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What is a Cash Discount Merchant Services Program?

As the mechanism of credit card processing is becoming increasingly complicated for merchants, most of them seek avenues that will allow them to reduce the given expense. One of the leading avenues is the adoption of a dedicated cash discount program that aims at incentivizing customers to make payments through check or cash. This helps in offsetting the overall payment processing expenses for business owners out there.

What is a Cash Discount Program?

Businesses that make use of a proper cash discount program provide a discount to the customers who make payments by either check or cash rather than using a debit or credit card.

Merchants are capable of incentivizing cash payments by providing a discount on the posted debit or credit card prices for customers that ensure payments through check or cash. By ensuring a service fee in the given price, cash payments tend to offset the charges associated with payment processing with respect to card transactions.

Benefits of a Cash Discount Program for Merchants

  • Reduced Fees: One of the major benefits of going with a cash discount program for merchants is eliminating or reducing fees associated with card processing. In simple words, when you decide to not process cards, you can avoid paying for the given services.
  • Increase in Cash Payments: While most customers prefer using cards, when you offer a discount, it will definitely help in incentivizing increased cash payments. This implies quicker access to the respective funds for the given merchant as processing times get eliminated. To top it all, reduced card payments by favoring cash will also significantly help in reducing the opportunities for frauds.
  • Reduced Chargebacks: Due to the reduction in the frequency of card payments, the chargebacks also get reduced. If you have been struggling with an increased number of chargebacks, then you can opt for the relevant cash discount program. It will help in reducing the risks of chargebacks continuing at the ongoing rates.
  • Getting People Through the Door: There are some marketing tricks that turn out to be more enticing than a business that offers discounts on its marked prices. Naturally, customers want to ensure savings as much as they can. A cash discount offer might appear small. However, it is ample to ensure that people are going through the door. This helps in increasing the chances of additional purchases.

Difference Between a Cash Discount Program and a Surcharge Program

Businesses across the world are checking out cash discount programs of different types. It is not even hard to analyze the reason. This is because most business owners tend to lose somewhere between 2 to 4 percent in the form of credit card processing fees for every single transaction. In the modern days when everyone wants services that are cheap and quick, like in the case of same-day funding, it comes as no surprise that the process of cash discount on card processing is increasing day by day.

The mechanism of cash discount processing is gaining impetus in the world. A typical cash discount program is a form of credit card processing that goes through the cost of acceptance to the customers who opt for paying with a debit or credit card. With the help of cash discount merchant services, business owners are allowed to continue accepting all major credit cards. However, there is no loss of 3 to 4 percent of fees in the process.

A cash discount is the scenario in which merchants tend to offer a discount on the listed price for customers who pay through cash. On the other hand, surcharge is the scenario in which additional fees get added on top of the listed price for customers that move forward with paying with the help of a card.

In case of a cash discount, the customer will be paying less than the given price. Those who continue using the cards will be simply paying the listed price. On the other hand, in case of the surcharge, customers who will be using cards will be paying more on top of the posted price.

How Does a Cash Discount Program Work?

The process of cash discount is known to work by offering a discount to the customers who opt for paying in the form of cash rather than a debit card or a credit card. Customers who opt for paying with a credit card will be paying the posted amount. This is because the processing amount gets built into the product’s cost. This will allow the business owners to ensure full payments from the customers while not incurring any type of credit card processing fees.

Is it Legal to Offer a Cash Discount Program?

One of the most common questions that is encountered is, “Is a cash discount program legal?” It is completely legal.

Which Businesses Work Great With a Cash Discount Program?

Some businesses are known to work better with a cash discount program. In most cases, it depends on whether or not the customers will be upset about going for a service fee that comes included in the respective transaction. The business owner will then know it best whether or not the given type of payment processing account will be working for them. However, there are specific industries that usually work great with the accounts related to cash discount processing. For instance, service-based industries or services usually work great in this scenario –including HVAC, electrical, automotive shops, landscaping, and others.

Conclusion

Hopefully, now it is clear about what exactly a cash discount program is and what it can imply for your business. As you evaluate each of the individual factors, you can ensure an informed decision on whether or not the given cash discount program is perfect for you. However, when you analyze that it is the right solution for your business, then ensure that you are choosing the right payment processing provider to help you implement the same properly.