Cash Discounting

Paytech Trust has solutions in place to support cash discounting – a hot topic among merchants.

WHAT IS A CASH DISCOUNT?

A Cash Discount is when a merchant offers a discounted price to their customers who pay with cash. This can be done one of two ways:

Cash Discounting – The merchant’s displayed prices are discounted at the point of sale.

Reverse Cash Discounting – The merchant assesses a Customer Service Fee to their customers. The fee is typically between 3%-4%, and is similar to the amount billed to the merchant for their processing fees. This helps to reduce or eliminate the merchant’s processing fees.

HOW DOES THIS PROGRAM WORK?

The merchant posts a policy advising a Customer Service Fee is assessed at the location. They also post a policy offering a discount to customers paying with cash. The Customer Service Fee and the Discount should be in line with the processing fee billed to the merchant.

Take the following scenario: A merchant is billed a flat 4% for their processing fees. When a card is presented for payment, the math works out like this:

– $100 Sale * 4% Customer Service Fee = $104 Total Purchase Price
– Merchant is billed a flat 4% processing fee. 4% of $104 = $4.16 Processing Fee
– Merchant pays $0.16 on a $100 sale. The $4.00 Customer Service Fee will cover the majority of the $4.16 processing fee billed to the merchant.

To make the fees a true wash, the merchant is billed a flat 3.84% for processing fees, while assessing a 4% Customer Service Fee.

Here is an example:

– $100 Sale * 4% Customer Service Fee = $104 Total Purchase Price
– Merchant is billed a flat 3.84% processing fee. 3.84% of $104 = $3.99 Processing Fee
– Merchant pays $0.00 on a $100 sale because the $4.00 Customer Service Fee will cover the $3.99 processing fee billed to the merchant.

The Understanding Customer

Easily accepts the cost of doing business and understand using a credit card means fees for them. (Most customers fit this category.)

The Questioning Customer

Inquires about the service fee, and may ask for more information. PayTech Trust supports merchants in providing answers and explanations

The Concerned Customer

Typically, this customer has other things on their mind and wants to vent. This percentage is usually extremely small. (.001% of your total overall sales). You always have the option to bypass the fee at your discretion.

Cash discounts are becoming more commonplace today and very rarely will you get an upset customer. And if you do – just bypass the service fee – and keep your customer happy. If they have questions, refer them to us, the “Cash Discount Experts”.

Contact Us

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email contact@paytechtrust.com

call 888-482-4348

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