As the cost of credit card processing continues to rise for merchants, many are seeking ways to reduce this expense. One solution is implementing a cash discount program, which incentivizes customers to pay by cash or check, thereby offsetting the payment processing costs for the business.
A cash discount program is when a business offers a discount to customers who pay by cash or check instead of using credit or debit cards. By including a service fee in the posted price, cash payments offset the fees associated with card transactions.
It is important to note the main difference between a cash discount and a surcharge. A cash discount is when a merchant offers a discount on the posted price for cash customers, whereas a surcharge is when additional fees are added to the posted price for customers who pay with a card.
For example, if a business lists a product's price at $15.00, a cash discount would mean charging cash-paying customers less than $15.00 at the register. A surcharge would mean charging card-paying customers more than $15.00 at the register.
The benefits of cash discount programs for merchants include reduced or eliminated card-processing fees, an increase in cash payments, and a reduction in chargebacks. Additionally, offering discounts can attract customers and lead to increased sales.
So whats my opinion on cash discount?
I would recommend it for businesses that take orders at the counter and are looking to push more cash sales. If you have a full service restaurant there are better programs out there for cutting cost. Stay tuned, we will dive into that more on our next few blogs!
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