The Cash Discount Program

Business owners and managers are considering a cash discount program because they want to save money, avoid processing fees, and give their customers more options. If you are looking for a way to save money every month, you should consider the cash discount program that allows for credit card purchases, changes the fee structure, and improves the customer experience.

How Much Are Companies Paying For Credit Card Processing?

Most companies pay somewhere from 2% to 4% on all their credit card transactions. The fee depends on the credit card that was used, the processing service that was used, and the value of the purchase. Some companies stopped taking credit cards because it was too expensive, but those companies lose money because “cash only” is not something customers want to see.

Moreover, these companies may stop accepting certain credit cards because the fees are too high. Every customer wants their purchase to be as simple as possible. However, customers prefer credit cards to cash. There is a way to change their minds, and you can use the cash discount program to shift the focus of your business.

Companies also need to pay more if their merchant charges extra fees for certain cards. This could be a problem if you have a clientele that uses expensive credit cards to process. You can cut back on your costs, and you do not need to eliminate the cards your customers love.

Most businesses know the shame of talking to a customer that pulls out a credit card that is not accepted. You feel bad for not accepting the credit card, and the customer often gets frustrated with you. Even if that customer understands, they might have a reason for using that card. The purchase feels like a hollow victory, and that customer might not return.

What Is The Cash Discount Program?

The cash discount program is something you already understand. When you drive by the gas station, you will see a few fuel prices on the sign. One of those prices is the cash price for basic unleaded. Gas stations have offered a cash discount for years when you do not use a credit card. You go into the shop, pay for your gas, and you get a small discount.

If you need to pay with a credit card, you pay more for your gas. Most of the time, you are using a credit card to pay for your gas. However, you may pay in cash because you want to get that discount.

What Does The Cash Discount Program Do?

The cash discount program allows you to pass your fees on to customers if they choose to use credit cards for their payments. This is a simple way to save money because your customers decide how they want to pay. You can keep all of the payments you get when customers pay cash. Plus, you can use the cash discount program when you want to allow for credit card processing when needed.

You Can Get A Free POS Processing Unit

You can sign up for the program and get a free POS processing device. You do not need to pay extra money to get the device, and you can operate it like normal. This is a good time to make a change, or you might want to start with the cash discount program because you just opened your business.

If you operate a seasonal business, you can make the change in the off-season. Your customers will come back to you because they love your products, and they may not remember your old prices. Plus, they have more options when they arrive.

How Do You Implement The Cash Discount Program?

The first step in this process is building the cost of credit card processing into your products. You should raise your prices a small amount to cover credit card fees. Most customers will not notice the difference because a 2% increase on a pack of gum in a tiny amount of money. Even if you raise the price of a kitchen cabinet 2%, most customers do not make enough purchases to notice or care.

If you want to use the purest form of the cash discount program, you do not need to change your prices at all. You can read about both of these systems below.

When you have adjusted your prices, you can offer the cash discount program to everyone who comes through the door. You may want to see an example of how this work, and there is a case study below that shows you how to save money.

How Do You Encourage Cash Payments?

You encourage cash payments by laying out the system on a sign near the register. You could place a sticker on your door that explains the cash discount system, and you can tell the customers upfront what their discount is. Your computer system must be designed to offer the cash discount when your customers make their choice, or your register should leave the price the same if customers use credit cards.

Remember That Banks And ATMs Help Customers Make Wise Purchases

Banks and ATMs help customers make purchases by offering free cash withdrawals in the branch or at a verified ATM. If you want to help your customers, you could put a popular bank ATM in your store. You could write down a list of ATMs that are close to the shop, and your customers can save money because they are not paying for credit card processing fees.

What Happens When Customers Pay With Cash?

When customers pay with cash, they might come into your store to buy $10 in products. This customer comes to the register with $10 in items, and those items ring up for exactly $10. At this point, the customer has the choice to pay with cash or a credit card.

When the customer pays with cash, they will get a 4% discount because that is the processing fee you would have paid. The customer pays with cash, and you press the cash button on the register. The customer pays $9.60 because they got a 4% discount. Customers are often excited by this, and they walk away with 40 cents.

If you sell more expensive items, your customers will save even more money. Someone who buys $100 of items will pay $96 with the cash discount. Of course, your customers can pay with credit cards. Read what happens when customers pay with credit cards.

What Happens When Customers Pay With Credit Cards

If you rose your prices slightly, your customers will pay the regular price for everything with a credit card. However, many businesses prefer not to change their prices. You may be afraid of shocking your customers, and you do not want to add cents to your prices that make them hard to read.

Because of this, the customer must pay a bit for the credit card processing fee. Again, you should charge about 4% because that is a common credit card processing fee. Your customer may come to the counter with $10 of products, but they will pay $10.40 when they use a credit card. The customer has paid for your processing fee, and they can see the difference.

Many customers want to get their purchases done quickly, or they do not carry cash. Because of this, they might use credit cards. However, you do not lose money when they use credit cards.

Case Studies

You may want to read a case study on the matter, and you can read more about that as you research the program. You can see the statements from people who have used this program, and you will learn about the money that was saved. A case study might help you understand how a business just like yours will benefit from this program, and you can share this information with your owner or manager if you want to reduce credit card processing costs.

Are Cash Discounts Legal Where You Live?

The cash discount program is legal in all 50 states. Gas stations use these programs every day, and you can do the same. However, some people get nervous when they want to deploy these programs. There is a difference between the cash discount program and a regular surcharge program.

Credit card fee programs are only legal in 40 out of 50 states. You cannot use the credit card fee program by itself in Texas, Oklahoma, New York, Massachusetts, Maine, Kansas, Florida, Connecticut, Colorado, or California. You can offer the cash discount and the credit card option together, and people often respond better to the cash discount.

Why Is The Surcharge Not As Effective?

Customers get nervous when they notice you are charging a fee for credit card purchases. If you walked into a store that said you must pay a fee for every credit card transaction, you might leave. However, you might stay if the store offers a cash discount. You can pull out a little cash and make your purchase. Also, you might bring cash to that store in the future because you like saving money.

The surcharge becomes an afterthought because it is a footnote to the cash discount. People love discounts, and they will happily shop with you to save money. When the customer has a choice, it is not a problem because they feel empowered.

Can You Pass Credit Fees On To Customers?

As mentioned above, you can use a cash discount program in every state. If you only charge a credit card fee, that is legal in just 40 states. The combination of the two is much more effective, legal, and easy to understand. You improve your company’s image when you give your customers more choices, and the customers will refer others to your company because their friends and family might want to save a little money with every purchase.

Will The Credit Card Merchant Allow You To Pass Fees On To Customers?

There is an acceptance agreement that you must sign when you start using a credit card processor. You may not be allowed to charge for credit card processing fees. If you are in violation of your contract, that could become a problem for your business because you can be charged a fee for violating the contract.

What Is The Difference Between Cash Discounts And Surcharges?

The surcharge program is just an additional fee to pay for credit card processing. The surcharge might be a surprise for your customers because they do not want to pay even more money. The cash discount program offers a chance to save money, but the customers pay a small amount to use a credit card. Again, you are giving your customers options instead of forcing them to pay cash.

When you use a surcharge program, your customers might get frustrated and ask, “can I pay cash?” The answer is yes, but the customers get no discount. Plus, frustrated customers might not come back.

Can You Take A Surcharge Fee For Debit Card Purchases?

No. Debit cards charge a completely different fee based on the bank, and the fee is typically a flat fee. This means that you cannot apply the percentage discount in the store. Also, you cannot apply these surcharges to gift cards because those cards do not charge standard fees.

All surcharge fees are prohibited nationwide on debit cards. You are in violation of federal law if you try to charge more to process a debit card. However, there are no restrictions on the most popular credit card brands. Each state might be a bit different, and you should align your fee structure or discount plan with those fees.

If you do not like to use the word “surcharge” when describing these fees, you can call them customer service fees. You can call these charges customer service fees because they are related to fixed business costs.

What Are The Average Credit Card Processing Fees For Businesses?

When you get a credit card processing system, you are charged different fees for monthly maintenance, and you pay a fee based on the type of card that is used. Qualified cards, mid-qualified cards, and non-qualified cards are charged differently. Plus, merchant fees tend to be added on top of the processing fees for the credit card company.

You should sit down to calculate how much money you pay when a certain type of card is processed. This is a good way to determine your average credit card processing costs. You can set up your cash discount program using this formula, and you can adjust the cash discount program if needed.

The carrier’s volume and average ticket price help determine fees. For example, you will be charged less for low volume and high ticket value. You will pay more when the carrier has high volume and a low average ticket value. You need to understand who shops with you most so that you can focus on the cards that make up your processing fees.

Mobile and online payments are a bit different because they are charged a fee based on risk. You can review the prices that you have been charged, but the average cost is somewhere between 2% and 4%. If you are using nothing but virtual payments where you are keying in card numbers, you will pay a different price than someone who uses their card on your website. Know the difference before you create the rules for your cash discount program.

What Are The Benefits Of Using A Cash Discount Program?

This list gives you an idea of how a cash discount program can change your business forever:

  • You never pay processing fees every again.
  • Customers can pay for the processing fees if they want to, and they can pay cash if they want to. You are never forcing your customers to pay more. They decide what they want to do with every purchase.
  • You can switch over to this system at any time. You get the signs that show you are using the cash discount program, and you can reprogram your register in moments.
  • You are never charged more tips. This means that your servers get the money they deserve, and you can easily distribute that cash at the end of the night without losing money.
  • You do not need to change processing companies again because you have found a system that works for you and the customer
  • You can get free terminals for your company
  • There are no extra fees.
  • Cash purchases help cut down on fraud that you might have dealt with when people were using credit cards all the time.
  • You can get a monthly contract that is easy to cancel when needed. Plus, you can turn the service on and off if you run a seasonal business.


The cash discount program is an easy way to reconcile all your processing fees. You can get your money back if customers want to use a card. You can give a small discount if your customers want to pay with cash. Your customers are in complete control of the program, and you use the same kind of terminal you normally would. Plus, you can post a sign, your customers understand the system, and you can encourage cash purchases. You should sign up now if you are tired of paying for expenses credit card processing fees every month. You should not throw away 2% to 4% of your profits every year when you can accept cash and keep your customers happy.

Contact Us

    Merchant Support

    If you need to speak with someone urgently, please use the contact form above or give us a call. We look forward to speaking with you, and thank you for reaching out to The Southern Institute.

    FREE Merchant Consultation
    FREE Merchant Account Set-Up
    FREE Gateway Set-Up
    Low Rates & Fast Approvals
    98% Merchant Account Approval Rating
    Chargeback Prevention Tools
    New and Existing Businesses Apply Now

    Contact Information