Why a Cash Discount Program is Your Business’s Fast Track to Saving
If you’re a business owner, you probably accept multiple forms of payment for your product.
Any sale should be gratifying, but are you ever frustrated when a customer pays with a credit card? If you’re part of a traditional processing program rather than a cash discount program, you probably know that you have to pay fees to process that credit card transaction.
It’s upsetting that the payment for the fees comes out of your pocket, even though the customer is the one to benefit from the convenience of using a credit card.
Your frustration is completely understandable. Luckily, there’s a way for you to eliminate all processing fees while still making a great profit. It’s called a cash discount.
What fees am I paying?
If you’re a part of a traditional processing program, fees are racked up every time a customer pays with a credit card.
Although these fees are small, usually 4.0% of the sale, they pile up quickly, and the money you have to spend on processing credit cards depletes your profits.
It typically looks something like this:
A customer comes in to purchase a product of average price from your business. If your average product costs $10, you should be making $10 off that sale, right? Not after processing fees.
If your customer pays with a credit card, 4.0% of the sale goes toward paying processing fees. Your $10 just became $9.60.
Those fees add up since they are incurred every time a customer pays with a credit card.
But what fees are you charged in the first place?
There are two main fees depleting your profits:
- Interchange Fee: The interchange fee is the largest fee in credit card processing. It consists of a percent of the sale plus some fixed amount. It makes up the majority of your credit card fees. Also known as a swipe fee, you’ll be charged this fee everytime a customer pays with a credit card.
- Assessment Fee: The other main fee is the assessment fee. The assessment fee ensures that the credit card companies themselves–such as Visa or Master Card–will be paid. The assessment fee goes straight to them.
The bad news is if you’re part of a traditional credit card processing program rather than a cash discount program, you pay both of these fees regularly.
The good news is, you can completely eliminate all processing fees by adopting cash discount processing.
What is a cash discount program?
We know that you don’t like paying those pesky credit card processing fees, and why should you? It’s not fair that you should pay to satisfy someone else’s convenience.
Luckily for you, there’s a way you can eliminate all credit card processing fees with a cash discount.
Like we said, you shouldn’t have to pay so your customers can benefit from the convenience of using a credit card. That’s where a cash discount program can help.
Unlike traditional processing programs that charge the merchant to process a credit card transaction, a cash discount program transfers the fee to the customer.
How does a cash discount work?
It’s simple, really.
The right processing company will provide you with a terminal programmed to work within a cash discount program. This terminal will automatically transfer the fee to your customer.
In order to avoid a giving your customers a surcharge, a cash discount program charges customers a small service fee if they choose to pay with a credit card. If they pay with cash the fee is lifted. This way, you are offering your customers an incentive to pay with cash.
In order to have a successful cash discount program, you’ll need to notify your customers of the service fee and the cash discounts.
To do this, you must have a written notification at all entrances and points of sale.
How will my business look with a cash discount program?
Your business will most likely look pretty similar to how it did before.
You won’t lose sales if customers don’t carry cash. Research shows that most customers ignore the service fee over 98% of the time.
You can learn more about credit card processing and cash discount processing by visiting our Cash Discount page.
With a cash discount program, you’ll have the freedom to keep your business looking just the way you like it. You’ll keep yourself and your customers happy.