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Education
Will 2022 be the year restaurants
stop paying credit card fees?
Why cash discount programs will take off in 2022
Here are five reasons why cash discount programs are
likely to take off this year:
1. Restaurants need to cut costs. Credit card fees are
typically a restaurant’s second-highest expense, right
behind rent/mortgage. Each time a customer uses a
credit or debit card, a restaurant pays roughly 3 to 4
percent on the transaction. Fees can be as high as 8
percent if the credit card has a loyalty program.
Cash discounts almost entirely eliminate this cost,
putting money back into restaurants that have been
struggling in the wake of the COVID-19 pandemic,
rising labor costs and inflation. Restaurants need to
save every dollar they can; cash discount programs
By Saleem Khatri help them cut costs.
Lavu
2. Cash discount programs sync easily with
ccording to the Nilson Report, merchants' cost restaurant POS systems. Cash discount programs
of credit card acceptance more than doubled can easily integrate with restaurant POS systems
from 2009 to 2019, to $68 billion. Until now, so the experience is seamless for both staff and
A restaurants didn’t like them but couldn’t avoid customers. Staff don’t need to do extra work, and
them. Not anymore. Restaurants can now avoid pay- customers can easily select how they would like to
ing expensive, ever-increasing credit card fees—and this pay.
might be the year they do it by embracing cash discount
programs. Plus, cash discount programs reduce headaches
for all parties. When customers are encouraged to
What is a cash discount program? pay with cash, it significantly reduces the risk of
chargebacks, pricing disputes, data breaches, fraud
A cash discount program rewards customers for paying in and other complications.
cash instead of with a credit card. It incentivizes clientele
to pay with cash by presenting a “non-cash adjustment” 3. Cash discount programs are legal and ethical.
line item on receipts and giving customers an opportunity
to remove the fee by paying with cash. The process allows Unlike credit card surcharge programs that have
complex compliance rules and are illegal in 10 states,
restaurants to share credit card fees with patrons.
cash discount programs are 100 percent compliant
While businesses have tried to avoid credit card fees in and legal in all 50 states. The Durbin Amendment to
the past by using credit card surcharges, a cash discount the Dodd-Frank Act protects cash discount programs
and makes the rules for implementing them simple.
program operates differently. Surcharges add a fee only
when a customer chooses to pay with a credit card; cash Cash discounts must be disclosed to customers
discounts provide a discount when a customer chooses to
pay with cash. through the use of signage and customer receipts.
This compliance is easy to follow and helps keep
customers from feeling confused or tricked.
Surcharges are complex. They have many rules, do not Customers are fully informed of the program and
allow for debit card transactions and are illegal in 10 states.
Cash discounts are simple, legal, and can help restaurants purpose, and they can choose whether they want to
participate. Most participate when they understand
offset up to 99 percent of their credit card processing
fees—which is why cash discounting will be the next big the savings for themselves and the restaurant.
trend in restaurant merchant services.
4. Customers already understand and accept cash
discount programs. While cash discounts may seem
new, they have been around for years. Think about
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