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How Business Owners are Increasing Profits By Offering a Cash Discount
Making a greater profit by giving cash customers a discount may sound like faulty logic, but it’s completely possible with a cash discount.
How does charging less make you more money?
The answer is simpler than you may imagine, and you can easily save your business money by adopting a cash discount program.
What is a Cash Discount Program?
A cash discount program may be the answer to making a greater profit for your business, but what is it?
You are probably aware of the fees you pay every month to process credit cards. An average of a 4.0% fee is added to your statement for every credit card you process.
For a better idea of how this is costing you, let’s look at an example:
Let’s say you own a local coffee shop, and you’re average sale amounts to $6. If you make 100 sales in a day, you should be making an average of $600 a day, right?
Not after credit card processing fees.
Every time a customer pays with a card, you’re charged 4.0% of the sale to process the transaction. That $6 sale is now only $5.76, and your $600 daily-profit is now only $576.
You may be making sales, but credit card processing fees send some of your hard earned profit right down the drain.
How Can a Cash Discount Help?
You’re losing money every time you process a credit card transaction, but that doesn’t have to be the case.
It’s unfair that you have to pay out of your own pocket to satisfy someone else’s convenience.
That’s where a cash discount can help.
You can now keep the full percent of your sale by eliminating credit card processing fees with a cash discount.
How Does it Work?
Paying with a credit card is a convenience, right?
So why should you pay for your customer to receive all the added benefits of using a credit card?
While traditional credit card processing works by having the merchant pay all processing fees, cash discount processing transfers the processing fees to the customer.
That 4.0% you used to pay to process a credit card transaction is now paid by your customer.
Now the average customer at your coffee shop pays $6.24. The extra $0.24 goes toward paying the processing fees, and you keep the full $6 of the original sale.
Isn’t This Just a Surcharge?
It might sound like your just charging your customers a surcharge to cover your credit card processing fees, but that’s not the case.
A cash discount is not a surcharge.
While surcharges have only been approved for legal use in 41 states, cash discounts are legal in all 50.
The difference comes with offering your customers an incentive to pay with cash.
In a cash discount program, a small service fee is incurred when a customer pays with a credit card, but when a customer pays with cash the fee is lifted.
In this way, you can offer your cash paying customers a discount while still making a profit and saving your business money by eliminating all credit card processing fees.
How do I Implement a Cash Discount Program?
Cash discounts are the perfect way to save your business money, but how do you get started?
Luckily for you, Shift Processing makes it easy to get started.
- You’ll need a credit card terminal programmed to operate within a cash discount program. When you get a terminal through Shift Processing, it comes pre-programmed with cash discount processing.
- Next, you’ll need to notify your customers of the service fee as well as the cash discount. To accomplish this, you must provide a notification at all entrances and points of sale. Shift Processing will provide you with all the necessary signage.
- What’s next? Save! Once you’ve successfully implemented your cash discount program, all that’s left for you to do is watch your business’s profits grow!
Don’t miss out on this opportunity to offer your customers a discount while still making a great profit!
Learn more about credit card processing and cash discounts by visiting our Cash Discount Page.
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