RTP® and FedNow® Free Real-Time Payment for Merchants

Integrating surcharge and cash discounting strategies with free real-time payments through FedNow for Point of Sale (POS), eCommerce, and Mail Order/Telephone Order (MOTO) businesses involves a few tailored steps. Here's a comprehensive guide to help U.S. companies and businesses implement these strategies effectively.

1. Understanding the Basics

• FedNow: A real-time payment service by the Federal Reserve enabling instant payments with immediate fund availability.
• Surcharge: Adding a fee to cover credit card transaction processing costs.
• Cash Discounting: Offering a discount to customers who pay using cash or equivalent methods, such as FedNow.

2. General Setup for All Business Types

1. Check Compatibility: Ensure your bank supports FedNow and can integrate with your payment processing systems.
2. Bank Integration: Connect your bank account to your payment systems.
3. Payment Processor: Ensure your payment processor supports FedNow transactions.

3. Implementation for Different Business Types

A. Point of Sale (POS) Systems

1. Update POS Software:

• Ensure your POS system can handle different payment methods and apply discounts or surcharges accordingly.
• Integrate FedNow as a payment option in your POS system.

2. Create Discount and Surcharge Items:

• Cash Discount: Set up a discount item (e.g., -2% for FedNow payments).
• Credit Card Surcharge: Set up a surcharge item (e.g., 2% for credit card payments).

3. Staff Training:

• Train staff to handle the new payment methods and explain the discounts/surcharges to customers.

4. Customer Communication:

• Display signage at the POS to inform customers about the discounts for using FedNow and surcharges for credit card payments.
• Example Signage: "Save 2% by paying with FedNow. A 2% surcharge applies to credit card payments."

B. eCommerce Platforms

1. Update eCommerce Software:

• Ensure your online store can accept FedNow payments.
• Implement a system to automatically apply discounts for FedNow payments and surcharges for credit card payments.

2. Set Up Discount and Surcharge Rules:

• Use your eCommerce platform’s settings to create rules for applying discounts or surcharges based on the payment method.

3. Website Communication:

• Clearly inform customers about the payment options, discounts, and surcharges on the payment page.
• Example Notice: "Pay with FedNow and receive a 2% discount. Credit card payments will include a 2% surcharge."

4. Checkout Process:

• Ensure the checkout process dynamically updates the total amount based on the payment method selected by the customer.

C. Mail Order/Telephone Order (MOTO)

1. Payment Handling:

• For telephone orders, train staff to inform customers about payment options and the applicable discounts or surcharges.
• For mail orders, include information about payment options and discounts/surcharges in your order forms and catalogs.

2. Invoice Adjustments:

• Create a system to manually apply discounts or surcharges when processing payments.
• Ensure the final invoice reflects these adjustments accurately.

3. Customer Communication:

• Clearly state payment options and associated costs in your communications and order forms.
• Example Script for Phone Orders: "You can save 2% on your total by paying with FedNow. If you prefer to use a credit card, a 2% surcharge will be added to cover processing fees."

4. Monitoring and Optimization

1. Transaction Review:

• Regularly review transactions to ensure discounts and surcharges are applied correctly.
• Adjust the rates as necessary based on customer feedback and financial performance.

2. Customer Feedback:

• Gather feedback to understand how customers perceive the new payment options and any issues they encounter.
• Use this feedback to make improvements.

3. Compliance Check:

• Ensure that your practices comply with state and federal regulations regarding surcharges and cash discounting.

Example Implementation Scenarios

POS Example

• Product Price: $100
• FedNow Payment: Customer pays $98 (2% discount applied).
• Credit Card Payment: Customer pays $102 (2% surcharge applied).

eCommerce Example

• Product Price: $100
• Checkout Page:

• FedNow Payment: Automatically applies a 2% discount, final price $98.
• Credit Card Payment: Automatically adds a 2% surcharge, final price $102.

MOTO Example

• Order Form:

• Includes a note: "Save 2% by paying with FedNow. A 2% surcharge applies to credit card payments."

• Invoice Processing:

• Manually adjust the final amount based on the payment method.

By following these steps, businesses can effectively implement surcharge and cash discounting strategies across POS, eCommerce, and MOTO channels, encouraging the use of FedNow for real-time payments and optimizing their payment processing costs.