For businesses with tight profit margins, few challenges sting more than rising credit card merchant fees. Your company shouldn’t have to give up on taking credit cards to keep operating costs low.
Organizations looking to control merchant costs need a more affordable option. That’s why zero credit card processing fees and zero cost credit card processing programs have gained so much traction in recent years.
What Zero Credit Card Processing Fees Mean
Zero cost credit card payment processing is an alternative way for businesses to manage card acceptance fees. By shifting some or all of the card acceptance costs to the payer, merchants:
- preserve margins
- speed up cash flow
- simplify payments
Software like PDCflow can support the use of zero cost processing merchant IDs (MIDs). Instead of being charged merchant fees on every credit card transaction, businesses can use zero cost credit card processing to cover those costs and increase revenue.
Why Business Leaders Choose Zero Cost Credit Card Processing
Merchant fees can be expensive for small businesses. Retain the revenue you've earned by paying zero credit card processing fees for card transactions.
For business owners, operations managers, executives, and finance leaders, the benefits are clear:
- Protects profit margins: Recaptures money that would traditionally be lost to interchange and merchant processor monthly fees.
- Improves cash flow: Customers still have the option to pay by card or ACH. Additional payment options encourage more transactions overall.
- Simplifies payment acceptance: Your merchant account and payment software, like PDCflow, work together. Offer secure payment channels (email, SMS, or online payment portals) and pass credit card processing fees on with the zero cost model.
- Price of product or service to consumer is $100
- The total cost the consumer pays is $104
- $100 goes to the Merchant
- $4 goes to the Credit Card Processor
Compliance Rules That Shape Zero Cost Credit Card Processing
There are multiple types of credit card fees in payment processing. There are zero cost processing fees, convenience fees, surcharging, and cash discount programs. These fee types may be subject to card brand rules, state regulations, or both.
One factor to understand about zero credit card processing fees: they are not a traditional credit card convenience fee or surcharge. The way each payment processor handles these may differ.
In PDCflow’s case, zero cost credit card processing is applied via a special Tech Fee, charged separately from the customer payment.
Always consult your merchant service processor, internal compliance experts, and legal team to ensure you are following the rules regarding fee-based payments.
Features for Credit Card Fee Compliance
Whether your business charges convenience fees, surcharges, or uses zero-cost credit card processing accounts, it is important to protect your company from risk.
Your software should include features for the basic best practices of credit card acceptance, such as:
- Apply state-specific fee restrictions: If your company needs to skip charging fees to specific states, your software should automatically override the fee to $0 in those cases. PDCflow has this capability built in.
- Display disclosures: Payment pages should include a disclosure about your fees. PDCflow configures zero cost processing accounts with text to notify payers of the Tech Fee they will be charged.
- Maintain an audit trail: It’s essential that your company can access audit trails for completed transactions. In the event of customer disputes or card brand inquiries, these audit trails prove that your organization is following the rules. All PDCflow accounts include transaction audit trails that show important details of customer payments.
Example of Zero Cost Credit Card Processing Disclosures on a PDCflow Payment Portal Page
How Zero Cost Credit Card Processing Works
In a zero cost processing model, your company must acquire a merchant account and choose a software company that can process payments through that account.
The merchant account gives you the ability to accept credit card payments from customers, and your payment processing software, like PDCflow, applies the fee to transactions. How it works:
- The software clearly discloses the fee to payers at checkout.
- The online payment process offers flexibility for customers to pay by credit card or choose ACH instead.
- The zero cost model enacted by your processor passes fees transparently to card users.
- Companies maintain compliance by separating the Tech Fee from the principal amount owed.
- Merchant enters the transaction amount and the Technology Fee is automatically calculated
- Customer accepts the transaction amount and Technology Fee
- Customer enters their payment information
- Customer receives receipt and Merchant receives 100% of the transaction amount
Steps to Implement Zero Cost Credit Card Processing
Implementing any new process requires planning and communication. Owners and managers who want to use a zero credit card processing fee model should follow these steps:
- Establish a clear fee policy: Work with your merchant service provider to understand how zero cost processing works. Create your internal policies based on this information.
- Evaluate how payments are processed: Make sure the fee you charge will be clearly displayed during the payment process. Ask your payment processing software how the payment screen will look for customers.
- Train staff: Operations, compliance, and customer service teams need to be fully informed on how your fee model works, so they can evaluate processes and clearly communicate with customers.
PDCflow’s Zero Cost Credit Card Processing
Without the right software, zero cost credit card processing can create compliance difficulties and confusion for customers. PDCflow solves these challenges with features and options that simplify accounts receivable.
- Merchant account relationships: PDCflow works with merchant service partners to offer zero cost options. Our team can help you through the onboarding process and connect you with trusted experts.
- Can restrict fees by state: PDCflow can block fees from being charged based on where your customers are making a payment.
- Discloses fee at the time of payment: With PDCflow, customers can clearly see a statement at the time of payment that discloses the Tech Fee.
- Separates fee from initial balance: The Tech Fee via PDCflow is charged separately from the payment.
- Take payments via email and SMS, or online payment portal: PDCflow’s flexible software makes it easy to take payments through a variety of channels. Send a request through email or SMS, or direct customers to an online payment page.
- Audit trail: Our audit trail provides detailed information about transactions and can be referenced at any time.
When zero credit card processing fees are implemented with the right technology, merchants keep more of what they earn without unnecessary compliance headaches or back-office rework.
For teams under pressure to protect margins and streamline operations, zero cost processing gives you a competitive advantage.
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- ABOUT THE AUTHOR -
Hannah Huerta, Marketing Specialist
Hannah Huerta is a Marketing Specialist at PDCflow. She creates content for the accounts receivable and payment industry.
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