Question 1

What is merchant processing?

Accepted Answer

Merchant processing is the system that allows businesses to accept credit and debit card payments from customers. It includes the payment gateway, processor, and merchant account that work together to authorize, capture, and settle transactions. Every time a customer pays by card, the merchant processing system handles the entire flow — from the moment the card is swiped or tapped to the moment funds arrive in your bank account.

Question 2

What is a merchant account?

Accepted Answer

A merchant account is a type of bank account that allows a business to accept card payments. It acts as a holding account where funds from card transactions are deposited before being transferred to your business checking account. Most modern payment processors bundle the merchant account with their processing service, so you do not need to set one up separately.

Question 3

How can a business lower credit card processing fees?

Accepted Answer

Businesses can lower fees by reviewing their current statement for unnecessary charges, switching to interchange-plus pricing (which is more transparent than flat-rate or tiered pricing), implementing dual pricing or cash discount programs, negotiating rates with their processor, and eliminating unnecessary monthly or annual fees. A free merchant statement review is the best first step — it shows exactly where your money is going.

Question 4

What is interchange-plus pricing?

Accepted Answer

Interchange-plus pricing is a transparent pricing model where you pay the actual interchange rate set by Visa and Mastercard, plus a fixed markup from your processor. It is generally more cost-effective and easier to understand than tiered or flat-rate pricing, because you can see exactly what the card network charges versus what your processor charges.

Question 5

What is an effective rate in merchant processing?

Accepted Answer

Your effective rate is the total percentage of your card sales that you pay in processing fees. It is calculated by dividing your total processing fees by your total card sales volume. Most business owners do not know their effective rate — a merchant statement review calculates it for you and compares it to what you should be paying.

Question 6

What is dual pricing?

Accepted Answer

Dual pricing is a payment model where businesses display two prices — one for cash and one for card — allowing the card processing fee to be passed to customers who choose to pay by card, while cash-paying customers receive a lower price. It is fully compliant with card network rules when implemented correctly and is one of the most effective ways for businesses to eliminate or significantly reduce their processing costs.

Question 7

What is a cash discount program?

Accepted Answer

A cash discount program offers customers a discount for paying with cash, effectively offsetting the cost of credit card processing fees for the business. Unlike a surcharge (which adds a fee for card use), a cash discount reduces the price for cash payment — which is compliant with card network rules in all 50 states. It is a simple, legal way to protect your margins without penalizing card-paying customers.

Question 8

Is dual pricing legal?

Accepted Answer

Yes. Dual pricing is legal in all 50 states when implemented correctly. Card networks allow businesses to offer different prices for cash and card payments as long as the pricing is clearly disclosed to customers at the point of sale. The key is transparency — customers must be able to see both prices before they pay.

Question 9

What is the difference between dual pricing and surcharging?

Accepted Answer

Dual pricing shows two prices — a lower cash price and a higher card price — before the customer pays. Surcharging adds a fee to the card transaction at checkout. Dual pricing is legal in all 50 states; surcharging is prohibited in some states and has stricter card network rules. Most businesses prefer dual pricing because it is simpler, more transparent, and universally compliant.

Question 10

How does ACH payment processing work?

Accepted Answer

ACH (Automated Clearing House) payments allow businesses to accept bank-to-bank transfers directly from a customer's checking or savings account. The customer provides their bank routing and account number, and the funds are transferred electronically through the ACH network — typically settling within 1-3 business days. ACH fees are significantly lower than credit card fees, making it ideal for recurring billing, B2B payments, and large transactions.

Question 11

What types of businesses benefit most from ACH payments?

Accepted Answer

ACH payments are especially valuable for B2B companies, professional service firms, medical offices, contractors, and any business that processes large or recurring transactions. If your average transaction is over $500, or if you bill clients on a recurring schedule, ACH can dramatically reduce your processing costs compared to credit cards.

Question 12

How much do ACH payments cost compared to credit cards?

Accepted Answer

ACH payment fees are typically a flat fee per transaction (often $0.25–$1.50) or a very low percentage (0.5%–1.5%), compared to credit card fees that often range from 1.5%–3.5% or more. For a $1,000 transaction, ACH might cost $1–$5 while a credit card could cost $15–$35. The savings add up quickly for businesses with high-volume or high-ticket transactions.

Question 13

What POS system is best for small businesses?

Accepted Answer

The best POS system depends on your business type, volume, and workflow. Restaurants benefit from table management, kitchen display integration, and tip handling. Retailers need inventory management, barcode scanning, and multi-location support. Service businesses often need appointment scheduling and invoicing. A good merchant advisor will assess your specific needs and match you with a system that fits — without overselling features you will never use.

Question 14

What is a smart terminal?

Accepted Answer

A smart terminal is a modern payment device that runs on an Android or similar operating system, allowing it to accept all payment types (chip, tap, swipe, digital wallets) while also running apps for reporting, inventory, and business management. Unlike traditional terminals, smart terminals can be updated remotely, integrate with your POS software, and provide a much better experience for both you and your customers.

Question 15

Do I need a POS system or just a terminal?

Accepted Answer

It depends on your business. A terminal is sufficient if you just need to accept card payments at a counter or on the go. A full POS system is worth the investment if you need inventory management, employee tracking, detailed sales reporting, table management (for restaurants), or integration with other business software. We can help you evaluate which option makes sense for your volume and workflow.

Question 16

What is a merchant statement review?

Accepted Answer

A merchant statement review is a free analysis of your current processing statement to identify your effective rate, hidden fees, pricing structure issues, and potential savings. It translates the confusing line items on your statement into plain language so you understand exactly what you are paying and why. Most business owners are surprised by what a review uncovers — unnecessary fees, inflated rates, and billing errors are common.

Question 17

How do I get a free merchant statement review?

Accepted Answer

Simply email your most recent merchant processing statement to chris@peoplesmerchanttrust.com with your business name and phone number. We will review it and get back to you with a clear breakdown of your fees, your effective rate, and any savings opportunities — with no obligation and no pressure to switch processors.

Question 18

How can restaurants reduce payment processing costs?

Accepted Answer

Restaurants can reduce costs by reviewing their current statement to identify their true effective rate, switching to interchange-plus pricing, implementing dual pricing or a cash discount program, using smart terminals that support all payment types, and eliminating unnecessary monthly fees. Restaurant processing has unique considerations — tip handling, table management, and high transaction volume all affect your costs. A free statement review is the best starting point.

Merchant Processing Questions Answered

Merchant Processing Basics

Dual Pricing and Cash Discount

ACH Payments

POS Systems and Terminals

Statement Reviews

Still Have Questions?