Benefits of a Cash Discount Program

Cash, check, credit card, debit card, mobile and online options are all modern means of payment ‒ that suit the techno-savvy generation of our times that is forever looking out for ways that are easy, quick and accessible

Nevertheless,small retailers such as owners of convenience stores, bars and single location restaurants are often found complaining about the high costs related to accepting credit and debit cards.The recent innovations in cashless payment technology have invariably complicated payment options available to both merchants and consumers alike.

New Cash Legislation Protects Consumers

New cashless payment innovations could end up disenfranchising approximately 14 million unbanked consumers. As a countermeasure, some cities and states, like New Jersey, Philadelphia and Massachusetts have obtained legislative cover protecting cash usage within their jurisdictions consistent with the developing trend of cashless retailing. Although exemptions exist for mobile device applications, car rental companies and other purchases, the laws on the whole guarantee security for a large portion of American consumers against any firm of discrimination owing to their lack of access to card or cashless technology.

On the other hand, a recent verdict on a long-standing court case in New York regarding surcharging introduces provisional protection for merchants who have been unduly compelled to bear the burden of credit card processing fees. As per a Newsday article, the settlement will allow New York retailers to alternately direct surcharge fees onto the consumers as long as the additional amount is disclosed in monetary terms. California, Florida and Texas are among some of the states that have revoked surcharge bans so as to allow retailers to share or pass on the burden of using plastic. While surcharge fees are subject to controversy and legal implications, cash discount programs enjoy legal patronage in all 50 states.

Cash Discount Program vs. Surcharge Fee

Cash Discount Program vs. Surcharge Fee Despite being wholly distinct from each other, Surcharge fees often get confused with cash discounts, creating uncertainty as to the application and legality of cash discount programs. According to The 2010 Dodd-Frank Law, stated in the Durbin Amendment, businesses are permitted to offer discounts to customers that serve as an incentive for customers to pay through alternative methods and the distinction between the two is best explained through the posted price of an item or service. According to a Visa representative, “merchants can provide a lower price for cash acceptance… However, merchants are not permitted to post a price for cash and then charge a higher price for cards.”

Cash Discount Programs: Better for Business Owners & Better for Customers

It is hard to dispute the benefits of a cash discount program for both retailers and their customers. Benefits include:

  • Reduced Fees for Merchants: The most obvious benefit for retailers is the ability to reduce or eliminate credit cards usage fees. With a cash discount program in place, merchants are able to reduce fees that cut into their profit margins and consumers avoid credit interest fees on small purchases.


  • Simple for Merchants & Customers to Understand: Since an in-built service fee is attached to all items in a store which is liable to be deducted in case of cash payments, cash discount programmes are relatively easier for customers and merchants to understand because of being apparently clear-cut and straight-forward.


  • Merchants Retain More Profit. Merchants are able to retain more profit by reducing processing fees whilst being able to reduce credit card charge offs as a result of decreasing no of customers taking up cards.


Credit card processing can be a major challenge for small businesses owners with limited budgets and thin profit margins. With a cash discount program, merchants can give customers the option to pay a discounted price when they pay with cash. This in turn reduces costs for both the customer and the business owner, while still catering to consumers who prefer plastic.


Currently more than 99% of businesses accepting credit cards are on traditional programs. These businesses pay a variety of different Daily, Monthly, and Annual Fees. In addition, they pay a percentage of all sales for the privilege of accepting credit and debit cards as a form of payment. When you add up all the fees and percentages that business owners are forced to pay, it comes out to anywhere from 3% — 4%+ of their gross credit/ debit card sales.

With rising credit card processing costs and overall increases in business expenses, like minimum wages, business owners are finding it harder and harder to cover their expenses. A solution was needed to offset these expenses and maintain a reasonable profit margin. Thanks to years of legal battles such as, “The Payment Card Interchange Fee & Merchant Discount Antitrust Litigation,” and the passing of laws such as, “The Dodd Frank Wall Street Reform and Consumer Protection Act,” and “The Durbin Amendment,” Mtech’s no fee processing solution is now available through our authorized representatives. 



Now, through Mtech’s, a small non-cash charge (4%) is automatically calculated for allowing the customer to use an alternate form of payment. This charge is waived as a discount if the customer elects to pay with cash or in-store gift card (if gift cards are accepted). Swipe4Free is a proven solution that allows businesses to increase profits by eliminating their credit card processing fees. / 888.411.7586 

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