What you need to know about Cash Discount Program

1. What you need to know about Cash Discount Program vs. Surcharge Program It’s easy to see why business owners love legal Cash Discount and surcharge programmes. While credit card payments for your business may seem like an obvious option, the ease of opening a merchant account to receive this perk comes with a price. Each transaction that you initiate with a credit card processor will incur a fee. Visa, MasterCard and other credit card platforms take a cut of your earnings. It’s vital to provide digital payment options for your customers if you want your business to operate according to today’s standards. What is Cash Discount Legal and what is it? Cash Discount is when a merchant offers a discount to customers who pay in cash, rather than with credit cards. This program is popular among business owners for many reasons. Cash is easier than credit cards, because there is no middleman (AKA the issuing bank and credit card processing company). A cash discount can also be used in your business. Benefits of a Cash Discount Program Before you offer cash discounts to your customers, there are some key points you need to understand. Get rid of friendly fraud using a cash discount Accepting credit card payments has its drawbacks. These annoying charge reversals can be costly and even detrimental to your business. It can reflect negatively on your business when a merchant initiates chargebacks for any reason. If you have too many chargebacks, your business could be subject to a high-risk merchant account . Cash Discount Processing Lowers Account Fees A cash discount serves one main purpose: it doesn’t cost you any merchant account processing fees. Cash payments are deposited directly into your cash register. There are no additional fees. No percentages. There are no rates. You get what you see.

2. Cash Discounts Diversify (and Attract) Growth Your business can use a cash discount to attract customers. The added benefit of a cash discount may make customers more likely to return to your business. You’re offering a discount on items that customers might otherwise have purchased at full price. What is the Difference between Surcharge and Cash Discount? The difference between the fee-recovery methods is minimal in theory. Surcharge programs increase the cost of credit cards, while cash discount programs lower the cost of cash. The main difference is the level of compliance. Surcharge programs do not apply to cash purchases, debit cards, or ACH payments, and other types of transactions. Merchants will typically adjust the percentage of this surcharge based on the purchase amount and the added tax. Merchants charge this surcharge because credit card processing costs more, which means that profit margins are lower for low-cost items. Cash Discounts and Surcharge Programs are Not for Everyone You can see that incentive programs offer many benefits to merchants. There are some things you should consider. You can expect that things will not go according to plan if you offer a surcharge or cash discount. Your well-intentioned program could backfire.