Cash Discount Processing

As a business owner, eliminating the fees that come with credit card processing may seem impossible. As more and more customers are opting for credit card payments, you’ll have to cover the fees that come with it. This could be a real headache, digging into your profits. 

But there is an alternative. 

With the cash discount program, you can say goodbye to merchant fees. By partnering with PaymentUSA, you can receive credit card payments without worrying about merchant fees.  

This is what we will focus on today – everything you need to understand about cash discount processing. So, let’s dive in.

What is Cash Discount Processing?

A cash discount program is an old business tactic commonly seen at gas stations. Here, a customer will see two different prices on the notice board – the cash price and the card price.  At the register,  the customer pays less if they decide to pay in cash. This method is actually a surcharge fee and not a discount. We will talk a bit about the varying features later. 

Cash discount processing allows merchants to eliminate the merchant fees that come with card payments.. 

Taking Care of the Middlemen

When customers complete payments via a credit card, there are three “middlemen” involved in the transaction:

- Why are tech support payment gateways unique?

The traditional method of processing credit card payments leaves all fees for you to clear up. Hence, it dips into your profit margin, taking up a percentage. Here’s an example. 
Suppose you have a small business that has just started to take credit card payments. If the average price of goods is $10, and there are 10 purchases daily, you accumulate a total of $100. But with traditional credit card processing, you’ll lose a lot.
After clearing the sales, you will have to cover the merchant fees. These could be up to 3% or even more. This means the profit per transaction is $9.70. You can save these funds with cash discounts. 

- Credit card processing with a cash discount program

With credit card processing cash discount plans, you no longer cover the payments for these services. Instead, you transfer the charges to the customer. Instead of losing 30 cents per transaction, you can keep the total amount, and the customer covers it. Some people claim cash discounts are encouraging customers to pay in cash rather than by credit card. 

What is a surcharge program and how is it different from cash discounts?

A surcharge fee adds a fee to the amount customers who opt for credit card payments pay. Hence, you can retrieve the merchant fees from your customers directly.  
It is important to note that this program is strictly for credit cards. However, customers frown on it because the extra charges are higher. There are also heavy regulations on this type of program. 
The compliance requirements are the primary difference between a surcharge and a cash discount. There are several conditions to meet before you can add a surcharge. Additionally, surcharges  are not legal in all 50 states in the US. You should watch out for laws governing your state of residence. 
The situation is not the same for a cash discount program – the credit card processing cash discount directly adds the fees to the posted price for goods and services.  

Benefits of the Cash Discount Credit Card Program

To verify the legitimacy of your business, you must provide a business license. This license should be from the city or state where your company operates.


Using a cash discount program is a great way to add flexibility to your business, mainly because of the minimal regulations. Depending on your margins, you can adjust the prices to make a discount look smaller or bigger. However, no matter how you look at it, customers don’t want to pay more than they have to. A cash discount program’s flexibility gives it a more positive spin. 

Fewer regulations

To control cheating, there are several regulations governing surcharges. Together with flexibility, those strict measures are absent or lesser with a cash discount merchant processing plan. Since you’re only adding the costs of commissions directly to the credit card, there are few repercussions. 

Choice of payment for customers

A high number of customers prefer to shop with credit cards rather than cash. This option will help them to maintain their favorite payment method while making small payments. Clients will still prefer this option since they can transfer payment at a more convenient time rather than carrying cash around. 

Chargeback reductions

The more a business accepts credit card payments, the higher the risk of a chargeback. If your business is suffering from the consequences of chargeback effects, a cash discount program credit card processing plan could help you reduce the risks. 

Reduce the need for follow-ups

If you currently accept credit card payments, you will know that you may have to do a follow-up with your customers, sending them payment reminders and due accounts. This also includes phone calls and even engaging the services of a collection agency. 
With cash discount processing, you can reduce the chances of needing to use these options to recover your money. 

Customer loyalty

A cash discount program is an excellent option for new businesses. If you’re just starting to build your business, it can be challenging to attract customers. Adding a number of perks by allowing credit card payments can build customer loyalty. You don’t lose out since you’re passing the merchant fees directly to the customers

Controlling processing fees

With all the programs this plan offers, it is no surprise that you can easily pass the processing fees for middlemen directly to your customers. Hence, it is a great way to increase the business’s revenue. In the past, traditional processing meant covering miscellaneous fees, which could take up to 3% per transaction. 

How to Choose Between Surcharge and Cash Discount for your Business

It can be challenging to choose between a surcharge and a cash discount. It helps if you understand what your competitors are doing to cut down on high credit card processing fees. Are they going straight for the surcharge offer? Have they raised the prices to accommodate the fees? Or are they shouldering the responsibility themselves? 
While you don’t want to fall below the performance of what your competitors are offering, saving your business and increasing the revenue is paramount. 

Are Cash Discounts Legal?

One question many people ask is about the legality of cash discounting merchant services. Yes, cash discounts are legal. You just have to ensure that you attach the credit card price on all price tags and educate your customers at the register. We’ll talk more about this when discussing implementing cash discounts. 

Implementing a cash discount program​

To ensure you’re on the right side of the law when running a cash discount program, the invoice or receipt must show a service charge that comes separately on the products when a customer pays with a credit card. 

- Determine what your processing costs are

Basically, the cash discount program is there to reduce processing costs. You should calculate the amount you’re paying as merchant fees. Ideally, it should be around 2-4% per transaction. 
So, if you’re paying an average of 3% per transaction on a credit card purchase, you have to add a separate 3% to the prices you post. Cash payments won’t carry the extra charge, but because the number of customers using cash to complete transactions is lower, no one may bat an eyelid at a 3% increase. 
With PaymentUSA’s calculator, you can easily determine how much you’re paying in merchant fees. This is the first route to implementation. 

- Get a reputable payment processor as a partner

To apply the cash discounting credit card processing offer, you need to accept credit cards as a means of payment first. Hence, you need the services of a top payment processor to efficiently handle all your payment processing needs. 
With this partnership, you can open a merchant account that makes taking credit card payments easy and begin to apply the cash discount program credit card processing platform.

- Inform your customers about the differences

During checkout, it is important to inform your customers about the price change. You should also inform them that the cash discount does not extend to cash payments or debit cards. Ensuring that you explain the significance and circumstances of the cash discount program helps reduce the incidence of cashback requests. 

How PaymentUSA’s Cash Discount Program Can Help

With years of experience working with small businesses, PaymentUSA has become a top payment processor that helps improve merchants’ revenue. With a series of products and services to help you cut down on processing fees, we help ensure that you cut down on expenditures and build on revenue. 

The savings calculator ​

As we have stated in our tips for business owners looking to cut down on costs, you need to understand how much you spend on processing charges monthly. Once you have this figure in hand, knowing how much you can save for your business with a cash discount merchant processing program is easier. 

Models for cash price ​

The cash discounting merchant service from PaymentUSA comes with a plan to reduce or eliminate the costs of merchant fees, especially for customers who rely on credit card payments. 
We build a plan for a merchant account that explicitly offers a cash discount plan for you. This way, your business gets a cash discount program that addresses the needs of your business. 

No hidden fees

Businesses must save on the cost of doing business, including the merchant costs for credit card processing. The cash discount program PaymentUSA offers is free from hidden charges. 
This includes zero fees for setup and for the duration of the contract. The program comes with transparent services, where everything is detailed. 

Say goodbye to yearly increases in rates

One common feature of cash discounts is that the rates are fixed and are not designed to take advantage of the merchant. We charge a one-time fee that credit card networks require for you to accept payments. 

Saving money in merchant fees is easy when you partner with PaymentUSA: 

  1. Book a call with our representatives, and let us learn about the needs of your business. 
  2. With our expertise, you get a quote that applies to your business alone. 
  3. Receive our free equipment in a day or two, along with an installation team that assists you in setting up and teaches you how to operate it. 
  4. Start saving money!

You can easily terminate fees that come with credit card payments via our cash discount merchant processing services. With our innovative, flexible, and cutting-edge technology, keeping your business ahead of the curve is easier than ever before.

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