The popularity of legal cash discount and surcharge programs is rising every day. That’s why the programs are used by large numbers of business owners. Credit card transactions require a processing fee for every transaction, which means that credit card platforms like Visa, MasterCard, AMEX, Discover, etc take their share from your every credit card sale. If you’re doing business by the standards of the modern world, it is mandatory that you offer some options for digital payment to your customers to allow them to pay with the help of credit cards. Nevertheless, if you are not interested in paying the transaction fee, there are a couple of ways by which you can get rid of the fees: cash discount programs and the surcharge programs.

What is a Cash Discount Program and is a Cash Discount Legal?

It refers to an offer that a merchant makes to the customer of a discounted price in case they opt to pay via physical cash instead of a credit card. Such a program can be used for a variety of reasons. But, the major reason is that the processing is a lot easier in this case due to the lack of a middle party. Additionally, it is perfectly legal to offer a cash discount in your business.

The Advantages of Offering a Cash Discount Program

A few things need to be considered and understood before launching a cash discount program:

  • Don’t fall victim to friendly fraud
  • Cash discount processing lessens account fees
  • Cash discounts expand (and attract) growth

So Then, What is a Surcharge Program?

A surcharge program refers to the fee charging from the customers who choose to pay via credit cards. This fee covers the processing fee of credit card payments.

Such a program is applicable only to the credit card payments; cash payments, debit cards or the corresponding digital payments are exempt from it.

The Drawbacks of Offering a Surcharge Program

Surcharge programs come with some drawbacks and risks.

Some surcharge programs are frowned upon

Although it is quite a common practice now, but still it is disliked by the credit card companies. A lot of credit card issuers pressurize the regulators to dissolves surcharges, because they do not want the owners of credit cards to pay transaction costs.

Every card issuing company possesses its own set of rules, so it is better to research their guidelines prior to initiate surcharging your customers.

The Difference between Surcharge and Cash Discount Programs

Theoretically, there isn’t any big difference between them; both are fee-recovery methods. In a surcharge program, you increase cost for the credit card users, while in cash discount program, you decrease cost for the cash payers.

The primary difference is the amount of compliance.

If you are using a surcharge program, you jump through hoops in order to charge consumers for the transactions.

Conclusively, it is better to offer 100% legal cash discount to customers, which is just a price reduction instead of an additional fee.

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