Could a Limited Acceptance Program be right for you?

Credit card processing fees can be expensive but as a merchant you do not want to cut them off as it could potentially hurt your business’ bottom line by driving away paying customers. There is middle ground though it should be entered into lightly.

A merchant can enter into a Limited Acceptance Program. Both Visa and MasterCard have such programs available. The program allows a merchant to accept debit cards but not credit cards. The interchange fee that is charged will be significantly lower for a debit card than it will be for a credit card which could lead to major savings and it may be a way to save on surcharge fees issued by a state’s government. Most transactions will still be able to be processed and this may be a move a merchant that does not make large sales could benefit from. The program can also be entered into to accept credit cards only.

There are rules though that must be followed. The merchant must register with the card processor as a Limited Acceptance Merchant and must provide reporting to those companies when requested. Any merchant that enters into the program must also accept any card from that network, whether issued by a US bank or an international bank. Visa requires a merchant to remove any of their signage and replace it with a limited acceptance sign. MasterCard also provides (but does not require the use of) a limited acceptance sign but does require that a merchant display it for at least three months if they ask for the signage.

The program has other benefits as well. If debit cards only are accepted not only do the interchange and surcharge fees get reduced but fraud can be fought as well. If a PIN is required to complete a transaction and entered correctly a customer will have a harder time making a chargeback and claiming fraud. For a credit card a business can add a surcharge (in a state where it is legal) in order to make up for the interchange fee.

A Limited Acceptance Program may or may not be right for your business and working with a credit card processor can help figure out if it is or not. The program should fit the needs of your business as well as those of your customers and that may require you to sit down and work out the math. Either way it is good to know that there are more than just a one-size-fits-all option for merchants and that it is possible to make your processing work for your business.