Dual Pricing

Guide to Dual Pricing in Credit Card Processing

Dual pricing, also known as differential pricing or two-tier pricing, is a strategy where merchants charge two different prices for the same product or service – a lower price for cash payments and a higher price for credit card payments. The price difference is intended to offset the fees associated with credit card processing.

How Does Dual Pricing Work?

With dual pricing, the merchant sets two price points:

  • Cash price – This lower price is offered to customers paying with cash or with debit cards. Cash transactions have minimal processing fees.
  • Credit card price – This higher price is charged to customers paying with credit cards. Credit cards involve interchange fees charged by card networks, which increase processing costs.

The price difference covers the extra credit card fees, so the merchant receives the same base amount regardless of payment type.

Examples of Dual Pricing

Some common examples of dual pricing:

  • Gas stations charge a lower price per gallon for cash payments vs credit cards.
  • Retailers set different prices for items based on the payment method.
  • Service businesses like auto repair shops have different labor rates for cash vs credit card customers.
  • Restaurants dual pricing items or adding credit card surcharges to the final bill.

Is Dual Pricing Legal?

The legality of dual pricing varies by state. Some states prohibit credit card surcharges but allow discounts for cash. Others restrict differential pricing entirely. Merchants must check regulations for their state.
For example:

  • New York bans credit surcharges but permits cash discounts.
  • California allows dual pricing but requires disclosure of the price difference.
  • Massachusetts prohibits credit card surcharges but allows cash discounts.

Implementing Dual Pricing

Follow these steps to implement dual pricing:

  • Review state laws on differential pricing for compliance
  • Determine appropriate cash and credit prices.
  • Prominently disclose pricing policy and difference
  • Apply for dual pricing with Shark Processing
  • Update POS systems to charge the correct prices.
  • Train staff on dual pricing procedures
  • Monitor impact and adjust as needed.

Learn More

To learn more about dual pricing and applying through our payment processing, please contact us at (800) 567-3019 or visit our contact page to fill out our online request form. We’re happy to answer any questions!


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