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Education

StreetSmarts SM

Steve Feldshuh

“Talk To Steve”

Cash discounts:

Are they right for your merchants?

By Steven Feldshuh These programs, in essence, are simply a transfer of
Merchants Choice Payments Solutions East costs/expenses from merchants to customers. Through
these programs, most or all of the expenses associated
ately, I've been receiving daily solicitations to with credit and debit card processing are transferred to
have my group sell the new cash discount pro- customers. For a large number of businesses, this makes
grams. I believe this is one indication that we're economic sense. However, if a merchant implements such
L at the beginning of a merchant pricing revolu- a program and loses business because it ends up charging
tion. Why? It's a matter of economics. more for goods and services than its competitors do, the
program is not feasible for that business.
Small businesses, many of which are on shaky ground,
want relief. Take a small business processing a payments Cash discount programs are relatively new; there is little
volume of $300,000 a year. If it transfers an average of 2 information on how they are faring. However, history
percent of that sum to consumers to help cover processing exists in a few verticals. Many private schools have been
fees, that's a $6,000 savings. If the business is doing $1 using this type of program for years. Government offices
million annually, at 2 percent, that translates to $20,000. that are not permitted to pay processing fees also have
Why wouldn't a business consider a cash discount been charging fees for card processing. Some petroleum
program? retailers also charge a flat fee for card use at the gas pump.
What merchants are saying

Now cash discount programs are available for every
It appears that some individuals and business. I reached out to merchant level salespeople
industries will push forward (MLSs) in the field and received initial feedback on what
immediately with cash discount they are hearing from merchants about these programs,
as follows:
implementation; others will want
to do trials or let competitors be the • Auto body: A large auto body shop in Elmsford,
N.Y., has been passing on a 3.99 percent cost to its
guinea pigs. But once a few places customers for years. The manager said, "No one
start switching, the concept of saving has ever complained. Very few people pull out a
money will spread. checkbook, and only a few come up with the cash."
• Deli/bodega: Owners of a New York City deli said
a cash discount program is right for them because

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