If you’re in the retail industry, there’s a good chance you’ve heard of cash discounting.. But, do you know exactly what it is? Although these programs are becoming increasingly popular with both the merchant and customers alike, the service is not new. Many retailers have actually been utilizing this program for a few years now with great success. Yet while the popularity is growing, there is still some uncertainty about the service. There is still confusion about what a cash discount program is, or perhaps more importantly, what it is not. Here is everything you need to know:
Zero processing fees
With the aid of a cash discount program, retailers can finally eliminate 100 percent of their processing fees. By offering a cash discount program to customers who pay with cash and a service fee on all sales, the processing fees are eliminated. The program starts by offering a customer service fee on every transaction. Wait, let us explain. For instance, consider a 4% customer service fee. If every item in the store is 4% higher than the cost listed, then a discount is given, which is equal to the customer service fee, when customers pay with cash. If an item is $100 and the customer chooses to pay with a credit card, the real price of such item is $104. However, the customer who chooses to pay cash gets the item for exactly $100, because a service fee of 4% has been discounted. Cash discount programs are very transparent because they let the customers know up front that they will save if they pay with cash.
Cash Discount differs from convenience fees
It’s important to note that a cash discount program is not a convenience fee. In general a convenience fee is one that has been added to the real price. This is not the case with a cash discount. Instead of “punishing” people for paying with a credit card, you are actually giving them a discount for paying with cash. After all, many credit cards have their own surcharges. Cash discounts are rewarding the customer, not punishing them.
It is not the same as surcharging, either.
Some states do not allow surcharging, but most do. The difference with a cash discount program and a surcharge, is exactly like previously mentioned with convenience fees, the customer will not be overcharged when making payment with credit card. However, those customers who pay with cash will receive a discount. As a merchant utilizing a cash discount program, it is important that you are entirely clear and do not misunderstand a cash discount program for a convenience or surcharge fee.
POS systems can adjust the payments within the terminal.
Perhaps one of the best aspects of the cash discount program is that this fully mobile payment technology is compatible with wireless terminals as well as POS systems. No PIN Pad is required and an EMV chip card terminal is included. At Dodson Payment Solutions we offer systems that are fully compatible with a Cash Discount program. Remember, you don’t have to manage this on your own. Our systems effortlessly take care of this automation for you.
It’s great as a marketing tool
Offering a cash discount program is a great way to drum up business when appropriately marketed. It can be used to attract new customers. After all, what customer doesn’t like a discount? For those loyal customers who have always paid with a card, you may not be able to switch them over, but for new customers, the cash discount program can be a powerful way to win over the competition.
Most retailers have found that a cash discount program works very well for them because they like the idea of eliminating 100% of their processing fees. Additionally, higher than average margins make the program extremely intriguing.
If you’re ready to learn more about the Cash Discount Program or want to implement it in your own retail location, give Dodson Payment Solutions a call today! We can help you make the most of this program.