A cash discount program is a great way for your business to save money by eliminating all credit card processing fees.
Traditional credit card processing charges you for every credit card transaction.
While you can’t force your customers to stop paying with cards, a cash discount will allow you to eliminate processing fees while still accepting credit cards.
You can learn all about how to optimize your business with a cash discount program!
Customers understand the advantages of paying with a credit card, but most of the disadvantages are paid for by the merchant.
Every time your business processes a credit card transaction, a small fee is added to your statement.
Those fees pile up fast and will quickly deplete your business’s profit margin.
A cash discount program can eliminate your credit card processing fees by transferring processing fees to the customer.
If you run a business, you probably process multiple credit card transactions every day.
But let’s take a deeper look at that process to see how it’s costing your company dearly:
Let’s say you own a small business, and you’re average sale amounts to $10. Traditional credit card processing would typically charge you 4.0% on every credit card transaction. This means that you would lose $0.40 on that $10 sale.
$0.40 may not sound like a lot of money, but those fees pile up.
If you make 100 sales every day, you lose an average of $40 on a daily basis. That’s $1,240 in a 31-day month.
All that money could be saved with a cash discount.
Your monthly statement will look a lot better with cash discounts, and you’ll be able to save that $1,240
When you implement a cash discount program, your processing fees will automatically be transferred to the customer paying with the credit card.
Now if your average sale is $10, you’ll keep the full profit. 100 sales a day results in a profit of $1,000 a day and $31,000 a month.
The idea surrounding a cash discount program is that your customer will pay for the convenience of using a credit card.
This may initially sound like a surcharge, but a cash discount works by offering your customers an incentive to pay with cash.
In a cash discount program, customers who choose to pay with a credit card have a 4.0% service fee added to their purchase. The fee is lifted for those customers who pay with cash.
The right technology will add the service fee directly to the transaction of customers paying with a credit card.
You can get a credit card terminal from Shift Processing that is pre-programmed for cash discount processing.
When a customer pays with a credit card on that terminal, a 4.0% service fee is automatically added to their transaction. Next, the fee for processing that credit card will go directly to your processing company who will use the added service fees to pay all your monthly processing fees. You don’t have to pay a thing!
You can easily add a service fee to your customer’s transaction with a properly programmed terminal, but there are a few more steps to take before you have a complete cash discount program.
You’ll be happy to learn that cash discounts have been approved for use in all 50 states, but there are some things you need to do to ensure its legality.
First, you need to notify all customers of the cash discount. They need to know that a 4.0% service fee will be added to their purchase, but it will be lifted if they pay with cash.
You must have signs communicating this message at all entrances and all points of sale.
You may choose to verbally notify your customers as well, but it is not mandatory.
Finally, the service fee will be listed on your customer’s receipt as a “Non Cash Adjustment.”
Now you can enjoy the full benefit of a cash discount program!
Your business can start saving money by eliminating all credit card processing fees.
And don’t worry, your business should not lose any sales with cash discounts for customers not carrying cash.
Customers understand that there are benefits to paying with a credit card, and they appreciate the convenience.
Research shows that customers still choose to pay with a credit card 98.7% of the time despite the service fee.
Want to learn more? You can learn all the ins and outs of credit card processing and cash discounts by visiting our Cash Discount Post.