This And That About The Cash Discount Program

While offering customers a discount for paying with cash may sound a bit shady, there is nothing unlawful or fishy about the situation. In fact, establishments have been providing these deals for years. It wasn’t uncommon in the past for retailers, service providers, and other places of business to take percentages off of sales when the consumer paid with money. Of course, the matter becomes a little crooked and dishonest if the person receiving the bills decides not to report the earnings to the IRS.

A Little History

The Dodd-Frank law was established in 2010. The legislation was supposed to save consumers some money. However, research from the Federal Reserve shows that it actually cost purchasers around $8-billion in the first two years. How? By swiping their credit/debit cards to pay for goods or services, the patrons wound up incurring hefty bank fees. Hence, something had to be done and quickly.

Thus, the Durbin Amendment was born. It reduced the amount that retailers paid banks, saving them money, which they could then pass on the customers. This bill also encouraged people to use various payment means, including paper money and coins. To make a long story short, the Durbin Amendment helped establish the cash discount program.

Is The Discount Worth It?

When a person pays with a card, the store is charged a percentage by the bank. The amount varies from institution to institution but is usually around 5-percent or so. If a retailer puts a laptop on sale for $500, which covers expenses and turns a little profit, they are good to go. However, if the client pays with a credit card, after the company pays the 5% rate, the amount they make on the sale is a mere $475. So, the organization would need to jack up the price of the laptop to $525 to assure they do not take a loss.

Now, the cash discount program comes into play. The same company can post clear and visible signs throughout the store, which say credit card customers pay $525 for the laptop while cash clients get it for $500. Displays depicting the store’s participation in the discount program must be placed at entryways, exits, and the point-of-sale locations. It is also notable to mention that things such as discounts and processing fees must be prominently displayed on the receipts. So, don’t send your clients into the arms of competitors with better deals. Instead, get involved in the cash discount program to let them pay how they want, which will, in turn, keep them happy and coming back for more.