You are already aware of the fact that the laws as well as credit processing agreements permit a merchant for offering discounts to those customers who give payment in cash. The thing is, why offer a discount?

Well, you are probably at an advantage if the customer pays in cash, but still there are some disadvantages that come with this practice. We will show both sides of the fence:

The Pros

On one side, are the advantages of using cash:

  • Keep all of your money.  It is quite simple that the use of cash enables you to avoid the fees of credit card interchange fees. You get to keep all the cash that you have taken.
  • Everybody loves a discount. Customers cherish getting a discount and if they get one, it is more likely that they would come back to your business in order to enjoy more savings. In other words, you would get loyal customers. Also, in this way, you are encouraging die-hard card-wielding customers to initiate cash payment.
  • A discount, sometimes becomes the difference between a sale and no sale.  For big ticket items particularly, there might be enough savings that the customers might approach an ATM immediately.
  • Distinguish yourself from the big box stores.  Your business is small, no sweat. By offering discounts with cash payments, you are giving yourself an advantage over the big box stores as they don’t care one way or the other.

The Cons

Here are some important reasons for you to not appreciate cash payments:

  • Keeping cash is riskier.  Large amount of cash on site comes with a larger security risk. Some of these risks include missing cash, mis-counted cash, robbery, untrustworthy and sticky-fingered employees and so on. You may not want the trouble of going through your register every night.
  • People buy more while paying with credit card. We tend to spend more money when we are using credit card. A customer is likely to make some extra purchases if they are not limited to how much money they got in their wallet.
  • Cash can prove more expensive to your business. There are a lot of costs associated with cash dealings. The fees of credit cards have fixed number associated with them to make you aware of all the costs of handling credit card payments. In the case of cash, these costs are not well-defined. If no mistakes are made, counting, transportation and securing your cash comes with a cost.
  • Credit cards are easy to handle and are more convenient for buyers. Everyday, the number of people choosing to pay by means of credit cards increases. The convenience of credit cards to both customer and merchant is very compelling..

The bottom line is this, you can offer a discount if they pay cash. Some customers will think the cash discount is an amazing option, others will stick to the convenience of using their card. Just remember, the choice is their’s to make. It’s not on you to pay for their card usage.

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