Cash Discount Card Processing Policies and Methods

It is written in the Durbin Amendment (part of the 2010 Dodd-Frank law), that businesses are permitted to offer a discount to customers as an incentive and to encourage customers to pay by alternate methods other than a credit/debit cards including either checks or cash in order to automatically receive a discount which is applied at the time of sale.

Surcharge and cash discount card processing or simply cash discounts have similarities between them which confuse customers as well as merchants and even business owners. The best way to move forward which would benefit the customers, as well as the company is by having a clear understanding of what these two terms mean. Only then would you be able to make the best use out of it and would be able to maximize the profit, both as a business owner or even as a customer. In this article, we try to explain in simple terms what a cash discount card processing or a surcharge is and how you could use them in your favor.

Cash discount

Earlier, companies and merchants were entirely responsible for paying the customer service fee that is added to the payment counter. This fee was only added if the customer chose to pay with a debit or even a credit card. It didn’t matter how big or how small the transaction was. If a card was swiped, the company had to pay for it. For big multi-million-dollar enterprises, the fee was negligible and didn’t matter much. But, for smaller business owners it was often the whole profit that went into paying that fees. Cash discount card processing was introduced to counter this.

The suffering and huge loss threatened the livelihood of such small business owners. To protect their income and to save all the years of hard work from going to waste, the business owners and merchants had to come up with a solution that avoided them having to pay the fees. It came up in the form of cash discount card processing which is more simply by the term cash discount policy.

What cash discount policy does is that it encourages its customers to pay for products with cash rather than by card. This works by putting up multiple notices around the store or elsewhere. It announces a discount for customers who choose to pay with cash. So if a customer pays by cash, the total amount is lessened by certain percentage giving the customers the impression that they are getting a discount. This is what cash discount card processing in a nutshell is. But, if the customer chooses to pay with a card, then the customer service fee is added to their bill.

Most of the times the customers are so used to paying the little extra amount that they don’t even give it a second thought. But, for those who feel it’s wrong to make the customers pay, they can make the payment with an alternate method of cash. It has been observed that some customers don’t want to pay the extra money but have no option because they were not carrying enough cash on them.

 Surcharge

The surcharge is not the same thing as cash discount card processing by any means. People often get confused between the two because they do not have enough information on this matter to be able to form correct opinions. One significant difference is that with cash discount, the customer is never overcharged while making the payment. This is because of the prominent notices that are hung around the store notifying the customers of the discount rates.  The whole cash discount card processing helped to maintain a level of transparency between the customers and the businesses which increase the customer’s loyalty towards the store.

To enable surcharge, the company has to register with multiple card banks. This process can only be avoided if the company operated in one of the ten states where surcharging is illegal. These states are Connecticut, Colorado, California, Maine, Florida, Kansas, Oklahoma, Massachusetts, Texas and even New York.  The Durbin Amendment states that the surcharge cannot be applied to debit cards. They can only be applied to transactions made on a credit card. There is also a maximum of 4% limit on the surcharge fee.

One interesting fact about cash discount card processing feature is that it can be set up by individual owners without needing the help or permission of somebody else. Most of the gas stations do it as well. Cash discount is a great way to attract new customers to your business and to do good business with them.

Sometimes the customers aren’t very eager to pay the little extra amount with a card, so they choose to pay with cash instead. They are at perfect liberty to pay in any mode that they want as long as the payment is made in full. A lot of the times customers have to pay with the card even when they don’t want to because they forgot to bring cash with them or didn’t have enough money on them to make the purchase.

Whether these strategies work for your business or not depends on a lot of different things. Factors like the location of the store, the customers that come there to buy stuff as well as the economic condition of the surroundings play a very big and important role in deciding whether these cash discount card processing policies and surcharge would be beneficial for your business or not.  

Surcharge and cash discount card processing are often mistaken to be the same thing when they are very different. This misunderstanding occurs when people do not have the basic knowledge on this subject matter. To make the most out of the offers and policies, the customers and merchants along with the business owners need to understand what it means to them. Then they will be able to benefit from it. Cash discounts and surcharges are simple to understand once you try.

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(800) 597-0713

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