Cash Discount Program Definition

Merchant Account Cash Discount Explained

What is a cash discount? A cash discount (often confused with “zero fee processing“) is a pricing plan that adds a fixed surcharge to all prices in a merchant’s store and then waives that surcharge for customers who pay with cash. In effect, this means that all customers who pay with anything but cash will pay the surcharge (usually between 1% and 4%) at checkout, and that the extra revenue generated by this surcharge can be used to offset the merchant’s transaction fees for accepting credit and debit cards. This passes the cost of accepting electronic payments from merchants to customers.

Cash discounts are often confused with “zero fee processing,” “free processing,” “reverse fee processing,” and other surcharge-based pricing structures. However, there is a key difference between a cash discount and these other programs. Cash discounts have been permitted by Visa and MasterCard for more than a decade and are completely legal as long as merchants provide adequate disclosure of the surcharge and apply it to all non-cash transactions. Surcharges, on the other hand, have been hotly litigated and remain illegal in 10 states. While cash discounts simply add a fixed percentage to all non-cash payments, surcharges cannot be added to debit cards, cannot exceed 4%, and must be disclosed via proper signage at least 30 days in advance of the surcharge. In other words, cash discount programs achieve a similar outcome to surcharge-based programs, but they are subject to fewer restrictions.

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I'm a former credit card processing sales director who left the industry because I didn't like how it takes advantage of small business owners. It feeds like a leech on businesses and thrives by imposing fees that are nearly impossible to comprehend. Seeing a need for change, I left and built this website help business owners better understand the industry, research merchant services providers, and get refunds of excessive merchant account fees. My experience of working "behind the curtain" in the industry, and using that knowledge for good, has resulted in millions of dollars returned to hard-working small business owners as well as enterprise-level companies.

From the time that I starting working in the merchant services industry to when I left to create this website, I've been on the pulse of payments for nearly 15 years. It didn't seem fair to keep this "insider" knowledge to myself. To lift the fog, I've reviewed hundreds of companies, read thousands of user reviews, and learned the pricing tricks of every provider. If you have questions about credit card processing, you can find the answers on this website.

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