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Education

StreetSmarts SM

Steve Feldshuh

“Talk To Steve”

Cash discount programs revisited

By Steven Feldshuh need to explain to your merchants the positive aspect of
Merchants' Choice Payments Solutions East their monthly savings through a cash discount program.

aily discussions continue in the GS Online's If a merchant pays $500 in monthly fees, and it can be
MLS Forum regarding cash discount pro- reduced to $50 a month in processing fees, that merchant
grams. I wrote about this topic in "Cash dis- would be saving $5,400 over the course of the year. That
D counts: Are they right for your merchants?" in is a big savings, and may be worth it to lose a few sales a
my Dec. 11, 2017, Street Smarts column, and I will try week.
SM
to shed light on what my ISO has been witnessing since 95 percent satisfaction
then.
I didn't think I would be inclined to push a cash discount
We have had a few merchant level salespeople (MLSs) program, but we now have merchants who are very
embrace this pricing program, and I'm going to share happy they made the change. It is a positive feeling to help
insights we've gleaned that I hope will help you with this merchants succeed, and by reducing their costs, we are
type of sale. I'll cover the top merchant verticals we are adding to their success. Since we started this new initiative
boarding, including how to deal with the objections we five months ago, we have had a 5 percent conversion rate
have been experiencing. Comments we hear range from back to traditional processing from merchants who tried
questions about the legality of cash discount programs to it, but couldn't deal with customer complaints.
the possibility of losing customers if a business converts
to cash discount pricing. I am sure the ones that converted back, didn't explain
the program correctly to their customers. The best thing
Savings versus customer loss I heard a merchant say was, "Look we are trying every
I don't believe statistics exist yet on loss of business way possible not to increase our pricing. If you pay us in
merchants may have experienced due to implementing a cash or write me a check, you get the best possible deal,
cash discount program. Charging the purchaser a non- because all of the items on our menu are at the cash price."
cash adjustment is a concept that merchants first have
to come to grips with themselves. They may lose a few We have had a few merchants tell us that surcharging
customers, and they have to do an analysis of their daily in New York is illegal. What we have found is confusion
sales to see if the savings are worth it. remains regarding distinctions between surcharge
programs, which are limited to Visa and Mastercard credit
I do know, however, that most of us are creatures of cards and are not permitted in certain states, and non-
habit. If we shop at a certain strip mall, it would take a cash adjustment programs. We realized some education
lot for us to change that habit, especially if it is a matter of is necessary.
convenience. If you believe in the value of the savings for
merchants, and desire to make a larger residual, then you

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