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Education

they currently lose money on cigarette sales and on • Fast food: The manager of a sit-down fast-food
sales under $2. "We usually have to add $0.50 to a establishment couldn't assess how a cash dis-
small sale anyway to cover our costs," they added. count would affect his business. The manager of a
15-store chain selling pizza by the slice, however,
• Newsstand: A newsstand, deli and seller of tobacco said he loved the concept.
products in Brooklyn, N.Y., said it's hard to charge
more because of the high cost to begin with. • Medical offices: The manager of a medical office
wasn't sure a fee could be added to a patient's co-
• Liquor store: A New Jersey liquor store owner payment. An eye doctor expressed interest in ap-
stated he doesn't know if state law permits cash plying cash discounts to eyeglass purchases.
discount programs, but he is investigating it. "It
makes sense," he said. "People will think it is just • Auto rental: This proprietor said such a program
another state tax anyway." "makes complete sense and can be part of multiple
surcharges."
• Hotel: The owner of a hotel in Florida said, "We
have other surcharges. This is easy to pass on be- It appears that some individuals and industries will push
cause they think it is part of a resort fee or linen forward immediately with cash discount implementation;
fee." others will want to do trials or let competitors be the
guinea pigs. But once a few places start switching, the
• Event ticketing: This company said it would be concept of saving money will spread.
easy to implement a cash discount program be-
cause, "we have other surcharges for handling, etc." Happy merchants mean opportunity

• High-end jeweler: A Scarsdale, N.Y., jeweler said It may take big banks a while to develop cash discount
he would love to implement a cash discount pro- programs ‒ if they do at all. So if you encounter big-bank
gram, but had reservations because "people buying merchants, their merchant services provider probably
Rolex would frown on it." can't do cash discounts. This is an opening for you. In
our industry, change generally leads to opportunity;
opportunity leads to new sales. You can potentially get a
smile out of a merchant who makes the change to cash
discount. A smile today is huge. Not getting beat up to
lower your cost by a penny or discount to 8 basis points
is huge.

Will cash discounts be short lived? Will the decline in cash
use by younger generations reverse? Will cardholders
stray from debit and credit cards and revert to paper
currency? The ease of use of mobile payments, and the
continued marketing of credit card rewards, would likely
be a roadblock for the return of cash. The fact that some
businesses are now only accepting cards to reduce theft
and robberies is also a deterrent.

Baby boomers will likely use cash when needed or will
find a competitor that doesn't charge customers the
percentage. But young people I've spoken with said paying
for processing is just part of purchasing something they
need now.

It would take a significant decline in card usage for the
card brands to intervene to stop this type of program. So,
for now, merchants have an opportunity to cut costs, and
MLSs can help. What are you going to do?
Steven Feldshuh, President of Merchants' Choice Payment Solutions
East, has 18 years' experience in sales and ISO development. Directly
prior to joining MCPSE in 2012, he was President of Payment Partners.
In his current position, Steven devotes the bulk of his time to assist-
ing agents in building their portfolios. Contact him by email at
stevenf@mcpseast.com or by phone at 212-392-9202.

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