I bet you have noticed that more and more of your customers prefer to pay using credit and debit cards, but is paying by card saving you and your business money?
Most businesses are losing between 2-4% in credit card processing fees with every transaction made by card. Each merchant account has a set credit card transaction rate it charges. Actual payment processing fees and monthly fees are determined by the card types, and any merchant fees are added on top of the actual cost to process a credit payment.
With a Cash Discount Program you can avoid paying this fee. A cash discount program is a type of credit card processing that passes the cost of acceptance back to customers who choose to pay with a credit card or debit card. Instead of the business paying for the cost to accept payments, the customer is given a choice to pay with cash and save or incur the cost of acceptance themselves.
How does a Cash Discount Program work?
Cash discount works by giving a discount to all customers who choose to pay with cash instead of a credit card or debit card. Customers who choose to pay with a card will pay the marked amount because the processing cost is built into the cost of the product. This allows the business owner to get the full payment from the customer and not incur any credit card processing fees.
If you charge 4%, processing fees on all items, the formula will indicate that the services or products you should sell at $100 will retail at $104, unless your customer uses cash. In that case, the customers making cash purchases will be discounted and will only pay the original $100. The totals are reflected on the customer’s receipt.
By utilizing a cash discount program, the business receives the full payment amount of each transaction without paying any credit card processing costs or fees.
What are the benefits of using a Cash Discount Program
With your customers opting to pay with cash you will be eliminating or reducing card-processing fees.
Easier to Implement
A Cash Discount Program is easier to explain and more encouraging making it more acceptable and more customers opting for it. Plus it is legal in all states.
Faster Process and Eliminate Fraud
The time between the sale and the access to funds is minimal. No wait time or processing time for the money to get on the merchant’s hand. Moreover, merchants can eliminate fraud exposure.
After reducing the number of customers using credit cards in your store, chargebacks will also diminish.
A Great Marketing Tool
The cash discount can be a useful marketing tool that will attract more customers. The word “sale” is known to attract more people, and that is why most businesses display it at the year-end outside their stores.
These are the main reasons why more and more store owners are using Cash Discount Programs. It is easier and simpler to implement and it is also legal in all states.