Cash Discount Definition 101
Picture this: you’re headed to checkout after a trip to your local market. As you approach the checkout terminals, you notice a sign stating that a service charge is added to all purchases unless paid for with cash. If you have the cash, great — you’ve just saved money on your purchase as if you had a coupon. Exciting, right?
However, if you don’t have the cash, you’ll have to cough up a few extra dollars for the service charge. But what does all this mean? In essence, what you’ve just experienced is the cash discount definition.
More on Cash Discounts
The previous example is just the tip of the cash discount definition iceberg. In more detailed terms, having a cash discount program in place allows a business to offer a deduction of their services or goods to customers by motivating them to pay with cash.
But why would a business want to do this in the first place? As popular as accepting credit cards is, card processing fees can quickly add up each month, taking away from a business’s profits. With a cash discount program, businesses can reduce this loss of revenue by passing these card processing fees onto customers who wish to pay with credit cards. Customers paying with cards will see the charge added to their receipt, while those paying with cash will see it waived.
Cash Discount Benefits
The cash discount definition is pretty simple to understand. And, while a cash discount program may seem annoying to customers who don’t carry cash with them, it presents various benefits to business owners, including:
- Reduced monthly credit card processing fees
- Incentivizes cash payments over card payments
- Collection of 100% of sales
- No transaction fees
- No disruption to your business’ sales flow
Cash Discount vs. Surcharge
A topic of frequent debate is whether or not a cash discount is different from a surcharge. Spoiler alert: they aren’t actually the same thing. In fact, a cash discount is when a merchant displays credit card prices of goods being sold and offers a discount on that price for customers who pay with cash.
Conversely, a surcharge is when a merchant displays cash prices of goods being sold and then charges an additional fee on top of that price for consumers who pay with a card. Essentially, cash discount programs are not credit card surcharges because they do not impose a fee that is added to a credit card transaction.
What Industries Can Benefit from a Cash Discount Program?
We’re glad you asked! When it comes to a cash discount program, there really isn’t a wrong and right industry for it. It all depends on how you like to operate your business and if you’re willing to take on that service charge instead of passing it onto the customer. Here are some of the many industries we work with every day to give you a better picture:
- Retail sales
- Child care
- Restaurant and bars
- Pest control
- Technology services
- Medical and dental offices
- Tax prep
- Auto parts and sales
- And many more
As you can see from the list above, we’re no stranger to different industries all over the map. We’re confident that it could be the right fit for you and your business.
Ready to Get Started?
By now, you’ve hopefully grasped the cash discount definition, its various business benefits, and how it differs from surcharges. Credit card processing fees don’t have to cut away from your monthly profits any longer. The truth of the matter is, credit card processing with no monthly fees is possible for all businesses with the right partner.
Does a cash discount program sound like it would benefit your business? Find out how much you could be saving with a cash discount program from Cashdiscounts.com — it may surprise you how much money you’ve been missing out on over the years. Contact our team of experts today to learn more about avoidable fees, effective rates, and more!