Why would I want to start using the Cash Discount Program?
The obvious answer is to completely eliminate all processing fees but more importantly this will affect merchants that suffer from high processing fees. For example a deli or coffee shop that has transactions for $5 - $8 will have a much higher effective rate then using that same card on a $100 purchase. The average swipe cost for a debit card used as credit is .05% and .22 cents for the transaction. So that $5 purchase with the same card will cost the merchant 4.5%. If that merchant is running 100+ transactions a day he will lose too much money. That is why you see signs that say $10 minimum everywhere you go. What happens when the customers rather go to 7/11 for their coffee because they do not have cash?
Is it legal to offer Cash Discount?
As Mitchell Katz, spokesman for the Federal Trade Commission, said in May of 2011: The Dodd-Frank law prohibits a payment card network such as Visa “from inhibiting the ability of anyone to provide a discount for payment by cash, checks, debit cards, or credit cards,” said Katz. “Neither surcharging, nor a cash discount is illegal.”
Until recently, Visa and master card made it very clear that a merchant is forbidden to charge any additional fees to patrons paying with a credit card. However the 2013 lawsuit against the card networks changed everything https://www.paymentcardsettlement.com/en/Home/FAQ. The change now allows for merchants to give a discount to people paying cash as long as it is clearly stated that the fees apply to all sales. As long as you post the cash discount disclaimer you can offer the discount to those paying with a cheaper form of payment like cash, check or bitcoin.
Is this program new?
No, this program has been in Europe for over a decade. Austraila has been utilizing this program since 2003 and 60% of the continent is using cash discount. The USA has seen this for the last 15 years with gas stations and government offices like traffic court. We are used to this when making bill payments over the phone or ordering movie tickets on Fandango. Until recent years merchant were not allowed but all of that has changed.
How do I make sure I am using this program correctly?
Our experts will help you every step of the way. We make sure you are registered with Visa and Mastercard. We also follow the rules set state by state. The most important issue is disclosure. Signage must be easily accessible by check out and front door. Soon merchant will have to post different prices for cash and credit just like the gas stations are doing. We know what your state requires and will make sure you are fully compliant.
Is Cash discounting the same thing as a surcharge?
When a fee is incorrectly applied to a transaction, any additional fee charged to those consumers using a credit card is labeled a Surcharge and that is expressly forbidden by Visa, Mastercard, and the processing provider without taking very specific steps. The way around this process is to allow us to automate a Cash Discount Program for you which is different than the Surcharge. In the Cash Discount Program you post signage stating that all consumers will now be paying a 4% Service Fee, however for those paying with cash, the fee will be waived. We will automate your equipment so that this fee is automatically added for those customers using any method of payment other than cash (essentially credit cards). While this may sound very similar to the Surcharge Program, it is distinctly different in that everyone is paying an increased fee, but those who pay with cash receive a discount, whereas with the Surcharge program, you are specifically stating that those paying with credit cards will pay more. Most importantly it is aligned with the rules of Visa and Mastercard.
Additionally, you are forbidden by Visa, Mastercard, and the Processor’s rules to profit on a credit card transaction, which could happen if you accidentally charged more than you were being charged by the processor. By utilizing the Cash Discount program, we establish proper pricing for you to ensure you stay within all stated guidelines.
Will my customers get upset?
While nobody wants to pay additional fees, more and more consumers are starting to realize just how expensive it’s been for merchants to accept credit cards. By charging a 4% fee on a sales transaction, that’s a small price for customers to pay for the goods and services you provide. And (if paying that fee or Implementing the Cash Discount Program) allows you to stay in business and keep your overall costs lower, it’s a small price to pay. In fact, surveys have shown that over 80% of respondents stated they wouldn’t think twice about paying that amount (only $1.00 on a $25.00 transaction) for the convenience of using their credit card rather than carrying cash. And we all know that fewer and fewer of us are carrying cash these days…and everyone loves the rewards associated with their credit cards.
Additionally, we’ve all become accustomed to paying $2-4 when we use an ATM and this cash discount fee is actually cheaper than the ATM fee for most transactions. If you explain that the Cash Discount program is a way for you to keep providing quality goods and services without increasing your overall prices, most consumers have indicated they understand and are fine with it. And again, a 4% fee on an individual transaction generally has a very small impact to the consumer, but for you, the merchant, your savings are significant.
What if I don’t like Cash Discount?
After a fair amount of time using this program if you do not feel it is a good fit to your business we will switch you back to traditional processing and lower your cost from your previous processor. It is an opportunity to create great cash flow and we want everyone to have the same chance to give this a try without any commitment.
What if I am in a lease?
The cost of monthly leasing can be quite expensive and it is a fee you cannot just stop paying. It is common to see a $90 lease payment for 4 years on a piece of equipment that may only cost $300. Our goal is to save you money and with cash discounting you can eliminate the monthly fees. Paying the monthly lease will be much easier. As soon as the lease period is over, cancel and move on lease free with Power processing.
What if I am in a contract?
Contacts can range from $300-$500, Power Processing will help to alleviate the burden of breaking your contract.