If you’re a small retail business such as a liquor store, restaurant, etc. and pay more than $20 for credit card processing, then a Cash Discount program will benefit your business immensely! A Cash Discount program allows you as a merchant to offset merchant fees by passing on the cost to the customer; by incentivizing a discount through cash payments, you can collect up to 100% of your revenue.
But how do you determine if a Cash Discount program is right for your business, let alone choose a good provider?
Let’s delve into some of the factors you should be taking into consideration.
Knowledge and Support
Familiarize yourself with how the Cash Discount program differs from Surcharging or Convenience Fees, and if the program works with your processor. A major difference to keep in mind when choosing an appropriate program for your business is that Surcharging is prohibited in 10 states, while a Cash Discount Program has no state restrictions.
In order to have a successful rollout, you’ll need proper training, in-store signage, and the support to resolve any questions or concerns that might arise when you deal with a customer. By having all the right information, you can let your customers know about and feel comfortable with the fee, especially since it allows you to keep the cost of your products/services low. A good processor should provide these resources to you and assist with any equipment troubleshooting, billing concerns, or further clarification.
Do you and your customers prefer cash transactions?
When you offer your customers a cash discount, you are incentivizing purchases to be made with cash as opposed to debit and credit card. As a small business with low ticket items, this is a great thing because this means you are not paying processing fees like you would on card transactions. If your customers regularly pay with cash anyway, then the transition to a Cash Discount Program will be rather frictionless.
What is your average ticket price?
Cash Discount Programs are ideal for retail businesses who have a low average ticket price, around $10-$15. In an increasingly cashless economy, consumers are starting to carry cash less and less often, so this is important to take into consideration.
Another thing you want to take into account is the fee that will be added on top of the purchase price if your customer chooses to pay with credit card. If your average ticket is more than say $50, then a fee for using a card (typically 3-4%) might deter a customer from following through with the purchase. If your store carries primarily low-ticket items, don’t fret! The couple of cents added on top of the purchase price to use a credit card is less than insignificant to your customers’ wallet.
Know your demographic
Do you know who your customers are? This is an important one. 10 years ago, pretty much everyone carried cash around. As mentioned previously, we are heading towards the direction of being a cashless economy. Millennials are now driving more and more purchases each day, but guess what? They don’t often carry cash with them and when they do, it’s not a large amount. Evaluate your customers and take this into consideration when implementing a Cash Discount Program for your business.
Cost of Equipment and Potential Savings
Some providers require an initial setup fee or additional charges when setting up a Cash Discount program. The technology required for a correct and compliant Cash Discount program is not compatible with all processing equipment. You want to ensure that the provider is supplying equipment compatible with the required card types and methods of payment, such as EMV-enabled credit cards (chip cards) and mobile payment.
Now that you know all the factors to take into consideration before implementing a Cash Discount Program, you might be ready to start eliminating your processing fees right away. If you still are weary, take a look at the potential savings merchants are seeing when they add the program to their business!
Ready to get started? Contact us about our Cash Discount Program today!