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Education

Saving merchant fees – Part 1:

Cash discount explained

By Nikki Estes and Shubham Garg • Attract more customers
iCheckGateway.com • Retain more profits
• Keep 100 percent of revenue
ou likely know the credit card companies
set merchant fees that are added to the sale • Eliminate merchant processing fees
amount. Originally determined by card types, • Incentivize cash and ACH payments
Y another factor that determines a merchant’s
rate includes whether the credit card is present during • Enjoy next-day funding
in-person transactions or whether it processes as card-not- • Avoid disruption in business flow
present in online, over the phone or when keying in the
card after a failed POS swipe. Additional determining fac- What does a CDP look like?
tors are card volume and average ticket amount. Mobile Businesses using CDPs, whether online or in person, need
and virtual terminal payments earn a different payment to make it clear that paying by cash or ACH will provide
fee structure as well.
consumers with significant savings. To convey this to
What can businesses do to save on merchant fees? consumers, the pricing should be explained and posted
prominently, in accordance with card brand guidance as
Businesses should explore a cash discount program (CDP) well as all applicable laws.
to see if it fits an enterprise's goals and payment processing
needs. Not all business types will want to implement such When displaying dual pricing, one price represents the
a program, but CDPs are growing in popularity among product's full price before the cash discount is applied; the
business owners as awareness of them increases. other denotes what customers pay if they choose to pay
through cash, check or ACH. To be in compliance with
Cash discount and surcharge programs stem from the CDP guidelines, a restaurant, for example, can add a label
same intention: to alleviate the hefty fees the credit card to their menu and a sign at their register that briefly and
companies, like Visa and Mastercard, impose on SMBs. clearly explain the program.
However, the programs operate differently in accordance
with regulations set by the card companies. Understanding To run a compliant CDP, it's essential that you, as a service
the differences between these programs will help you provider, understand the guidelines set forth by the card
match the businesses you serve with the right programs. companies and help your merchants adhere to them
when implementing the program and when creating their
Merchants benefitting from cash discount programs signage, which should be clearly visible to consumers
include those who mostly utilize processing hardware, in all online, mobile and in-person environments. The
like Clover, and midsize retail and ecommerce businesses signage stands as a valuable asset in lessening confusion
that regularly have lower transaction amounts and process and developing transparency for business owners and
over $5,000 in transaction volume per month. With the their customers.
right partner, high-risk businesses can also profit from
CDPs. What if a merchant in my portfolio could use a CDP?
What is a cash discount program? If you have already set up a merchant account to process
credit card transactions, return to them and explain the
A CDP enables business owners to save on merchant fees benefits of having a CDP. This will demonstrate that you are
and provide their customers with discounts. And offering evolving with fintech solutions to keep entrepreneurs and
a CDP helps you enhance merchants' processing ability consumers happy. If your merchants and their consumers
and close more leads. are happy, feel satisfied that you provided them with
technology and savings to retain those relationships.
In a CDP program, the business owner rewards customers
who choose to pay their bills through cash, debit, ACH Nikki Estes guides "Singers of Solutions" on the iCheckGateway.com
or check. Using a CDP in business or consumer payment team, educating the ISO, ISV, and merchant audience with creativity
transactions will discount the final price of the product/ on customized payment technology. She and Shubham Garg, a humor-
service, passing on savings from the company to the ous, prolific wordsmith, support the iCG mission to edify businesses and
purchaser. empower consumers through payments automation, bringing sophisti-
cation to the heartbeat of every business with simplicity. Contact them
CDPs enable business owners to: via email at pr@icheckgateway.com or by phone at 239-349-2880.

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