Merchants have long known card network rules permit them to charge a different price for accepting cash versus cards, but outside of gasoline retailers, most merchants haven’t done much about it.

One reason they may balk at offering discounts to customers paying with cash could be the difficulty of figuring out an appropriate cash-discount amount, which can vary quite a bit, according to JetPay Corp.

JetPay aims to provide merchants with another way to capture revenue and get around the confusion over cash discounts with “Limitless,” a new card-processing system that debuted Monday. Limitless uses proprietary technology developed by Phoenix-based Hybrid Business Services LLC to automatically calculate the merchant’s cost of accepting card payments, using a flat fee to estimate the average overall cost to merchants for fees associated with credit, debit and prepaid cards. Interchange, network fees, and all other acquiring fees are included in single, bundled fee that’s itemized and added to the receipt at checkout for all purchases, regardless of tender type. For customers who pay with cash, the fee is subtracted from the total. The fee varies on a “sliding scale” based on total ticket size, JetPay says.

Merchants are eager to give customers the option to get a discount for paying with cash, but it’s not easy to execute. “For years, merchants have known the card networks allow them to provide a different price for accepting cash versus cards, but merchants are confused about how to set that discount,” said Peter Davidson, JetPay’s vice chairman.

Berwyn, Pa.-based JetPay is marketing the total card processing service to merchants for $35 a month, with unlimited payment volume. For a separate, one-time cost, JetPay also supplies the terminals designed to work with Limitless. JetPay contends it’s the first company to offer a flat-fee service for any level of transaction volume. “There are services that build in a convenience fee for accepting card payments, but as far as we know, this is the first type of service for any size merchant to automatically calculate merchant-fee costs,” Davidson said.

To market the service, JetPay is partnering with ISOs and using the sales arm of Hybrid Services, which is selling its Hybrid SmartRegister that compatible with Limitless, as well as other terminals manufactured by Equinox. The companies believe many merchants who still haven’t  upgraded their point of sale terminals to the EMV standard are prime candidates for the new service.

“A lot of companies still haven’t committed to an EMV solution, and we’re providing a service that includes contactless, EMV and a streamlined method for handling fees associated with accepting cards,” says Jeff Moskowitz, CEO of Hybrid Business Services.

Marc Abbey, a managing director at consulting firm First Annapolis, says he’s not surprised to see a new service promising to simplify merchant fees.

“The network rules for cash discounts, surcharging and convenience fees all vary slightly, and it can be confusing for merchants,” he says. “A service using technology to embed merchant fees would seem to reduce some of the complexity for merchants, but it doesn’t solve all their problems, and merchants always need to be careful about introducing something that might change a customer’s payment preferences,” he adds.


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