Helping Businesses Increase Profits with Cash Discount Programs
There is no doubt the pandemic crippled sales and brought hardship to many businesses. Unfortunately, many had to close their doors for good, while others had to impose additional surcharges to stay afloat.
While credit and debit cards are extremely convenient for businesses and customers alike, the convenience comes at a cost to the business.
To help, businesses needing a way to increase profit without alienating customers implementing a cash discount program to cash-paying customers is a great way to increase profits. Giving a discount may sound like faulty logic, but it’s completely possible with cash discount. And honestly, who doesn’t love a discount?
What is a Cash Discount Program?
Cash discount is exactly what it sounds like. It’s offering a discount to customers who pay with cash or check instead of paying by card. With this method, businesses can avoid most of their card processing fees by incentivizing their customers to pay by cash.
Cash discounting is a win-win for both the merchant and the customer, as long as the customer has cash on hand. If the customer chooses to pay by card, then they will not receive the discount. This ultimately affords businesses the ability to be more flexible in pricing their products and services, while maintaining a competitive advantage.
Can Any Business Offer Cash Discounting?
The short answer is, yes! Cash discount programs are legal in all 50 states, unlike surcharging which varies from state to state. However, there are a few guidelines regulated by the card industry that owners must adhere to in order to implement a compliant cash discount program.
Pros & Cons of Cash Discounting
There are both pros and cons for a business to move to a cash discount program. Obviously, the biggest positive factor is eliminating almost all of the card processing fees, which provides an immediate boost to the bottom line. Other positive factors include the flexibility when pricing products and services.
Negative factors include potentially rubbing some customers the wrong way, those that may not be accustomed to carrying cash. Additionally, some businesses may not be comfortable with their employees handling a larger volume of cash. This should be taken into consideration when deciding if cash discounting is right for each business.
Are Cash Discount Programs the Wave of the Future?
Although it’s not for everyone, the idea is worth considering. For businesses offering customers a cash discount, even a minimal one, it can be advantageous for both the owner and customers. Businesses looking to build a strong customer base, a cash discounting program can provide a little extra incentive for customers to pay with cash, and even stand out from the competition.
If this sounds good to you, it might be worth the time to consider a switch to offering cash discounts to customers.
Originally published by Digital Transactions | Sept. 1, 2021