What is a Cash Discount?

Cash Discount Program

What is a Cash Discount Program?

A cash discount program shifts the burden of paying credit card processing fees to the customer instead of the seller. If a customer chooses to pay with cash, they receive a small discount since there are no processing fees required. It is a program that incentivizes paying for goods or services with cash vs a credit card.

When Would You Use a Cash Discount Program?

There are some instances where your business should at least consider using a cash discount program. Credit card processing fees can stack up and cost your business big money. So when should your business consider implementing a cash discount program?

Cash is a Preferred Payment

Do you work in an industry where cash is a preferred payment method? If so, then a cash discount program is essential. The more cash your business is taking in, the more cash your business will have in hand.

What Are Competitors Doing?

Are cash discount programs common in your industry? If your top competitors are stealing your business because they are offering a discount for cash payments, then it is time to switch. Stay up to date on payment processing industry trends and how your competitors are accepting payments.

How Much Do Your Goods or Services Cost?

Are the goods or services you are selling so cheap that a credit card processing fee will double the price? Sometimes products are being sold at such a low cost that the processing fee will cost more. If your business is in this situation, then a cash discount program is essential.

The Benefits of a Cash Discount Program

Most retailers choose to implement a cash discount program because of its various benefits. Would you rather save money, or lower prices, if a customer decides to pay with cash instead? Let’s dive into the main reasons why businesses choose to use a cash discount program.

Cost Savings

Whether you as the business are paying the credit card processing fees, or the customer, a cash discount program preserves your profit and keeps prices low. Keep expenses and prices low by promoting payments with cash.

Faster Cash Flow

Since a cash discount program incentivizes cash payments, your business will receive cash at a faster rate. Cash payments do not require a processing fee and allow your business to receive the payment the minute a customer hands over cash. This means you will have cash coming in and potentially going out at a faster pace.

Automated Terminals

The terminals we offer at Coast 2 Coast Payments automatically apply the cash discount at checkout and there is virtually no work on your end. This simplifies promoting the cash discount and applying it so that you can focus on other aspects of your business.

Lowering Cost of Goods Sold (COGS)

Another benefit of a cash discount program is the ability to lower your business’ COGS by minimizing the taxes you have to pay. Since our POS technology automatically takes out the 3.5-4% processing fee every day, your business does not pay taxes on it, lowering the overall COGS.

Cash Discount vs Surcharge

As a business owner, you have probably heard both of these terms. But there is a key difference between them. The option your business chooses depends on how you want to charge customers the credit card processing fee.

Cash Discount

A cash discount means advertising and posting the price of your products or services as if someone is paying with a credit card. But when the customer or client is at checkout, a discount is applied if they pay with cash. In this situation, the customer is paying less than what they originally thought was the full price.

Surcharge

A surcharge means advertising the price of your products or services as if a customer is paying with cash. But when the customer gets to the register, an additional processing fee is added to the total if they are paying with a credit card. In this case, the customer is paying more than what they originally thought was the full price.

How to Implement a Cash Discount Program

If your business chooses to implement a cash discount program, the largest consideration is advertising. For a cash discount program to work, all prices in-store or online need to be adjusted to reflect credit card payment prices. That way, customers start to see a discount at checkout.


The other consideration is selecting the right point of sale terminal. Most POS terminals offer a cash discount functionality that automatically provides a discounted price at checkout. If you have questions about whether or not your current POS terminal is right for your business, get in touch with an expert at Coast 2 Coast Payments!

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