Benefits of Switching to Cash Discounts
We’ve all heard about the so-called benefits of accepting credit cards and digital payments. Retailers are told payments will be faster, customers will be happier, and they will be able to make more sales. The additional revenues are sure to offset the fees. But too often they don’t.
Customers have become accustomed to having a wide range of payment choice. Over a quarter of U.S. consumers rely on their debit cards and over 25 percent regularly grab their credit cards to make a payment. And merchants bear the brunt of the costs for providing that additional convenience or risk losing business.
A Change in the Tide
Credit, debit, and digital payment fees get expensive fast. In many cases, they eat up the majority of revenue made from a purchase – especially for smaller transactions. But now merchants have the opportunity to pass the cost of convenience to those who reap the benefit, the customer.
A law passed in 2010, the Dodd-Frank Law Durbin Amendment, allows retailers to offer a discount to consumers who choose to pay through methods other than debit or credit cards. So, rather than letting a credit or debit card transaction fee eat up all of the proceeds from a transaction, merchants can include the standard transaction percentage in their regular pricing and give an attractive discount to those who pay in cash. The system is called Cash Discounting.
Save Money & Customers
The signs and steps many merchants take to limit their losses to card purchases have a way of alienating customers. Complete refusal of credit and debit means anyone not carrying cash is out of luck. But those minimum purchase signs don’t help, either. Someone coming in for a one-dollar cup of coffee or a lighter doesn’t want to figure out a way to spend an additional $9 so they can swipe a card. They probably don’t want to take extra time to hit up an ATM, either.
With Cash Discounting, there is no need to turn away business or put up minimum purchase signs. Instead, merchants can advertise their special cash discount program, offering lower pricing to customers who pay in cash. Credit and debit card users pay the new standard pricing which includes the transaction fee. Cash transactions are rewarded by the removal of that additional cost.
The size of the transaction is no longer an issue. Whether the purchase is $1 or $1,000, merchants are finally able to keep the entirety of the revenue.
Discover how a Cash Discounting Program can benefit your business. Contact Star Financial Services today!