It seems that there has been a recent increase in cash discount processing. Data from Google trends indicated that searches for cash discount programs have nearly doubled in the past 18 months. Why the sudden increase?
Cash Discounts Are Nothing New
You might think that this is due to some fresh and innovative program that’s finally made its way into the mainstream, but this is not so. Cash discount programs have been around for many years. Business in Europe have offered cash discounts for decades, and U.S. gas stations have been offering a discount to customers who pay with cash for over 15 years. In fact, many places now offer cash discount incentives, such as:
• The U.S. Postal Service
• District courts
• The IRS
• The DMV
These places have come to realize that while you can’t stop accepting credit card payments, you can find ways to offset your costs that you incur when taking them.
It’s An Incentive, Not A Surcharge
A cash discount is not a surcharge. Credit card companies such as Visa and MasterCard have specific rules regarding surcharges. Surcharging is also prohibited in at least 10 states. Cash discounts are permitted by law and conform to Visa and MasterCard rules.
The best way to describe the benefit of a cash discount program is this: A cash discount is a reduced price offered to customers who pay with cash or check instead of a credit or debit card. Those who pay with a credit or debit card will not receive the reduced price. It’s as simple as that.
Saving Money Has Always Been Popular
As cash discount programs continue to rise in popularity, many businesses are getting on board. It all begins by posting a sign that indicates that a service fee such as 4% will be added to all posted prices. Those who pay by cash or check will not be subject to those fees. This means that the fee will still apply to those who pay by credit or debit card.
That 4% fee will offset the costs that a business must pay to the credit processing company when they accept credit card payments. This translates to a significant savings for the merchant. More exposure and more savings are just two of the reasons that cash discounts are becoming more popular, and it’s likely to continue.