“Cash discounts are illegal. They don’t work. They only hurt business owners.”
That’s what the big credit card companies want you to believe, and you know what, they almost got away with it. Almost.
What they don’t want you to know is that it is 100% legal to run a cash discount program. They don’t want you to know that a cash discount program can save small businesses, mom and pop shops, restaurants, and more hundreds in card processing fees. These card companies would much rather continue to overcharge merchants rather than let them in on the truth you’re about to hear.
Today we’re exposing the truth behind cash discounts – the truth that Visa and Mastercard would love for you to ignore. As you’ll soon learn, a well-constructed cash discount program will lower your costs, impress your customers, and increase your speed of checkout.
So without further ado, here are 5 benefits you’ll score when you set up your own cash discount program.
You’ll Collect More Cash
When you offer a cash discount, your customers will be more likely to pay you in cash in order to take advantage of that discount. Pretty straightforward, right?
Why is cash so valuable? Once you get it, you can use it; there’s no waiting for the money to transfer to your merchant account. Meanwhile, funds from credit card payments can take up to a couple days to deposit into your merchant account.
Cash is also not subject to credit card processing fees, which leads us to the second benefit of running a cash discount program.
You’ll Pay Less in Card Processing Fees
Every time someone pays a you with a credit card, the credit card companies and payment processors lump on additional fees that you’ll have to pay. However, as more customers pay you in cash, by default less will pay you with card. The amount you’ll owe in processing fees will gradually diminish.
Here’s the good news: you can recover a lot of your money by simply running a cash discount program. In a cash discount program, customers only receive a discount when paying in cash; anyone paying with a different form of payment (credit cards, debit cards, gift cards, etc) will pay non-discounted prices. If your customers do decide to continue paying with credit card, you’ll rack up extra revenue that can offset some of your processing fees.
Your Customers Will Appreciate You for It
Everybody loves a discount. The cash discount program itself is a great marketing tool for you and your business. Your customers will love knowing that you’re willing to offer them a discount. To them, you’re going out of your way to get them a deal – even if that deal is contingent on them paying you in cash.
But what about your card-paying customers? How do you explain the markup in price to them? Here’s one suggestion: remind them of the last time they went to a restaurant or store that only accepted cash, or that only accepted card for large purchases. Paying a small service fee is just a fraction of the trouble they’d go through if they had to pay a large bill to use their card or run to the ATM to get some hard cash.
You Don’t Have to Register with the Credit Card Companies
That’s right. No red tape. No annoying oversight. And still completely legal.
You do NOT need to register your cash discount program with Visa, Mastercard, Discover, American Express, or any other card company. Once you have the right signage and the right EMV terminal, you’re good to go!
You might be thinking, “Wait, I thought I heard somewhere that you need to enroll with the credit card companies to run a cash discount program. You sure about that?” That applies to surcharges – charging your customers extra for paying you with a credit or debit card – but it does NOT apply to cash discounts.
Surcharges are essentially when you overcharge your customers and take home the extra profit, which is illegal to do. Doing so can result in hefty fines and losing your card processing privileges. Cash discount programs, however, do NOT fall under this category because they’re considered deductions from your normal prices – not extra charges.
Your Customers Will Blaze Through Checkout
Ever paid for something with your card, only to regret it immediately afterwards? Maybe the EMV terminal glitched out as you were typing in your PIN number or the swipe reader could not read your card after five swipes. Annoying and slow, right?
Cash transactions, on the other hand, are much easier to complete. The customer hands you money, you pay them their change (if there is any to give them), and they’re on their way. As mentioned before, running a cash discount programs increases the number of cash transactions your business receives on average.
You’ll also need to use special cash discount program terminals, which will speed up credit card transactions. Though hard to find, these EMV terminals are reliable and powerful, meaning you’ll experience less hardware malfunctions and will move customers faster through line. They’re also programmed to print receipts that include a line for cash discounts, and this programming is even integrated into a couple full-blown POS systems.
Ready to see if your business qualifies to run a cash discount program? Click here to secure a free merchant statement analysis from one of our in-house experts.