions and has been in the payment processing industry for over 23 years. He has helped businesses of all sizes accept card, checks, and even cash safely and securely.  Ken collaborates with over 25 bank managers around central Texas, including financial institutions such as Frost Bank, Wells Fargo, First State, Horizon Bank, Texas Health Credit Union, and many more because of his one-on-one approach and local support. He provides businesses of all sizes the tools to accept and lower the fees they pay to accept all forms of payments.  His company Guarantees to Lower costs or pay the business $500 for letting them try.  Processing solutions include:

  • Cell Phone/iPhone/iPad/Laptop Card Readers
  • Mobile Wireless Credit Card Terminals with Integrated Printers
  • E-Wallet/Tap-N-Go/ApplePay Card Readers Solutions
  • Computerized Multi Station Point of Sale Registers
  • Ecommerce Sales/Donation Website Integration

Learn more about Ken by contacting him at or calling 888.995.3995.