There?s no denying that COVID has had long-lasting effects on all types of businesses. But ask who owns any brick-and-mortar store, plus they?ll let you know that COVID killed cash payments.
Unfortunately for business owners, the downfall of cash and the rise of contactless and digital payments has only increased the financial burden of payment processing costs. In addition, credit card processing is becoming increasingly expensive for merchants that are now looking for avenues to help them reduce this expense.
With customers preferring non-contact payments, businesses must get creative to encourage cash payments from their customers. One method to do this is through cash discount programs. With cash discounting, consumers can spend less on the purchases while also lowering payment processing charges for business owners.
Curious if a cash discount program might help your business? Check out our simple guide on cash discounting!
What is a cash discount program?
A cash discount program is when a business offers customers a monetary incentive to pay with cash instead of utilizing a credit or debit card. This helps lower merchant processing fees for the business.메이저놀이터
Consumers are drawn to card payments for a variety of reasons. They are simple to operate, convenient, and often include incentives like cash return or airline miles. So to obtain customers more inclined to make cash payments, businesses have to offer them something better still – discounts!
So as to encourage cash payments, merchants implement cash discounting by waiving the service fee that comes with card payments. Offering cash discounts to customers can result in Tidal Commerce clients saving up to 90 percent of these payment services fees.
So how exactly does cash discount work?
The best part about implementing a cash discount with a merchant services provider like Tidal Commerce is that the entire process is built directly into your payment terminal. The program is built to encourage your clientele to pay via cash or gift card.
When a customer would go to check out, a small service charge is applied to the sale. Here, they have the option to cover with cash or perhaps a gift card, which will result in a computerized discount. However, should they elect to continue with a credit or debit card, the typical price that includes the service charge will stay.
The transparency at checkout helps it be clear to customers that they can receive a discount if they pay in cash while also empowering them to create their very own decision and pay how they need. The effect is that the business owner can pass payment processing fees to the client while also allowing them the opportunity to earn a cash discount.
Is a cash discount program legal?
A cash discount program is totally legal across all of the states in the US, unlike credit surcharges which are illegal in ten states. The Durbin Amendment that passed with the Dodd-Frank financial reform legislation protects the allowance of cash discounts in the united states.
That being said, you can find regulations, including state laws and card brand rules, that must be followed when implementing cash discount merchant services. Tidal Commerce will assist you in guaranteeing compliance together with ensuring you have the proper register and door signage necessary.
Great things about a cash discount program
The main goal of cash discounting for some business owners would be to offset their payment processing costs. However, the advantages of a cash discount program don?t end there. A number of the other merchant benefits could even surprise you.
- Reduce transaction fees
One of the most apparent benefits for merchants that adopt a cash discount program is reduced or eliminated card-processing fees. Once the incentive works and customers opt to pay in cold income, you eliminate expensive merchant fees altogether. If they still move forward with a credit or debit payment, you?ve already built those processing fees in to the product’s final price. Either way, you can decrease your payment processing fees by around 90 percent.
- Encourage cash payments
As we mentioned, bank cards come with built-in incentives, so getting customers to improve their payment method can take plenty of work. Offering cash discounts will make customers feel like they’re being rewarded for cash payments. This means you will also have faster access to those funds as you won’t have to await processing times.
- Automated terminals
By implementing the cash discount program with Tidal Commerce, there? cash discount credit card processing to no work on your end. The terminals you utilize, including most third-party terminals, will automatically apply the discount, gently encouraging your customer to cover with cash.
- Minimize chargebacks
A chargeback is a reversal of a credit or debit card charge, implemented initially as a safety feature for customers paying with plastic. However, chargebacks are really costly for merchants and will be taken benefit of. Cash payments aren’t subject to chargebacks, and if a cash-paying customer wants a refund, there won’t be chargeback penalties for your business.
- Please customers
Everybody loves a discount. And for many customers, finding a discount just for paying cash seems like being rewarded for nothing. Although some companies worry that cash incentives may discourage their customers, folks are used to seeing cash discounting at car dealerships, gasoline stations, and much more. A cash discount program allows customers to save lots of money and pay through their preferred method.
- Simplify statements
Fewer card payments bring about more straightforward monthly statements for your business. Since the cash discount program is fully implemented into your existing merchant services, there’s no drastic change to your system.
Cash discount vs. surcharge program
While cash discounts may seem exactly like a surcharge program on the surface, what sort of programs operate is totally different, and they are subject to different regulations. The main element difference is that cash discounts provide a cheap for cash payments, while a surcharge adds additional fees on top of the posted price.
Cash discount and surcharge programs each face different guidelines from state legislation or card brand rules. Cash discounts, when implemented properly, are legal in all fifty states. Surcharges are illegal in ten states and require advance notice to some card brands.
While it might just look like semantics, consumers may behave differently when confronted with a discount versus a supplementary charge. While at the end of the day, most customers notice credit card processing fees are being passed on in their mind, the marketing of the procedure makes a big difference. Allowing customers the opportunity to get a discount will likely be better received than charging a surcharge for charge card payments.
Is cash discounting right for the business?
Certain businesses could be more inclined to consider cash discount merchant processing programs. For example, hospitality companies offering quick service or casual dining spots can definitely benefit from such programs. Other great fits include shops and boutiques that sell clothing, specialty items, or gifts.
While those types of businesses may be the best fits, your business may still reap the benefits of cash discounting! If you are not sure whether it’s a good idea for the business, think about the following:
Do you prefer cash payments? A rise in cash payments will also mean a rise in cash readily available. While this minimizes the opportunity of charge card fraud, it could increase employee theft or target burglary. In addition, you’ll be responsible for counting cash every evening and ensuring it arrives at the bank safely.
Are similar businesses offering cash discounts? Observe your competition. Should they?re offering cash incentives, then it?s likely an effective initiative which can be good for you. If customers receive a cash discount from your own competitors however, not you, it could drive them to alternative merchants.