By now, you?ve probably notice the rising popularity of Cash Discount programs as a way to offset your merchant service fees. A Cash Discount program is really a method of implementing a service fee to all customers who pay with a card, while providing a discount to those who pay with cash. Cash Discount programs are legal in every 50 states per the Durbin Amendment (the main 2010 Dodd-Frank Law), which states that businesses are permitted to offer a discount to customers being an incentive for paying with cash. While this sort of program has been utilized by gas stations for years now (displaying cash prices), there is still confusion on how best to implement a Cash Discount program the proper way.

Guidelines and Requirements
The card associations have strict guidelines on how a Cash Discount program must be implemented. The essential steps being 1) Correct signage must be posted at the door and check out 2) The quantity of the added service fee should be clearly displayed on the receipt and 3) Offering your customers a cash discount verbally. Even though gas stations post different prices, as a retailer it is not necessary to achieve this. The posted prices are believed cash prices and the signage allows for a fee if the payment is not made with cash. In order to be compliant, merchants with a Cash Discount Program need to display the Base Quantity of the transaction, the money Discount, and the full total Cost of the transaction on the customers? receipt (see below).

Applying the Service Fee
Minus the proprietary technology programmed into your terminals, you would have to manually apply the service fee. But in case a fee is incorrectly applied to a transaction, the additional fee charged to customers will be labeled as a Surcharge that is prohibited in 10 states (California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, and Texas). If the fee isn’t a Cash Discount and is regarded as as a Surcharge, even though allowed in your state, has strict requirements on the amount of the Surcharge. As a merchant, you need to register with Visa/MasterCard as a way to legally apply the surcharge. A Cash Discount Program has no necessary registration.

It is also vital that you note that you’re forbidden by Visa, Mastercard, as well as your processor? cash discount merchant processing to profit on credit cards transaction, that could happen in the event that you accidentally charged a lot more than you were charged by your processor. While many processors may offer a Cash Discount program, not absolutely all of these offer and make use of the compliant technology that is appropriate for your terminals. A major difference we have seen while considering the providers across the industry may be the Cash Discount line item. Many providers provide a program without the Cash Discount line item showing on the receipt. It is important that when considering processors, they are offering you a compliant program with capable technology to show the mandatory line items on the receipt.

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