One of the biggest expenses a business has is credit card processing fees. Each month, business owners pay roughly 3-5% of their sales on credit card processing fees, but there is a way to avoid these costs. It’s through Cash Discounting!

What is cash discounting?

Cash discounting is a program that rewards customers when they pay in cash instead of with a credit card. By offering an incentive to customers so they don’t use their credit cards, a cash discount program helps restaurants avoid paying expensive credit card processing fees. When offering cash discounts, a restaurant can offset up to 99% of their credit card processing fees. 

How does it work?

Cash discounting is relatively easy to set up. It takes place during customer check-out and can be seamlessly integrated into the customer experience. 

1. When a customer is ready to pay, they are presented with a bill which includes a line item for a non-cash adjustment. 

2. The customer can choose to remove the fee by paying with cash. 

3. If the customer chooses to pay with a credit card, they pay the full amount of their bill. If the customer chooses to pay with cash, they save money on the transaction. 

Cash discount programs benefit both customers and restaurants. 

Customers have an opportunity to save on their bill. Restaurants avoid expensive credit card processing fees. Plus, restaurants benefit even if customers choose to use their credit card. Restaurants avoid the extra expense of the payment processing fee by passing it onto the customer through the non-cash adjustment.  

What’s the difference between cash discounts and credit card surcharges? 

Cash discounting is not to be confused with credit card surcharges. While both attempt to eliminate credit card processing fees for restaurants, they do not work in the same way. 

Credit card surcharges are not on a bill when it is presented to a customer. The fee is added once the customer chooses to pay with a credit card. Cash discounting is fully transparent. The fee is added to the original bill, and the customer can choose to remove it by paying with cash. 

• Surcharges provide an additional fee to customers when they pay with a credit card. 

• Cash discounts provide a discount for customers when they pay with cash. 

The difference between the two programs isn’t only in how they are presented to customers.

Credit card surcharges are more complex to set up. There are many complicated rules for using surcharges. Plus, surcharge programs don’t account for debit card transactions, and they are illegal in ten states. Cash discount programs don’t come with the legal or technical complexities of credit card surcharges, and it’s more transparent and ethical. 

Are cash discount programs legal? 

While credit card surge charges are illegal in ten states, Cash Discounting is legal in all 50 states. 

The Durbin Amendment protects cash discount programs and makes it simple and easy to remain compliant. The federal guidelines require restaurants to disclose the details of the program to customers through signage and receipts. This requirement isn’t a hurdle for implementation; it’s actually a best practice. When customers are fully informed, they can choose whether or not they want to participate, and they often do. 

What do customers think about cash discount programs? 

The #1 hesitation business owners have about using cash discounting is concern about what customers will think. But, studies have shown that customers are receptive to cash discounting programs. 

A CCSalesPro study found that cash discounting was not an issue for customers 99.2% of the time.  

When cash discounting programs are transparent, many customers recognize the benefit of the program and choose to use them. There are a few reasons why. 

• Customers are already familiar with cash discount programs. Cash discounts have been commonly used at gas stations for years. 

• Many restaurants and hospitality businesses are already using cash discount programs. Starbucks, Hilton, and over 30,000 businesses have used or are using cash discounting. 

• Customers understand the changing economy. Most customers are aware of the expense cost of credit card processing fees and the rising costs of goods and labor for restaurants, and many are open to doing what they can to support restaurants in their community.  

Plus, cash discounting is on the rise. Many national chains and independent restaurants are embracing cash discount programs. As programs are implemented in more and more places, the program will become a norm for customers.