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Let’s face it, it costs money to process credit and debit cards. Merchants like you are being asked to foot the bill of processing fees. And not until recently merchant card services like Visa and Mastercard made it clear that merchants couldn’t charge a fee to their customers to compensate.

Why do credit card companies charge a processing fee?

Credit card companies have been adding perks and benefits to their cards at an astounding rate. Rarely do you see a credit card that doesn’t have some kind of cash back reward program, or an airline mileage benefit, or points for a vacation plan, or some kind of extra that incentivizes a consumer to use a credit card frequently. The downside to these systems is that credit card companies usually ask merchants like you to foot the bill.

These processing fees can get very expensive for a merchant, especially small businesses that have a razor-thin profit margin yet still need to accept credit cards to remain flexible in the marketplace.

But government agencies, municipalities, the post office, schools, and courts all charge a convenience fee if you want to use your credit card to make a purchase, pay a fine, or pay for a service from them. The only entity that can’t do this is a private business.

The cash discount program is how a small business can circumvent these stipulations.

What the card companies can’t prevent you from doing, is for you to offer a discount for anyone that pays with cash. This discourages people in your store from using their card. This makes little difference to the customer unless they are aware of their rewards balances and see the higher price as a sufficient tradeoff to getting more miles or cashback points. You as the merchant benefit by having one fewer transaction to pay processing fees for.

Is This Fair?

Most merchants believe so, as they just want to make the sale, and not have to worry about helping someone go on their next vacation, simply because they used a card instead of the cash in their wallets.

For more information about instituting a cash discount program for your business, click here to see how Sync Payments can help you alleviate the cost of processing fees.