The Cash Discount Program gives customers a discount for paying in cash and passes along the processing fee to customers paying with a card. Depending on the rate of your cash discount, your customers will cover most of the credit card processing fees. This reduces the cost to the merchants by 80-90%!
The Cash Discount Program can be an effective way to cover a business’ cost of accepting credit/debit cards, but may not be ideal for every business. Below are some important factors to consider when deciding if this program is a good fit for your business:
Your Customer’s Preferred Payment Method
Do your customers prefer to pay with cash or card? Knowing your demographic will help you determine if you should offer the discount or not. Age groups will differ on their cash usage and how much they carry. For example, younger generations typically carry little to no cash and prefer to pay with their phone or a card. Older generations are more likely to pay with cash (or a check if possible). The cash discount will be easily accepted if your customers are already inclined to pay with cash.
Average Ticket Prices
The lower the item costs, the lower the fee will be. The higher the item costs, the higher the fee will be. If you have low ticket items combined with the cash discount, customers are incentivized to pay with cash. If you have high ticket items, the impact the added percentage would have on a customer’s total could be huge. It's very important to keep this in mind when considering adding a cash discount to your business.
Your Competition
Do your market research! Are cash discounts common in your industry and in your area? Comparing yourself to your competition is important. Why? If your competition is offering a cash discount, maybe you should too. If they aren’t... why not? If other businesses have implemented a cash discount, maybe it's time you do the same! It's a great way to lower your operational business expenses. But, you don't want to drive your customers to your competitors, so it's important to consider all factors before making a decision.
