Traditional credit card processing is a huge expense for small and medium-sized businesses. That’s because there are fees for every purchase made with a credit card. Over time, these small fees add up and result in lost revenue for merchants.
However, merchants depend on credit cards for their survival. Many customers use their credit cards exclusively. If small businesses stopped accepting credit cards, they would see a dramatic loss in sales.
There’s an answer to this problem, though. Read on to learn more!
What Is a Cash Discount Program?
In a traditional cash discount program, a business owner lists all prices under the assumption that the customer will use a credit card to pay. Then, he or she gives a customer a discount for paying cash or check instead of using a credit or debit card to purchase goods and services. This discount is usually a small percentage of the purchase price.
What is a Surcharge?
In a surcharge program, when a customer pays with a credit card, an extra fee is added to their purchase. Like cash discounts, this fee is usually a small percentage of the purchase price. Surcharges are not allowed with debit cards, they are only for credit cards.
Customers typically do not mind paying a small convenience fee for using a credit card to make a purchase. With so many lawsuits currently in process against traditional cash discount programs, switching to a cash discount surcharge program might make sense for many businesses.
How to Help Customers Understand Your Cash Discount Program
Like we said, cash discount programs are legal—but current litigation may create barriers or deem them illegal in the near future – if you want to be successful, you may want to look at a cash discount surcharge program to avoid business interruption.
In order to stay compliant, you need to register with your preferred credit card companies 30 days in advance of launching the program. You then must tell your customers about the cash discount surcharge program through proper signage and utilize software that outlines fees on receipts. For example, you could have a sign on the door and at the registers stating:
“There is a service fee applied to all credit card sales. Pay in cash to waive the service fee!”
You also need to make sure your cashiers are always mentioning it verbally. For example, they could say,
“Do you want to save 3% today by paying in cash?”
Make sure all your employees know the program inside and out so they can answer any customer questions. Your staff should also understand how to explain the surcharge breakdown to customers including the sales price, convenience fee, and total amount charged.
Interested in adding a cash discount surcharge program to your small or medium-sized business? Get in touch with us today!
