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Education

StreetSmarts SM

“Setting up your ISO for success”

WITH
AARON NASSEH

Understanding the cash

discount program

By Aaron Nasseh To illustrate, I'll use a 4 percent customer service fee. This
Finical Inc. means the true cost of every item in the store is 4 percent
higher than listed, and the pricing notice will indicate a
f you're active in the merchant services indus- discount is given equal to the customer service fee when
try, chances are you've heard of cash discount customers pay by cash. In short, if an item is priced at $100
programs. They're gaining tremendous popularity and the customer elects to pay by any method other than
I with both merchants and sales agents; however, cash, the true price is $104. If the customer pays by cash,
confusion abounds about what exactly a cash discount the total is $100 since the 4 percent customer service fee
program is and is not. In this article, I'll provide an over- has been discounted.
view of the cash discount program, and share the unbe-
lievable opportunity offering one can afford you and your A cash discount program is not a surcharge fee, nor is it
merchants. a convenience fee. Surcharging and convenience fees are
generally charges added to the true price; they do not offer
My company has been offering a cash discount program a cash discount. The reason this was previously frowned
for over two years, so I've had a good deal of practical upon, and still is in certain states, is because some states
experience with it. However, I'm not an attorney, and view surcharging as punishing customers for paying by
nothing in this article should be construed as legal advice. credit card ‒ not to mention that Visa and Mastercard
If you have legal questions, contact an industry attorney. have their own rules about surcharging.
Zero processing fees Not the same as surcharging

A cash discount program enables merchants to eliminate Surcharging and convenience fees have become more
up to 100 percent of their processing fees by adding a widely accepted due to certain court rulings over the past
customer service fee on all sales, and offering a cash few years, but they're still not available in all states. What
discount for those who pay by cash. Merchants must differentiates a cash discount program is the customer is
display a customer pricing notice letting their customers not being charged more when paying with a credit card,
know there is a customer service fee charged on all because the true cost of the item being purchased is, in
transactions – keyword being "all." fact, 4 percent higher, as disclosed by the pricing notice.
Instead, customers are receiving a discount if paying by
cash. So, don't mistake a cash discount program for a
surcharge or convenience fee.

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