What is a Cash Discount Program

We answer all your frequently asked questions about cash discounts

What is the Cash Discount Program?

A cash discount program is a type of credit card processing that allows a business to offer a deduction of their services or goods to customers by motivating them to pay with cash. If the merchant chooses to pay with credit cards, the business can pass the cost of acceptance to the cardholder thus allowing the business owner to continue to accept all major credit card but without the loss of discount fees.

We’re sure you have other questions, and we have answers – scroll down to find answers to our most frequently asked questions.

What Exactly Is Included In A Cash Discount Program?

We’re ready to help you completely eliminate those pesky credit card fees. Working in the industry for decades, we’ve figured out what works best with a Cash Discount Program and we’re ready to pass that on to you. We’ve created a program that allows you to collect 100% of your sales revenue by applying a Cash Discount Fee to customers paying with checks, credit, or debit cards.

What’s Included?

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Eliminate Monthly Processing Fees

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Collect 100% of Your Revenue

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Incentivize Cash Payments

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Online Cash Discount

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No Transaction Fees

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Won’t Disrupt Your Sales Flow

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Next Day Funding is Available

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POS Cash Discount

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Free Disclosure Signage

A Side-by-side Comparison Of Cash vs Credit Card Payments Showing How A Cash Discount Program Works in Real Time:

Cash Payment

A customer walks to a register with $10 worth of goods. The customer sees a sign that says a 5% service charge is added to all purchases except for cash payments. By paying with cash the customer gets a 5% cash discount.

The customer has cash available to them and decides to pay with cash. Their total is thus $10.

The cash discount applied is a small reward to customers paying with cash. It rewards them for paying with cash while rewarding you as a business owner because you don’t have to pay transaction fees on your credit card payments.

Credit Card Payment

A customer walks to a register with $10 worth of goods. The customer sees a sign that says a 5% service charge is added to all purchases except for cash payments. By paying with cash the customer gets a 5% cash discount.

The customer doesn’t have cash on them and decides to pay with a credit card. Their total is thus $10.50.

The cash discount program allows customers to pay with a credit card, just like normal, but they take your transaction fee on for you. The choice is up to the business owner – take on the fee or pass it on as a cash discount to your cash-paying customers.

In both of the above cases, the customers were paying for $10 worth of goods but the customer paying with a credit card basically paid their own transaction fee. By paying with cash, the first customer saved 5% on their goods; thus a cash discount program.

Paying with a credit card is convenient for customers but it can be costly for merchants. Offering a cash discount is a great way to tip the scales into your favor as a business owner.

Other Important FAQs

IS CASH DISCOUNT PROGRAM LEGAL?

The short answer is Yes. Offering Cash Discount is legal in all 50 states all due to the Durbin Amendment which states that businesses are permitted to offer a discount to customers as an incentive for paying with cash. As long as proper signage is disclosed clearly and visibly about the program to the consumer, the merchant can actually save on processing fees which can add up monthly.

IS IT LEGAL TO PASS CREDIT CARD FEES TO CUSTOMERS?

The Durbin Amendment (part of the 2010 Dodd-Frank law), which was a provision of United States Federal Law, 15 U.S.C. § 1693o-2, that required the Federal Reserve to limit fees charged to retailers for debit card transactions. The Durbin Amendment added a new Section 920 to the Electronic Fund Transfer Act regarding debit interchange transaction fees and rules for debit card transactions. Disclosing that merchants can offer an incentive or discount to their customers who are paying by alternative methods other than a credit/debit card. (§ 920. Reasonable Fees and Rules for Payment Card Transactions.)

HOW DO I USE CASH DISCOUNT PROPERLY?

In order to be compliant, merchants with a Cash Discount Program require to display signs by the entrance and in front of all point-of-sale locations. Additionally, a clear display of based cost, cash discount, and total of sale must be on the customers’ receipt.

DO I HAVE TO GIVE DISCOUNTS OR LOWER MY PRICES?

No. The signage we will provide to you states, “All Prices Posted are the Cash Price.” This means that your prices do not have to be adjusted. The equipment will automatically add the service fee to your cash price if they use a card.

WHAT IS THE DIFFERENCE BETWEEN CASH DISCOUNT AND SURCHARGE?

A cash discount is when a merchant displays credit card prices of goods being sold and offer a discount on that price for consumers who pay with cash.

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.

WHAT ARE THE AVERAGE FEES FOR CREDIT CARD PROCESSING?

Although we used 5% as the fee in our example above, most of the time credit card processing fees fall in the 2-4% range for most businesses. Each merchant account has a set credit card rate it charges qualified cards, mid-qualified cards, and non-qualified cards. That rate differs in most cases on each transaction. Actual processing and monthly fees are determined by the card types and any merchant fees added on top of the actual cost to process a credit card payment.

WHAT HAPPENS IF THE PROGRAM IS NOT FOR ME?

If you are unsatisfied with the Cash Discount Program, we would be happy to switch you to a traditional processing rate.

Ready to Dive In?

Find out how much you’ll save with our Cash Discount Program today with a free complimentary analysis by one of our payment specialists. It’s simple, we’ll offer you a FREE, confidential Instant Savings Quote today right here on our website. To learn your effective rate, avoidable fees, and any potential savings, please upload your merchant statement below.