re: 3% Credit Card Fee

How it works:

Generally speaking merchants pay anywhere from 2.3-3.0% on all charges including on the tips you leave on a credit card. What the processing companies have begun doing like Shift 4 and other is they have begun buying up POS Terminal systems. So what they do now is they come in and offer to give you a free POS System if you will switch from a regular pay your 2.4% setup to a Cash Discount setup. They tell you that you will no longer have to pay the 2.4% if you offer a cash discount and charge your customers who use credit cards what amounts to 4.0% fee. Then what they do is instead of charging you 2.4% on processing fees they raise your processing fees to 3.9% so they can make an extra 1.5% but the clueless merchant is happy to not be paying the processing fees anymore so they go along with it. I did this for a time at my business because I was paying almost $30,000 a year in processing fees on transactions. After awhile I didn't feel good about it and stopped, but when I did do it I had negotiated their fee down to 3.25% instead of the 3.9% they try to slip in behind your 4.0% charges to the customer. All this scheme is is a way for the processing companies to nearly double what they charge the merchant for processing fees by bribing the merchant to charge the customer 4.0% even though most processing fees lie around 2.3%.