A Cash Discount Surcharge Program: The Right Thing for Your Business?
Did you know you can offer a discount to customers that pay with cash or check instead of paying with a card? You can, and it is called, “Cash discount surcharging.” You, the business owner, have the ability to add a custom service fee to all credit card transactions and then remove the service fee for any transaction that pays with cash or check.
As credit card processing fees continue to rise, cash discount surcharging programs become more and more attractive. Offsetting payment processing fees is very appealing to business owners because it is a large portion of monthly overhead expenses. But, is making the switch the right thing for your unique business? Let’s explore.
Do you really want to handle more cash?
Offering a cash discount surcharge is likely to increase the amount of physical cash and checks you have on hand each day. Most business owners see that as a great thing because cash and checks do not come with any processing fees. However, more cash and checks also means you will count more money, balance more registers, and physically take more deposits to the bank.
Beyond the increased time it takes to physically handle cash and checks, more cash on hand means a higher potential for theft and fraud. Small businesses face all sorts of threats related to cash including employees stealing cash and customers forging checks. More cash may not be as free as it seems and your business will have to set policies to minimize any potential threats.
Is your competition offering cash discount surcharges?
Cash discount surcharging is growing in popularity but not across all industries or areas. Ask yourself, are local businesses already offering this type of savings to their customers? If your customers can walk down the street to your competition and take advantage of cash discount surcharging, it might be time to think about offering your own program. They might expect it from you – and if you don’t have it – spend money elsewhere.
On the flipside, there could be a competitive advantage if you are the first business to adopt a cash discount surcharge program in your local market. The decision to offer cash discount surcharging could increase your business credibility in the eyes of your customers and you could be the trendsetter. This is a growing service and you want to make sure your company is well-positioned.
What is your average sales price?
With cash discount surcharging, size matters, so be sure to consider your average transaction amount before making the switch. Let’s say your credit card convenience fee is 4% and you sell flat-screen televisions for $1500. Adding an additional $45 to credit card transactions could become a deterrent to customers. On the other hand, if you sell cupcakes for $1.50 each, adding a flat fee of $.25 to non-cash transactions is entirely acceptable and will more than likely go unnoticed. A smaller average sales price lends itself to more profitable cash discount surcharging programs.
Taking the time to evaluate these factors before implementing a cash discount surcharge program into your business can help you foresee future customer concerns. Every business model is unique and there is no one-sized-fits-all approach to payment processing. If you believe you are ready to move forward, be sure to learn more about our cash discount surcharge solutions.