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Is it a good idea, and is it even legal, to assess a credit card surcharge on top of your clients’ total if they insist on paying with plastic? Truth be told, in some states, it is perfectly legal for a merchant to pass on, to the consumer, the credit card fees they would normally be charged. It helps small businesses in particular remain viable. But consumers don’t like it.
Cash discounts, on the other hand, sound like a much more attractive idea to both consumers and merchants. There are no legal issues, currently, with offering a cash discount. Let’s explore this option.

Cash Discounts – What Are They?

Offering a discount to consumers who pay cash is precisely what it sounds like. When a consumer makes a purchase, if they pay with cash, their purchase is discounted. Some merchants go so far as to say that customers can pay with a debit card, check, or, of course, cash for the discount.
This can be done in a couple of ways, one slightly more attractive than the other. Businesses also have to be careful about “charging a service fee”. Again, it’s only legal in some states.
Businesses posting the “cash only” price, in view, for the public to see, will tack on a service fee at the end of a receipt.
On the other hand, if stores post the credit card price, then show a discount at the end of the receipt for cash payments, it’s a more attractive option.

Aren’t Those Both the Same Thing?

The added service fee and cash counts systems look and sound very similar, indeed. If the customer pays with a credit card, they get charged a fee (to help businesses cover the fees they have to pay for credit card processing).
On the other side of the coin, when merchants offer discounts for cash transactions, consumer see it as a type of” service” that the merchant is offering them.
Discounts can be offered for cash customers; while, technically, service fees must apply to all methods of payment. The legal battle regarding service fees and merchants passing on processing fees has been the subject of court debates in any number of states. New York, Florida, California, and other states currently agree that the fees can be passed on to consumers.

Offering Cash Discounts

If a cash discounting program sounds like something you’d like to start, get in touch with your credit card processor. In most cases, they can assist you in setting up the equipment that will assess service fees/subtract discounts.
You’ll need to be completely and totally out in the open and crystal-clear in your business practices, as well. Your consumers must be made 100% aware of discounts/service charges, and on every customer receipt they must appear.
Some receipts will tack the service fee on for every single transaction, regardless of if it’s cash or plastic. Then, if the payment is in cash, that service fee will be subtracted (as a cash discount). An explanation of the cash discount/service fee should be clearly posted at the cash register and at the entrance to your store in readable and easily understandable signage.

Work with TITAN Merchant Services

TITAN Merchant Services is currently charging no service fees, during the coronavirus, to merchants for credit card processing. Click here for details.