What You Need to Know About Cash Discounts vs. Traditional Processing
As a business owner, there are many ways that you can accept money from your customers. You could do cash only, you could do plastics only, you could do both. However, it is important to know which type of payment is best for your business and which type of payment is best for your customers.
Traditional Processing
Traditional processing is when the business owner assumes the credit card processing fees on each of their customers transactions.
Cash Payment Discounts
Though cash payment discounts have been around for quite some time, they have become exceedingly popular over the last year, mainly due to COVID.
Instead of the merchant paying the credit card processing fee, they add an additional fee onto their customer’s total to cover the transaction charge. This incentivizes the customers to pay in cash to reduce their total.
This is a completely legal and effective way to reduce your costs are a business owner, but there are certain things you have to do to stay compliant with this type of transaction. For example, you need to advertise on your storefront and at the register that you offer cash payment discounts.
Know Your Industry and Know Your Customers
There are certain industries where charging your customers a transaction fee is not the best idea. For instance, if you are a fine dining restaurant, your customers will find it odd if you charge them for the transaction fee. Whereas an automotive shop is a better industry to incentivize cash payments.
It is all about knowing who your audience is!
Learn More About Credit Card Processing
If you are interested in learning more about the payment processing industry, contact us today!
