There?s no denying that COVID has already established long-lasting effects on all sorts of businesses. But ask the owner of any brick-and-mortar store, and they?ll let you know that COVID killed cash payments.

Unfortunately for dual pricing vs cash discount, dual pricing pos , the downfall of cash and the rise of contactless and digital payments has only increased the financial burden of payment processing costs. In addition, credit card processing has become increasingly expensive for merchants that are now looking for avenues to help them reduce this expense.

With customers preferring non-contact payments, businesses must get creative to encourage cash payments from their customers. One way to do this is through cash discount programs. With cash discounting, consumers can cut costs on the purchases while also lowering payment processing costs for business owners.

Curious if a cash discount program can help your business? Have a look at our simple guide on cash discounting!

What is a cash discount program?
A cash discount program is whenever a business offers customers a monetary incentive to cover with cash rather than using a credit or debit card. This helps lower merchant processing fees for the business enterprise.

Consumers are drawn to card payments for a number of reasons. They are simple to use, convenient, and often include incentives like cash back or airline miles. So to obtain customers more inclined to create cash payments, businesses have to offer them something better still – discounts!

So that you can encourage cash payments, merchants implement cash discounting by waiving the service fee that is included with card payments. Offering cash discounts to customers can result in Tidal Commerce clients saving around 90 percent of these payment services fees.

So how exactly does cash discount work?
The best part about implementing a cash discount with a merchant services provider like Tidal Commerce is that the complete process is built straight into your payment terminal. The program is built to encourage your clientele to pay via cash or gift card.

When a customer would go to check out, a little service charge is applied to the sale. Here, they have the option to cover with cash or perhaps a gift card, which will result in a computerized discount. However, should they elect to continue with a credit or debit card, the standard price that includes the service charge will remain.

The transparency at checkout makes it clear to customers that they will receive a discount if they pay in cash while also empowering them to make their own decision and pay how they want. The effect is that the business owner can pass payment processing fees to the customer while also allowing them the chance to earn a cash discount.

Is really a cash discount program legal?
A cash discount program is totally legal across all the states in the US, unlike credit surcharges which are illegal in ten states. The Durbin Amendment that passed with the Dodd-Frank financial reform legislation protects the allowance of cash discounts across the country.

That being said, you can find regulations, including state laws and card brand rules, that must definitely be followed when implementing cash discount merchant services. Tidal Commerce will help you in guaranteeing compliance and ensuring you have the proper register and door signage necessary.

Great things about a cash discount program
The main goal of cash discounting for some business owners is to offset their payment processing costs. However, the benefits of a cash discount program don?t end there. A number of the other merchant benefits may even surprise you.

1. Reduce transaction fees
The most apparent benefits for merchants that adopt a cash discount program is reduced or eliminated card-processing fees. When the incentive works and customers choose to pay in cold hard cash, you eliminate expensive merchant fees altogether. Should they still progress with a credit or debit payment, you?ve already built those processing fees into the product’s final price. In any event, you can lower your payment processing fees by up to 90 percent.

2. Encourage cash payments
As we mentioned, credit cards come with built-in incentives, so getting customers to change their payment method can take many work. Offering cash discounts will make customers feel just like they’re being rewarded for cash payments. This implies you can also have faster usage of those funds as you won’t have to await processing times.

3. Automated terminals
By implementing the cash discount program with Tidal Commerce, there?s little to no work on your end. The terminals you utilize, including most third-party terminals, will automatically apply the discount, gently encouraging your customer to cover with cash.

4. Minimize chargebacks
A chargeback is a reversal of a credit or debit card charge, implemented initially as a safety feature for customers paying with plastic. However, chargebacks are extremely costly for merchants and will be taken advantage of. Cash payments aren’t subject to chargebacks, and if a cash-paying customer wants a refund, there won’t be chargeback penalties for your business.

5. Please customers
Everybody loves a discount. And for most customers, receiving a discount simply for paying cash appears like being rewarded for nothing. While some business owners worry that cash incentives may discourage their customers, folks are used to seeing cash discounting at car dealerships, gas stations, and more. A cash discount program allows customers to save lots of money and pay through their preferred method.

6. Simplify statements
Fewer card payments result in more straightforward monthly statements for the business. Since the cash discount program is fully implemented into your existing merchant services, there’s no drastic change to one’s body.

Cash discount vs. surcharge program
While cash discounts might seem the same as a surcharge program at first glance, the way the programs operate is totally different, plus they are subject to different rules and regulations. The key difference is that cash discounts provide a cheap for cash payments, while a surcharge adds additional fees along with the posted price.

Law compliance
Cash discount and surcharge programs each face different guidelines from state legislation or card brand rules. Cash discounts, when implemented properly, are legal in every fifty states. Surcharges are illegal in ten states and require advance notice for some card brands.

Marketing, baby!
While it may just look like semantics, consumers may behave differently when met with a discount versus an extra charge. While by the end of your day, most customers notice credit card processing fees are increasingly being passed on to them, the marketing of the process makes a big difference. Allowing customers the opportunity to receive a discount is going to be better received than charging a surcharge for credit card payments.

Is cash discounting right for the business?
Certain businesses may be more inclined to consider cash discount merchant processing programs. For instance, hospitality companies offering quick service or casual dining spots can definitely benefit from such programs. Other great fits include shops and boutiques that sell clothing, specialty items, or gifts.

While those forms of businesses may be some of the best fits, your business may still benefit from cash discounting! If you’re not sure be it a good idea for your business, consider the following:

Do you prefer cash payments? A rise in cash payments will also mean a rise in cash on hand. While this minimizes the chance of credit card fraud, it could increase employee theft or target burglary. Furthermore, you’ll be in charge of counting cash every night and ensuring it finds the bank safely.

Are similar businesses offering cash discounts? Observe your competition. Should they?re offering cash incentives, then it?s likely a successful initiative which might be beneficial to you. If customers receive a cash discount from your competitors but not you, it could drive them to alternative merchants.

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