Offset your Credit Card Processing Fees

As credit card processing fees becomes increase for merchants, many are seeking avenues that allow them to reduce this expense. One of these avenues is adopting a cash discount program that incentivizes customers to pay by cash or check, offsetting payment processing costs for business owners.

What is a cash discount program?

Businesses that use a cash discount program offer a discount to customers who pay by cash or check instead of using a credit or debit card.

Merchants can incentivize cash payments by offering a discount on the posted credit or debit card prices for customers that pay by cash or check. By including a service fee in the posted price, cash payments offset the payment processing charges that come with card transactions.

 

How Does Cash Discounting Eliminate My Credit Card Fees?

With most Cash Discounting programs, the credit card processor will charge you a flat percentage on your total sales and that percentage is passed on to your customers when they pay with a credit card. For example, if your rate is 3.90%, your terminal is programmed to automatically add that equivalent amount to the transaction. On a $100 sale, you are collecting $103.90 from the customer. Your processor deposits $100 to your bank account and you have no other fees. Learn about the difference between surcharging and a cash discount program. 

Is Cash Discounting or Surcharging Right for My Business?

The ability to pass the credit card fees to the customer is gaining popularity. Beyond Bancard offers Cash Discount Programs to all their customers. We’ve compiled some information for you to consider:

What’s in it for the merchant?

Reduced fees

One of the benefits for merchants that adopt a cash discount program is reduced or eliminated card-processing fees. Merchants who offer Cash Discount Programs, save can save hundreds to thousands a month. Depending on the volume of monthly transactions. High Volume Merchants can see significant savings. 

Reduction in chargebacks

On the same principle, as the frequency of card payments reduces, so will chargebacks. This is another huge saving factor. If you have struggled with a high number of chargebacks, opting for a cash discount program could reduce the risk of them continuing at their current rate.

Attract Bargain Buyers

As we all know, there are few marketing tricks more enticing than a business offering discounts of “sales” on its marked prices. Customers, naturally, want to save as much money as they can. And while a cash discount may only be small, it’s enough to get people through the door — increasing the likelihood of additional purchases.

Are customers required to buy or use your product or service?

If your product or service is mandatory for your customers, they will appreciate having payment options, even if they might incur a service charge. However, if your product or service is discretionary, certain customers might walk away on the basis of a service fee included in the listed price.

Are other businesses in your market offering cash discounts?

Stay competitive in your industry. This is an important consideration. If you’re the only business of your kind offering cash discounts in your area, customers that prefer paying by card might complain. Alternatively, if your customers are used to seeing cash discounts offered in your rival stores, not providing one might drive them to your competitors.

Do you rely on repeat customers?

If you rely heavily on repeat customers, the perceived “extra fee” on products that are paid for by card might have an impact on them. Customers that prefer to pay by card might be put off by the discounts offered to cash-paying customers, and turn to a competitor that doesn’t offer benefits to those paying by cash. Beyond Bancard can help set up a Cash Discount Program. 

Does a Cash Discount Program eliminate all my fees?

Essentially, yes. You are passing the cost of the processing fees to your customer. There may be some ancillary fees that could be charged to you, such as chargeback or PCI fees.

Eliminating your credit card processing fees is very appealing, but it may not be right for you. Does your business have higher transaction amounts, even large ticket items over $10k? Are you primarily a Business-to-Business seller?