Right about now, you’re probably thinking, “Hey, wait a minute. Haven’t they already written to me about non-cash adjustments (cash discounting) before? Why are they writing about it again?” The reason is simple. The past two years have been brutal for many of our merchant partners, and a number of them have turned to cash discounting as a way of reducing their credit card processing costs with very favorable results. A number of other partners are starting to inquire about how to go about setting up a cash discounting program as we prepare to enter another new year, so let’s go over this one more time.
What is a cash discount program?
A cash discount is when a business offers a discount to customers who pay by cash or check, instead of with a credit or debit card. The business owner adds a customizable service fee to all credit and debit card transactions, and then rewards customers who pay by cash or check by giving them a discount. Cash discount programs are on the rise because they can offset payment processing costs for business owners, and because experience has demonstrated that those who have implemented these discounts have seen virtually no negative reactions from their customers.
Is a cash discount program the right choice for my business?
More and more of our merchant partners are opting to offer a cash discount, but is it the right choice for you? If you offer a cash discount, you are likely to see more purchases made with cash or check as opposed to credit or debit card, so you’ll see a sizable reduction in your credit card processing fees. That doesn’t mean cash is free, of course. It will cost you time or money to count the cash and take it to the bank. Small businesses can also be susceptible to theft of cash by employees. In addition, a number of studies have shown that customers who pay with credit cards spend more money, so you may not want to motivate customers to use cash rather than card or check.
Can I offer the cash discount program in my state?
Yes, the cash discount program is available in all fifty states.
Is cash discounting the same as a surcharge?
No. People sometimes confuse cash discounting with surcharging but they are not the same. A cash discount is a reduced price paid by customers who use cash or check rather than a credit or debit card. A surcharge is an extra charge that applies to customers who pay with a credit card rather than other forms of payment, including debit cards, cash and check. Many states – California, Colorado, Connecticut, Florida, Kansas, Maine Massachusetts, New York, Oklahoma, and Texas, plus the U.S. territory of Puerto Rich – do not permit a surcharge.
“A cash discount is a reduced price paid by customers who use cash or check rather than a credit or debit card. A surcharge is an extra charge that applies to customers who pay with a credit card rather than other forms of payment, including debit cards, cash and check.”
How do I implement a cash discount program?
There are a number of guidelines that must be followed by merchants participating in a non-cash adjustment program, but that’s where we come in. Our technology allows this to happen and keeps you within the guidelines of Visa, Mastercard, and processor regulations. You’ll need a credit card terminal that is pre-programmed with cash discount processing. Next, you’ll need to notify your customers of the service fee as well as the cash discount. We can provide you with signage to help you provide notification at all entrances and points of sale.
Ready to take the next step?
Is a cash discount program right for your business? That depends on many factors, as discussed in this blog post. But if you’re ready to take the next step, we’d like to invite you to learn more about how we can help you get started. Just contact your Commonwealth representative or call us at 800-866-3944 and we’ll be happy to answer any questions you may have.