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Everything You Need to Know About a Cash Discount Program

What is a Cash Discount Program?

Credit card processing has become costly for merchants over the years and isn’t expected to slow down anytime soon. Because of this, many merchants are searching for solutions to offset unmanageable processing fees and rates. One of the main options merchants are choosing is cash discount credit card processing to help manage some of the associated costs. So, what is a cash discount program and how can it help your business? Keep reading to find out.

Let’s start with the cash discount definition: a type of credit card processing that allows a business to offer a deduction of their services or goods to customers by motivating them to pay with cash. If customers choose to pay with credit cards, the business can pass the cost of acceptance to the cardholder thus allowing the business owner to continue to accept all major credit cards but without the loss of transaction fees. 

What’s In It for the Merchant?

Swiped Zero is ready to help you completely eliminate pesky credit card fees. Working in the industry for decades, we’ve figured out what works best with a Cash Discount Program and we’re ready to pass that on to you. We’ve created a program that allows you to collect 100 percent of your sales revenue by applying a Cash Discount Fee to customers paying with checks, credit, or debit cards.

Our Cash Discount Program shows businesses: 

  • How to eliminate credit card processing fees
  • How to collect 100 percent of your revenue
  • How to incentivize cash payments

Reduced fees: The biggest benefit to merchants is reduced or eliminated card processing fees. 

More cash payments: With customers incentivized to pay in cash, you’ll have faster access to funds because the processing time is eliminated. And, you’re less exposed to credit card fraud. 

Chargeback reductions: As card payments are reduced, so are chargebacks. If you’re struggling with excessive chargebacks, a cash discount program could reduce the burden. 

Gain more traffic: Discounts are always attractive to customers who are keen on saving money. While the discount is small, it may be enough to drive more traffic to your business and build your customer base. 

Depending on your cash discount program provider, you may get other benefits, including: 

  • Online cash discount
  • POS cash discount
  • No disruption of your sales flow
  • Next-day funding available
  • Free disclosure signature 

How Does it Work? 

Merchants recoup processing costs by including the fee into the listed price of their goods and services, which passes the fee to their card-paying customers. Merchants can then offer a cash discount to customers that opt to pay by cash or alternative payment methods like check and ACH transfer. 

Cash discount programs are legal as long as they comply with certain requirements. We ensure technical compliance in the back end. Merchants ensure compliance through price adjustments, compliant signage, and receipts. Here’s how it works: 

  1. Price adjustment: Businesses adjust the pricing of their goods and services to recoup the processing cost of a transaction, which is generally around 2-4 percent of a transaction This becomes your “list” price. 
  2. Discount promotion: Customers who pay by cash or an alternative non-card-based payment method receive a discount. To comply with legal requirements, businesses must promote the program properly with in-store signage and verbally explain the program to customers at the point of sale. 
  3. Discount application: Your point of sale terminal automatically applies the discount to cover the merchant processing cost. Because merchants aren’t allowed to profit from credit card transactions, this must be done in a legally compliant manner. To ensure compliance, you must use compatible technology and a reliable, compliant credit card processor.
  4. Implementation: A compliant, reliable cash discount program with compatible technology should offer quick setup, easy-to-read statements, and rates programmed into the POS system to ensure that the correct fee or discount is properly communicated on the customer receipt.
  5. Fast funding: With our cash discount program, merchants keep 100 percent of their sales without monthly processing fees. Batches settle in as little as one day so you receive your funds faster.

Cash Discount vs. Surcharge 

It’s a common misconception that a cash discount program and surcharge are the same. We’re here to set the record straight and tell you that they are different. Here’s how: 

  • A cash discount is when a merchant displays credit card prices of goods being sold and offers a discount on that price for consumers who pay with cash
  • A surcharge is when a merchant displays cash prices of goods being sold and then charges an additional fee on top of that price for consumers who pay with a card.

For example, if the list price of an item is $10, a cash discount results in the customer paying less than $10. On the other hand, charging credit card customers more than $10 to offset processing costs is considered a surcharge. 

Surcharges are not compliant. Cash discounts are. Under the Durbin Amendment to the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, businesses are legally permitted to incentivize customers with a discount for cash payments. 

Are Credit Card Discounts Legal? 

Any cash discount program that doesn’t strictly follow established legislation and credit card company rules could result in fines or possibly having your merchant account suspended. Currently, 11 states have legislation that strictly prohibits surcharges for credit card transactions. Other states may follow. 

So, cash discount programs are 100 percent legal and compliant with credit card issuers as long as you follow the laws and rules. 

What to Know About Cash Discount Programs 

Compliance is actually easy for merchants. By adding simple signage about your cash discount program and disclosing transaction details in a certain way on customer receipts, you can have a compliant and profitable program. 

Cash Discount Program Signage 

In-store signage should be prominently displayed at entrances and at the point of sale. In-store signs also help sell the program and motivate customers to pay by cash.


Every receipt must explain that all service charges are paid for by the customer when using a credit or debit card, but that these service charges are eliminated for cash purchases. If there is a fee for processing a credit card or a discount provided for paying cash, it must be a clear line item on the customer’s receipt. 

Use Compliant Technology

To avoid overcharging and ensure proper line-item display on each transaction, it’s crucial to use compliant technology that is compatible with your terminals. Working with a provider like Cash Discount Programs virtually assures compliance.  

Is It a Good Fit for Your Business? 

While cash discount programs are a great way to offset credit card processing fees, it may not be the best fit for every merchant. Here are a few things you should consider before jumping into a program like this: 

Do you prefer cash payments? A cash discount program will result in more cash in the drawer. Handling cash can be cumbersome and less safe than using a solution like contactless payments. It takes time to count and deposit cash at the bank. And more cash means more exposure to theft by employees or burglars. It’s also a fact that card-paying customers spend more than cash customers. So, it’s possible that a cash discount program could result in less revenue overall. 

Is your product or service mandatory? If customers are required to buy or use your product or service, having another payment option provides a welcome convenience despite the service charge. However, if your product or service is discretionary, you may lose customers due to the listed service charge. 

Are competitors offering cash discounts? If similar businesses in your market are offering a cash discount program, customers may gravitate to them at your expense if you don’t have a similar program. On the other hand, if your business is the only one in your market offering the program, customers who prefer to pay by card may complain. 

Do you rely on repeat customers? If you have a loyal customer base with a lot of repeat business, the perception of an extra fee might put them off and drive them to a competitor that doesn’t offer benefits for cash sales. 

Learn More

Is a cash discount program right for you? If you’d like to learn more about the details of implementing a cash discount program, or simply get started, contact us today.