Coastal Pay's Zero-Fee Gateway Aims to End Merchant Processing Costs

SAN DIEGO, CA – April 23, 2026 – Payment technology company Coastal Pay today launched a next-generation payment gateway that promises to eliminate processing costs for merchants, a move that could significantly disrupt the traditional fee structures of the payments industry. The new Coastal Pay Gateway offers enterprise-grade features with no monthly or per-transaction fees, aiming to solve a major pain point for businesses of all sizes.

“We built Coastal Pay Gateway to solve a real pain point: merchants are tired of paying fees on every dollar they earn,” said a spokesperson for Coastal Pay in the official announcement. “Our platform gives businesses the tools to grow without the financial drag of traditional payment processors.”

The platform's core offering is a "zero-cost" processing model, which, combined with a suite of modern payment tools, positions it as a bold challenger to established fintech giants.

The Mechanics of a 'Zero-Cost' Model

At the heart of Coastal Pay's offering is the ability for merchants to shift the cost of credit card acceptance directly to the cardholder. This is achieved through two primary methods: compliant surcharging and dual pricing. Surcharging involves adding a small percentage-based fee to credit card transactions to cover the merchant's processing costs. Dual pricing, on the other hand, involves displaying two distinct prices for goods or services—a lower price for cash or debit payments and a higher price for credit card payments.

Both strategies are designed to operate within the complex rules set by major card networks like Visa and Mastercard. By leveraging these models, merchants can effectively offset the 1.5% to 3.5% in interchange fees they typically pay on every credit card sale. For a small business with tight margins, this can translate into thousands of dollars in annual savings, directly boosting profitability.

Beyond shifting fees, the gateway also employs interchange optimization. This "smart routing" technology analyzes transaction data and enriches it with additional details to ensure each payment qualifies for the lowest possible interchange rate from Visa and Mastercard, minimizing costs at the network level even before any surcharges are applied.

Navigating a Complex Regulatory Maze

While the promise of eliminating processing fees is compelling, its implementation is far from simple. Merchants adopting surcharging must navigate a dense and evolving patchwork of state laws and card network regulations. Coastal Pay's claim of "compliant surcharging" hinges on its technology's ability to manage these rules automatically.

Card network guidelines are strict. For instance, Visa generally caps surcharges at 3%, while Mastercard's limit is 4% or the merchant's actual cost of acceptance, whichever is lower. Critically, these fees are prohibited on debit and prepaid card transactions, requiring a system that can instantly identify the card type at the point of sale. Merchants must also provide clear and conspicuous disclosure to customers before the transaction and on the receipt, and they must notify their processor and the card networks 30 days before implementing the practice.

State laws add another layer of complexity. As of 2026, states like Connecticut, Maine, and Massachusetts outright ban credit card surcharges. Others permit it with specific limitations. Colorado, for example, limits surcharges to 2% of the transaction amount. New York's law, effective in early 2024, mandates that merchants post the total credit card price, including the fee, to ensure full transparency. In California, the "Honest Pricing Law" (SB 478) makes traditional line-item surcharges illegal but allows for dual pricing models where both cash and credit prices are clearly displayed. The success of Coastal Pay's platform will depend heavily on its ability to automate compliance with these varied and stringent requirements, protecting merchants from potentially severe penalties.

The Consumer Side of the Equation

The shift to merchant-led fee structures inevitably places the consumer at the center of a new transaction dynamic. As regulators like the Consumer Financial Protection Bureau (CFPB) crack down on so-called "junk fees," the transparency of surcharging and dual pricing models is under intense scrutiny. The key to consumer acceptance is clear, upfront communication.

For many customers, the convenience of using a credit card and earning rewards may outweigh a small, clearly disclosed surcharge. However, other consumers may be deterred by the extra cost and opt for debit cards or cash to avoid the fee. This could potentially alter purchasing behavior and even impact customer loyalty if the fees are perceived as unfair or hidden.

Industry analysts note that framing is crucial. A "cash discount" is often perceived more positively by consumers than a "surcharge," even if the final prices are identical. Businesses adopting these models face a relational challenge, needing to educate their customers on why the fees exist without causing friction at checkout. The ultimate impact will vary, depending on the industry, customer base, and the merchant's approach to transparency.

A New Battleground in Fintech

Coastal Pay's launch enters a competitive landscape where many players are already trying to lower merchant costs. However, its approach differs from prominent competitors like Stax and Payment Depot, which operate on subscription-based models, charging a flat monthly fee for access to direct-cost interchange rates. While these models reduce costs, they don't eliminate them for the merchant in the way a surcharging program does.

To further differentiate itself, Coastal Pay has bundled its zero-cost gateway with a robust set of modern features. These include QR code payments for contactless commerce, text and email invoicing for faster collections, and a customer vault for secure, recurring billing. A fully customizable, PCI-compliant hosted payment page allows businesses to start accepting payments quickly, while the promise of Instant Payouts in the coming year will enable merchants to access their funds in real-time.

Perhaps most strategically, the platform is "white label ready." This allows Independent Sales Organizations (ISOs) and other software partners to rebrand and sell the gateway as their own. By providing the underlying technology for others to build upon, Coastal Pay is positioning itself not just as a direct-to-merchant provider but as an infrastructure player aiming for rapid, scalable growth through partnerships. This strategy could significantly accelerate its adoption and challenge the market share of established payment providers by empowering a wide network of resellers.

The success of this ambitious model will ultimately be tested in the market, hinging on its ability to deliver true cost savings for merchants while ensuring both regulatory compliance and a transparent, acceptable experience for the end consumer.