If you haven’t read our article defining the Cash Discount Program as well as our Q&A, please do so before reading this post as it highlights important information regarding the definitions and policies required to be compliant. You can find the program details here.
Now that you know what the Cash Discount Program is, the next question is: Is it right for your business? In this post, we will go through what to consider before jumping in and what it would mean to get started.
Here at Capital Bankcard-New England, we are pleased to offer both Surcharging and Cash Discount Programs available in all 50 states.
According to the Durbin Amendment (Part of the 2010 Dodd-Frank Law), businesses can offer a discount as an incentive to encourage customers to pay by cash or check instead of by credit and debit cards. This incentive is applied at the time of sale and reflects either an additional service fee (surcharge) or a discount on the retail price of the items or services (cash discount). With either program, customers must be notified prior to purchase. This can be done with clear posted signage throughout the store, at the point of sale, and verbally at the point of purchase prior to the sale being completed.
The Cash Discount Program works by applying a small customer service fee (up to 4%) on all transactions. This fee is then removed if your customer pays with cash or in-store gift card.
Merchants will save a substantial amount of money by passing along their standard Interchange Fees.
In general, Cash Discount Programs are seen in a more favorable light than Surcharge Programs. There is a misconception that Cash Discount Programs prohibit sales if a customer does not have cash on them at the point of sale. Based on research, this has not been proven. In fact, 90% of the time, your customer will disregard the convenience fee in these types of transactions. Credit card transactions increase slightly while the Merchant offers our Cash Discount Programs.
Some questions to consider:
- What is your mindset? Are you tired of paying credit card service fees? Do you feel that credit card processing fees should be your responsibility, or the responsibility of your customer to absorb?
- Can you use the extra money? Enabling the Cash Discount Program, you can expect to save over 80% of your net processing fees. Could saving money on your credit card processing fees, give you extra money to expand, invest in more employees, or payoff debts? How helpful would it be adding an additional 4% to your bottom line every month?
- Can you track your Cash Flow? Do you feel confident to accurately and safely handle and track the additional amount of cash that your customers will be handing you? Do you trust your staff to manage in influx of cash? What is your end of day procedures and do they include moving cash?
- Do you have repeat customers? Do you feel comfortable enough to pass this fee along to your customers? Will they even notice the changes in your pricing? Will you and or your staff be able to articulate to your customer that this small processing fee is designed to offset your true cost of doing business each day? Will they continue to support you?
- Are your products and services discretionary? Are they mandatory and or are they a commodity that your customer must purchase repeatedly throughout the year?
- What is your average ticket amount? Will the discount be enough to incentivize your customers into paying cash? The larger your average ticket is, the more impactful these programs can be for you and your valued customer. Will your valued customer like the sound of “Pay by Cash and Save?”
- What are your competitors doing? Is the Cash Discount Program currently being offered by your competition? Are their customers returning as often? Have you seen a change in their business?
If you have been able to answer the above questions and think that implementing the Cash Discount Program is something you are interested in, please call us! We know that you may be hesitant to make the change, but we are here to support you from beginning to end. This program is fast becoming the norm, and we are confident that implementing this program is an investment into your business.
All business owners want to offer the highest quality product and services at the most competitive pricing levels throughout the year. The Cash Discount Program allows you to retain an additional profit margin of up to 4% of your earned profit on every sale. How important is this newfound profit for you as the business owner? Only you, the business owner can make this final decision. Please call our office or book a consultation on Facebook. We encourage you to ask a lot of questions and research this program extensively. Our consultation is free and confidential, with absolutely no obligation.
Please Request a Quote or Contact Us to get started today!