As Mitchell Katz, spokesman for the Federal Trade Commission, said in May of 2011: The Dodd-Frank law prohibits a payment card network such as Visa “from inhibiting the ability of anyone to provide a discount for payment by cash, checks, debit cards, or credit cards,” said Katz. “Neither surcharging, nor a cash discount is illegal.”

Other than the ability to virtually eliminate your monthly processing fees, the Cash Discount Program can really help those businesses that are most impacted by high processing costs. Consider small ticket merchants like a sandwich or coffee shop. You may have an average transaction size of only $5-8 dollars (sometimes even less). The underlying Interchange cost on a debit card used as a credit card is .05% plus $.22 per transaction before any processor fees. If you accept a debit card on a $5 transaction, your effective rate (fees divided into the sale amount) will be $.2225 divided into $5 or 4.45% before paying any additional fees! Compare that to a business that has a $100 dollar average transaction where their total costs are $.27 so their effective rate is now only 0.027%. The same credit card was used for each transaction, but the overall impact to profit is radically different. Using the Cash Discount Program can mean the difference between a business that is profitable and one that is just squeaking by (or sadly, not squeaking by…)

No, in fact it’s been around for decades in Europe and is used across the US in gas stations where a cash discount is offered at the pump. Gas stations have been using this program in the US for over 15 years. Many national, state and local governments including the DMV, Secretary of State, Post Offices, Schools, Courts, and the IRS implement a Service Fee.

In order to correctly implement a Cash Discount program, you don’t need to change any of your prices – you simply post signage (that we will provide) that states that all transactions now carry a 4% customer service charge. The proprietary technology is provided by AdvoCharge in conjunction with our hardware and processing partners.

Until recently, Visa and MasterCard regulations made it clear merchants could not charge more to a consumer who used a credit card over other methods of payment. As a result of a 2013 lawsuit against the card networks, merchants are now allowed to impose a surcharge in all but 10 states and Puerto Rico. We’ll address the surcharge in the next question below. However, there has always been a stipulation in the Visa and Mastercard regs that allow for a discount when paying with cash. While this may seem like an issue of semantics, It’s simply adhering to the wording of the Visa and Mastercard regulations that allow the cash discount program to be implemented. Here’s the verbiage specific to both Visa and Mastercard Rules and Regulations: From Mastercard Rules 15 November 2016 5.11.2 Charges to Cardholders A Merchant must not directly or indirectly require any Cardholder to pay a surcharge or any part of any Merchant discount or any contemporaneous finance charge in connection with a Transaction. A Merchant may provide a discount to its customers for cash payments. A Merchant is permitted to charge a fee (such as a bona fide commission, postage, expedited service or convenience fees, and the like) if the fee is imposed on all like transactions regardless of the form of payment used, or as the Corporation has expressly permitted in writing. From Visa Core Rules and Visa Product and Service Rules – 22 April 2017 1.5.4.14 Discount Offer – US Region and US Territories In the US Region and a US Territory, a Merchant may request or encourage a Cardholder to use a means of payment other than a Visa Card or a Visa Card of a different product type (e.g., Visa Classic Card, Visa Traditional Rewards Card, Visa Signature Card) than the Visa Card the consumer initially presents. Except where prohibited by applicable laws or regulations, the Merchant may do so by methods that include, but are not limited to: Offering the consumer an immediate discount from the Merchant’s list, stated, or standard price, a rebate, a free or discounted product or service, or any other incentive or benefit if the consumer, who initially presents a Visa Card, uses instead another general purpose payment card or another means of payment Communicating to consumers the reasonably estimated or actual costs incurred by the Merchant when a consumer uses a particular general purpose payment card or means of payment or the relative costs of using different general purpose payment cards or means of payment Remember, your stated price now carries a 4% Service Fee, so when you someone pays with cash, they are receiving a discount off of your stated price, not an increase when they pay with credit or other means of payment.