October 3, 2023

As credit card processing becomes increasingly costly for merchants, many are seeking avenues that allow them to reduce this expense. One of these avenues is adopting a cash discount program that incentivizes customers to pay by cash or check, offsetting payment processing costs for business owners.

What is a cash discount program?

Businesses that use the best cash discount program offer a discount to customers who pay by cash or check instead of using a credit or debit card. Merchants can incentivize cash payments by offering a discount on the posted credit or debit card prices for customers that pay by cash or check. By including a service fee in the posted price, cash payments offset the payment processing charges that come with card transactions.

Difference between cash discount and surcharge

The cash discount program is where merchants offer a discount on the price for cash customers. But surcharge is where additional fees are added on top of the posted price for customers that pay with a card. With a cash discount, the customer pays less than the listed price, and those using cards simply pay the listed price. While they may sound like essentially the same thing, the difference is very important in order to comply with laws and card brand rules as mixing the two up could mean fines. Eleven states have laws that prohibit surcharging altogether.

What’s in it for the merchant?

Reduced fees

One of the most obvious benefits for merchants that adopt a cash discount program is reduced or eliminated card-processing fees. Simply put, by deciding to not process cards, you avoid having to pay for the services.

Increase in cash payments

While many customers prefer to use cards, offering a discount will no doubt incentivize more cash payments. This means faster access to the funds for the merchant as processing times are eliminated. Not to mention, a decrease in card payments in favor of cash drastically reduces the likelihood of fraud.

Reduction in chargebacks

On the same principle, as the frequency of card payments reduces, so will chargebacks. If you have struggled with a high number of chargebacks, opting for a cash discount program could reduce the risk of them continuing at their current rate.

Implementing the best cash discount program

In order to comply with the rules and laws on cash discount programs, all receipts should show that there are service charges on products that are paid for by card and that these are eliminated when the products are paid for by cash. Working with a merchant service provider can help you get all of this in order to make sure you’re not risking compliance.


By evaluating each of these factors, you can make an informed decision on whether or not a cash discount program is right for you. However, if you think it’s the right solution for your business and you want to take the next step, make sure to choose a payment processing provider that will help you implement it correctly.

And, venturing into the domain of how to start a payments company requires strategic navigation. Conduct thorough market research, deciphering industry nuances. Formulate a robust business plan, focusing on regulatory compliance, innovative technology, and customer satisfaction. Cultivate strategic partnerships, prioritize security measures, and execute a well-thought-out launch for enduring success in this dynamic sector.

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