Merchant Cash Discount Program
Cash Discount Program: The Benefits and Problems to Expect
4.8 (96.36%) 11 votes

An Introduction to the Cash Discount Program

***Important update, please read first*** Visa has officially announced that cash discount as it has widely been implemented throughout the payments industry is not compliant with Visa regulations. You can read their statement here. For this reason, Harbortouch is discontinuing the cash discount program effective on 12/3/18.

Credit card processing comes with hefty fees and today; it has become costly for merchants. That is a challenge for businesses with smaller budgets. Swipe fees, or interchange fees, might become a financial burden on your business if you have decided to accept credit and debit cards. That is the main reason most business people are going for cash discount credit card processing programs.

You might be the owner of a small or a big business, but that is not important. The cash discount program comes with numerous benefits. Unfortunately, most business owners do not know what this program is or what it is involved.  Harbortouch now offers a cash discount program as an option with credit card processing services.

What is a Cash Discount Program?

Definition of a Cash Discount Program

A cash discount program relates to the methods merchants are applying in their businesses to pass the costs of accepting credit and debit cards to their customers or cardholders. The merchants raise their prices through simple conspicuous signage in the business location and offer discounts to the customers who make cash purchases.  Here’s an image to illustrate how it works:

How Cash Discount Program Works

A quick example: If you charge 4%, processing fees on all items, the formula will indicate that the services or products you should sell at $100 will retail at $104 unless your customer uses cash. In that case, the customers making cash purchases will be discounted and will only pay the original $100. The totals are reflected on the customer’s receipt.

Definition of Surcharging

Surcharge or convenience fees are different from cash discount program.  A surcharge is when merchants increase the cost of purchases made by credit card. No cash discount fees or surcharges are allowed on PIN-based debit transactions.  Surcharging is an option allowed to merchants as discussed here at, however there are limitations and restrictions to consider before surcharging your customers.

Sometimes the program gets confused with surcharging, but here’s the difference between the two:

Surcharging vs Cash Discount Program

With a little background out of the way, let’s get to the meat and potatoes of this article.  We’ll take a look at the pros and cons of offering a cash discount.

What are The Benefits of Cash Discount Credit Card Processing?

Reduced Fees

The main benefit relates to eliminating or reducing card-processing fees associated with credit cards accepted. After deciding not to process cards, you will not have to pay for the services. But if you have already priced your products or services to cover the card processing fees, this benefit might not make sense to you.

Easier to Implement

Apart from being more accessible to achieve, the program is also easier to explain to customers. Some merchants isolate and then pay for the card processing by assessing surcharges on the products customers buy with credit or debit cards. That comes with numerous challenges. For example, adding card-processing surcharges is illegal in many states. However, implementing cash discounts is legal in all states. Explaining that every item in the store is priced with built-in service fees is usually easy. The merchants can also deduct the fee easily if someone prefers cash payment.

Encourages Cash Payment

Even though most individuals prefer card payments, cash discounts incentivize them to use cash instead of debit or credit cards for all their purchases. In other words, the time between the sale and the access to funds is minimal. Such transactions do not involve wait time or processing time for the money to get on the merchant’s hand. Moreover, merchants can eliminate fraud exposure.

Chargebacks Reduction

After reducing the number of customers using credit cards in your store, chargebacks will also diminish. If chargebacks have been a massive problem for your store, the decrease might help you minimize the card fees you pay because you will be at a lower risk.

A Great Marketing Tool

The cash discount might be a useful marketing tool for your restaurant or retail store that will eventually attract more customers. The word “sales” is known to attract more people, and that is why most businesses display it at the year-end outside their stores. Getting more people inside your store should be your primary goal throughout the year.

Ideally, people will get in for a single item and go out with more. Even though a 4 percent discount will help you cover the cost of processing your cash discount service, it will be a useful sales or marketing tool if you implement it in the right way.

Complete processing fees elimination is essential to most merchants. Merchant level salespeople benefit from the programs due to the above average margins associated with them. However, when choosing a type of cash discount processor, you should educate yourself on the associated problems.

The Problems Associated with Merchant Cash Discount Program

Some Customers Hate Moving with Cash

Around 33 percent of people prefer using their debit and credit cards to make purchases. That means that today, many people do not carry cash. And if your customers are opposed to making cash only payments to get discounts, they might leave without making any purchase. That might lead to reduced sales.

Conspicuous Signage

To provide cash discounts, you have to post in your place of business signage to let all your customers know that they will receive discounts if they use gift cards or cash to make a payment instead of debit or credit cards. That is a rule that credit card brands have set and your business must follow it. You should be ready to incur printing costs and replace the prominent signage in your store if the need arises. Even more, some customers may see the offer in a negative light if expressed as a discount. Example of signage you’ll need at your store:

Cash Discount Signage Example


For you to comply with this program, all your receipts should reflect that there are service charges on your products and cash payments eliminate the service charges. You should, therefore, work with a provider like Harbortouch merchant services that offer this feature. Furthermore, you will have to observe all law changes around cash discounts to avoid penalties.

Potentially Lower Sales

Most studies have shown that most customers spend more money when using their debit or credit cards to shop. If cash is a more attractive option to you when it comes to managing credit card fees, you might discourage and depress your sale results.


Cash discount implementation in your business comes with several challenges. However, it will be more successful if you follow every rule. By observing all rules, you will be able to avoid penalties and issues related to cash payments. Be ready to evaluate your success programs.

Will a cash discount eliminate the monthly processing bills? Yes!

Some merchants see some smaller fees on their monthly bills. That is because of the variations of interchange prices. Fortunately, most business owners witness 95-100 percent decrease in their monthly bills. After adopting the program, your monthly statements will show near-zero processing costs for services and goods you sell showing up in the deposit. Depending on the provider, the monthly subscription fees that cover for your participation will also be lower.

With the Cash Discount Program from Harbortouch, you can offset your credit card processing costs, to learn more contact us today.

  • 9
  • 1

Leave a Reply

Your email address will not be published. Required fields are marked *

Post comment