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Education
ChapterTitle

StreetSmarts SM

Essential distinctions between

cash discounts and dual pricing

By Nick Cucci Businesses that offer cash discounts can provide a bet-
Fluid Pay LLC ter customer experience and encourage customers to save
them money on fees.
usinesses are always looking to do more with What is dual pricing?
the money they receive. However, each time
a customer makes a purchase using a card, Dual pricing is the act of applying surcharges to pur-
B a business typically ends up forking over a chases, a practice that involves applying a secondary fee
transaction fee to process the payment through a payment when customers choose to pay with a credit or debit card
processor. (see http://tinyurl.com/2m4bvdsz). For businesses, the goal
of this process is to have the customer cover the cost of
To mitigate these processing fees, businesses have a cou- the fee associated with their transaction.
ple of options: cash discounts and dual pricing. In this
article, I will take a look at what these methods are and Businesses that embrace dual pricing can make it easy
how they support both customers and businesses. to cover fees from payment processors. More important-

What is a cash discount? ly, they make it so customers that are not causing fees
will not have to pay the price. It places the responsibility
A cash discount is an opportunity to save customers on the customer for choosing their payment method of
money by allowing them to pay a lower amount when choice.
they agree to pay in cash as opposed to with a credit or
debit card (see http://tinyurl.com/32dd9fxn). Since compa- The amount of a surcharge can vary. However, these
nies often end up paying fees when processing card pay- fees are highly regulated and are often determined by
ments, a cash discount can make it easy for those who the payment processor, as well as the government. Ad-
aren’t paying with a card to save since they will not cost ditional rules often apply when using dual pricing with
the company any additional fees. customers.
Differences between cash discounts and dual pricing
The amount of a cash discount can vary, but it is often a
percentage of the total purchase price. Although paying Following are some main differences between these two
in cash is less common than it has ever been, offering a popular ways to navigate transaction fees.
cash discount allows businesses to provide better service
to customers whose purchases will not lead to additional • Cash discounts focus on cash customers specifi-
fees. Sixteen percent of customers carry cash on them at cally: All good businesses want to reward great
all times, and they will often pay in cash to avoid fees if customers. When it comes to cash discounts, cus-
they can (see http://tinyurl.com/nbpzdjbn). tomers who pay in cash have a lot to gain. While

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