What Are Cash Discount Programs for Credit Card Processing?

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For small businesses, credit card processing fees can have a big impact. Processing fees can run 2-4% per transaction, depending on the industry. Especially for smaller shops, those small percentages add up to a large hit on profits.

That’s why cash discounts are popular for some businesses. Legal in all 50 states, cash discount programs offer a lower price to customers paying cash. For example, say an item would normally cost $50 and the shop selling it has a 4% credit card processing fee. If the shop is using a cash discount program, they would add $2 to cover processing to the item’s price.  A customer using cash would pay a discounted price of $50, while a customer using a credit card would pay the full $52 price.

Surcharge programs follow a similar idea, but instead add the 4% fee on top of the price for customers paying with a credit card. There are more limitations on using surcharges than there are on cash discounts. Additionally, surcharge programs are only legal in 44 states.

Whether your business chooses to cover credit card fees with a cash discount or surcharge, either program comes with cumbersome pricing calculations. A processing system like the free clover flex helps business owners manage cash discount programs without headache.

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How Do Cash Discounts Work in Credit Card Processing?

The idea behind cash discount credit card processing is that businesses can cover bothersome merchant services fees while still having all the convenience of accepting credit cards. Participating businesses charge a service fee to all their customers, then offer a discount to those who are paying with cash.

Using a cash discount program, businesses automatically give a 4% discount to their customers who choose to pay with cash. Processing fees are already included in the transaction. Customers who choose to pay with a credit card are charged a small service fee. The solution allows businesses to effectively accept credit cards with no monthly fee, as most of their processing fees are covered through the customer service fee. Merchant solutions providers that offer this type of program may also provide display signage for point-of-sale stations that clearly outlines the service fee and cash discount to customers.

What Are the Benefits of a Cash Discount Processing Program?

In addition to saving money on monthly credit card processing fees, setting up a cash discount program through your merchant services provider comes with conveniences. Rather than needing to calculate fees and add them manually to each item’s price, you’ll be able to rely on advanced technology like the free clover flex to do the math for you. The program accepts a variety of payment types, including credit cards, debit cards and chip-enabled EMV cards.

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Setting up a cash discount program that still uses a credit card processing system is ideal for restaurants and other businesses that routinely process transactions for small dollar amounts. The program works well with most point of sale systems, making for a seamless transition for businesses that sign up.

If you want to save money on monthly credit card processing fees for your business, consider setting up a cash discount program. Turn to a trusted merchant account services provider for quick setup, excellent customer service, and transparent pricing.

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