What Restaurant Owners Need to Know About Dual Pricing

In today’s world, restaurants are always looking for ways to manage transaction fees and optimize profitability. With the ever-changing financial landscape and technology improvements, there are many advancements in payment processing that restaurateurs should be aware of. One of the more popular solutions to helping a business thrive is dual pricing credit card processing.

What is Dual Pricing? 

Dual pricing is a payment model that allows businesses to implement two different prices for credit card transactions. Businesses and restaurants can adopt this pricing model through a point-of-sale (POS) system, presenting both cash and card price. When a restaurant offers dual pricing, it maintains 100 percentof the cash price for every item sold. While this may seem fictitious, it’s legal in all 50 states.

A perfect example of dual pricing is a gas station. There are always two different prices, one for card and one for cash, with the cash prices being significantly lower. Gas stations significantly lower their credit card processing costs because of this program. However, dual pricing still keeps cash or card, giving the consumer the ability to choose. Consumers who use cash ultimately help the business reduce transaction fees without even knowing. This same solution can be used in restaurants whether its fast food, dine-in or fine dining. 

To implement dual pricing, the restaurant is required to have suitable merchant accounts that accommodate the pricing model. Merchant accounts act as an interface between the business and the card networks, facilitating the authorization and settlement of credit card transactions. To move forward with dual pricing, the restaurant needs to select a merchant account provider that offers flexibility. 

With Visa’s recent surcharge cap of three percent, it’s essential restaurateurs are aware of the different payment solutions available.

What are the Features of Dual Pricing?

When a restaurant adopts dual pricing, business owners can offer a cash and a regular price, allowing them to keep 100 percent of the cash price. This reduces overall transaction fees for restaurants and helps enhance their bottom line. 

The dual pricing model promotes transparency and fairness for restaurants. By clearly delineating the fee structures for card transactions, restaurants can ensure that customers are informed and understand the costs involved for both them and the business. 

To clearly summarize the benefits of dual pricing, it helps restaurants with: 

• Cost savings 
• Improved profitability
• Enhanced transparency 
• Flexibility 

To fully leverage the benefits of dual pricing, restaurants should carefully analyze its transaction mix, understand the customers' payment preferences, and work with a reliable payment processing provider that offers dual pricing options. 

While dual pricing may not work for everyone, it’s a great solution for businesses, as it reshapes the merchant services landscape. Dual pricing is a useful tactic aimed at improving a business's bottom line and putting the merchant first.