The Zero Fee Program is a way for you as a merchant to offset some, or all, of your current merchant service fees without increasing your overall rates. It is a method of implementing a service fee to all customers, while giving a discount to those who pay with cash. Therefore, your posted rates now become the rate for those who pay with cash. Those customers who pay with cash avoid the services fee and all others will see a line item added to their receipt. It is our proprietary technology that allows this to happen and keeps you within the guidelines of Visa, MasterCard, and processor regulations.

As Mitchell Katz, spokesman for the Federal Trade Commission, said in May of 2011: The Dodd-Frank law prohibits a payment card network such as Visa “from inhibiting the ability of anyone to provide a discount for payment by cash, checks, debit cards, or credit cards,” said Katz. “Neither surcharging, nor a zero fee program is illegal.”

No, in fact it’s been around for decades in Europe and is used across the US in gas stations where a zero fee program is offered at the pump. Gas stations have been using this program in the US for over 15 years. Many national, state, and local governments including the DMV, Secretary of State, Post Offices, Schools, Courts, and the IRS implement a Service Fee.

In order to correctly implement a Zero Fee program, you don’t need to change any of your prices – you simply post signage (that we will provide) that states that all transactions now carry a 3.99% customer service charge. The proprietary technology is provided in conjunction with our hardware and processing partners.

However, any consumer who pays with cash, will have this fee waived. Your posted prices are your cash prices. Consumers who pay with a method other than cash will see a 3.99% Zero Fee Program fee listed on their receipt at the register. The additional 3.99% service charge is programmed into your terminal, hence there are no additional steps for you.

 Until recently, Visa and MasterCard regulations made it clear merchants could not charge more to a consumer who used a credit card over other methods of payment. As a result of a 2013 consumer who used a credit card over other methods of payment. As a result of a 2013 lawsuit against the card networks, merchants are now allowed to impose a surcharge in all but 10 states and Puerto Rico. We’ll address the surcharge in the next question below.
However, there has always been a stipulation in the Visa and MasterCard regulations that allow for a discount when paying with cash.
While this may seem like an issue of semantics, it’s simply adhering to the wording of the Visa and MasterCard regulations that allow the Zero Fee Program to be implemented.
Here’s the verbiage specific to both Visa and MasterCard Rules and Regulations: From MasterCard Rules 15 November 2016

From Visa Core Rules and Visa Product and Service Rules – 22 April 2017

No, the Zero Fee program, while seemingly similar, is actually very different, particularly in the eyes of Visa and MasterCard. As mentioned in the preceding Q&A, the 2013 ruling against the card networks resulted in merchants now being able to implement a surcharge. The surcharge is allowed in all but 10 states (California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas, plus the U.S. territory of Puerto Rico).
Those states claim that a surcharge is not fair to consumers. We find it somewhat laughable that it’s not fair for consumers to pay for the cost merchants incur to provide goods and services while it’s been perfectly OK for merchants to pay for the rewards programs associated with the credit cards that consumers use.
You do realize that right? Every time you see an ad on TV, in print, or hear on the radio that talks up the benefits and rewards associated with a particular credit card, those benefits come in the form of higher Interchange rates that merchants pay to be able to accept those cards. The increase in fees is not borne by the card issuing banks or credit card processors – it’s paid for by you the merchant!
The Surcharge carries with it several stipulations:

• Only credit cards may be surcharged – no debit cards
• Signage must be posted for at least 30 days prior to implementing a surcharge alerting your clientele
• There is a 4% maximum that can be imposed
• Surcharging is only allowed in states where the program has not been excluded

With the Zero Fee program, these limitations are not in place, as you are not implementing an additional fee for accepting a credit card, you are providing a discount for those who pay with cash. This is a clear distinction, and one that Visa, MasterCard, and the courts have agreed upon:
With our Zero Fee program, all prices in your store carry a 3.99% Service Charge. The posted prices are your cash price. Those who pay with cash do not have to pay this fee. This is not a situation where those who pay with a credit card pay more.
As Mitchell Katz, spokesman for the Federal Trade Commission, said in May of 2011: The Dodd-Frank law prohibits a payment card network such as Visa “from inhibiting the ability of anyone to provide a discount for payment by cash, checks, debit cards, or credit cards,” said Katz. “Neither surcharging, nor a cash discount is illegal.”
Is this a semantics argument? We’ll let you decide, but most importantly, Visa, MasterCard, and the courts allow for this distinction.

 When a fee is incorrectly applied to a transaction, any additional fee charged to those consumers using a credit card is labeled a Surcharge and that is expressly forbidden by Visa, MasterCard, and the processing provider without taking very specific steps (see previous question)
The way around this process is to allow us to automate a Zero Fee Program for you which is different than the Surcharge. In the Zero Fee Program you post signage stating that all consumers will now be paying a 3.99% Service Fee, however, for those paying with cash, the fee will be waived. We will automate your equipment so that this fee is automatically added for those customers using any method of payment other than cash (essentially credit cards). While this may sound very similar to the Surcharge Program, it is distinctly different in that everyone is paying an increased fee, but those who pay with cash receive a discount, whereas with the Surcharge program, you are specifically stating that those paying with credit cards will pay more. Most importantly it is aligned with the rules of Visa and MasterCard.

Additionally, you are forbidden by Visa, MasterCard, and the Processor’s rules to profit on a credit card transaction, which could happen if you accidentally charged more than you were being charged by the processor. By utilizing the Zero Fee program, we establish proper pricing for you to ensure you stay within all stated guidelines.

 While nobody wants to pay additional fees, more and more consumers are starting to realize just how expensive it’s been for merchants to accept credit cards. By charging a 3.99% fee on a sales transaction, that’s a small price for customers to pay for the goods and services you provide. And (if paying that fee or Implementing the Zero Fee Program) allows you to stay in business and keep your overall costs lower, it’s a small price to pay.
In fact, surveys have shown that over 80% of respondents stated they wouldn’t think twice about paying that amount (only $1.00 on a $25.00 transaction) for the convenience of using their credit card rather than carrying cash. And we all know that fewer and fewer of us are carrying cash these days…and everyone loves the rewards associated with their credit cards.
Additionally, we’ve all become accustomed to paying $2-4 when we use an ATM and this Zero Fee Program fee is actually cheaper than the ATM fee for most transactions.

If you explain that the Zero Fee program is a way for you to keep providing quality goods and services without increasing your overall prices, most consumers have indicated they understand and are fine with it. And again, a 3.99% fee on an individual transaction generally has a very small impact to the consumer, but for you, the merchant, your savings are significant.

If for any reason you wish to discontinue the Zero Fee Program, we will immediately change you back to traditional Interchange Pricing. You will still save a lot of money on your credit card fees by utilizing our low rate program, which still saves business owners considerably more than their previous processor was charging.

We have been in the financial industry for over 30 years and have always been an advocate acting in the best interest of our merchants, saving our clients millions of dollars each year. The Zero Fee Program offering creates a path to save our clients even more money each month. With the addition of this program, we have multiple options for our clients to choose from – you choose the savings plan that best suits your business. Ask us about Hybrid options if you’d like to cover some of the costs while charging your clients some but not all of the fees.

Terminal leases often have incredibly high rates relative to the underlying piece of equipment you are “renting.” For instance, it’s not uncommon to see a lease on a desktop terminal for $79 per month for 5 years. The retail price of the hardware is often only $300-400 and the cost of that terminal will be $4740 by the time it’s all paid off!

When you know the truth it’s nauseating to make that $79 payment, but if we can save you $300 or maybe even $3000 per month in processing fees, it becomes much easier to stomach. Likely better to continue making the payment and set a calendar event to cancel as soon as possible.

Similar to the previous FAQ on terminal leasing, sometimes cancellation fees can be insultingly high (side note: we never have a cancellation fee!). But often you can wait a month after switching before the fee catches up with you, and by then you will have saved significantly on the new program. In the long run, you will be far better off to switch and start saving as soon as possible.

Yes, while we are currently operating under Visa and MasterCard guidelines, there is nothing preventing them from making changes to their own regulations at some point in the future. The program has been in use in the US for the past 4 years with no indications that either Visa or MasterCard will make changes to prevent it, but it is always a possibility.
If the program were to be disallowed, we would simply switch you to our low cost, Interchange Plus program where you’d pay some of the lowest rates possible within the normal card processing framework.

Here are some links on the topic of the Zero Fee Program, Surcharging, and Visa/MasterCard regulations. They are the opinion of the authors and are independent of DMMS (Danny Mortimer Merchant Services):