Cash Discount Application by Cash Discount LLC
If you're in the Payments Industry you've most likely heard the words 'Cash Discount'. This is where a merchant can decrease a price of their sale in exchange for a cash payment rather than a credit card payment. It's completely legal to provide a Cash Discount in the United States, where 'Surcharging' is actually illegal in a handful of US States. Surcharging is where you charge the customer a fee for using a credit card.
August 1st, I hosted a sales seminar with the CashDiscount.com team speaking about their new application recently developed on Poynt, the first smart credit card terminal. Available Here in our Sales Hub.
There are rules for providing a Cash Discount. As of January 27, 2013 several Card industry changes went into effect with regards to the credit card company’s federal class action litigation settlement. The settlement requires Visa and MasterCard to change some rules for merchants who accept their cards, including allowing merchants to “offer discounts to customers who pay with payment forms less expensive than Bank Debit cards”.
- Clear and conspicuous signage is required by law to be displayed at the business entry point and at the point-of-sale to easily and accurately explain the discount program payment options – if a customer “chooses to pay with cash or check the service charge is discounted”.
- The customer service fee or discounted amount must be present on any generated receipts from the transaction. Cash Discount compatible device software provides customer receipts that clearly outline: Base Cost, Cash Discount & Total Sale
Poynt Receipt with Cash Discount & without Cash Discount (MyBMR Application)
How does Cash Discount work on Poynt?
- To start, you need to get a Poynt Terminal and download one of the two Cash Discount applications. If you can't download the application, feel free to contact poyntsales@goboomtown.com
- It's best to be familiar with how the native Register Application works on Poynt. This is the primary application that hosts the merchants menu and also provides options for payment and check out.
- Merchant or Processor sets up the fee inside the Cash Discount application (only up to 4%) within the settings tab.
- Merchant provides the choice to pay by cash or credit. If the customer chooses cash, the selected cash discount is automatically applied to the total (like the receipt above).
- There is live reporting for the merchant to see (1) Processing fees saved (2) Current service charge selected (3) Gross Sales (4) Service charge earned.
Video on how Cash Discount works with Poynt (CashDiscount Application)
https://www.youtube.com/watch?v=3AqLYuN2tm8
Does the Cash Discount App work for both Credit and Pin/Debit?
It works with Credit Card & Pin/Debit Cards on Poynt, but does depend on the processor. When you do Cash Discounting the correct way, you're not Surcharging. You're adding a fee to every item/service and NOT adding a fee only when a credit card charge is made. The software applies the discount automatically. The Cash Discount team will be updating their website soon with what processors that are most eligible for Cash Discount.
Can you bypass the SVC code?
Yes, at the time of sale the merchant can bypass the SVC code.
Wouldn't I not want to give my merchant access to changing the % rate?
This fee is for and only applies to the merchant. You as the processor can set their fee at 4%. Whatever they do on the front end is their choice. I would, of course, advise them to set it at 4% (for the best value) in the application, but the real benefit of the software is that the merchant saves money on processing and your team can continue to charge the 4%. We're working to have it so the processor can lock the rate on the application.
How can an Agent/Sales Rep make money?
Agents have the opportunity to sell at a higher rate, instead of selling their standard interchange rate (avg 2.0-2.5%) now they can sell it at 4% flat rate. The batches, deposits and statement process will remain the same; the only difference is that now the merchant will be paying a flat rate of 4% on their statement.
How would an Agent sell Cash Discount to the merchant?
Agents offering "Cash Discount" across the country are generally offering a flat fee rate to the customer. The Agent signs up the merchant at the flat rate with the incentive that the merchant will recoup the majority of their processing fees. Just a heads up that not every merchant will enjoy Cash Discount, but here is how to speak about it to the merchant,
Agent: We have a new way to save the majority of your processing fees.
Merchant: What do you mean the majority of the processing fees?
Agent: I have a new program which offers the merchant a flat rate of 4%.
Merchant: 4% ???? that's too high!!!
Agent: give me a minute and let me explain. We have a new product called the "Cash Discount Program". Using this program you will be able to save the majority of your processing fees.
You are currently paying at least 3 % to 4% on processing, aren't you?
Merchant: OK...
Agent: Using the “Cash Discount Program" you will be paying a flat 4% fee, while collecting a flat 4% from your customers to cover the cost of processing. Your current average ticket is about $10, going forward instead of $10 your customers will be paying about $10.40 for the same ticket. You will be collecting the 4% fee upfront and covering your cost of processing. The program will save you a great deal of money..
Merchant: I don't get it
Agent: How much do you process every month?
Merchant: About 100k
Agent: At 100k you are averaging between $3000 to $4000 in monthly processing fees, right?
Merchant: Yes, about
Agent: With the Cash discount app you will be collecting those fees daily from your customers, so you would be saving the processing fees without much of an effort. At month's end you would have collected about $4000. That means that you would be saving about $48,000 per year. That's allot of money back into your pocket isn't it?
Merchant: Yeah
Agent: So to qualify for this program you would need the Poynt Smart terminal and to download the "Cash Discount Program", the rest is easy.
Merchant: Sign me up if this is true
Agent: Great, let get started
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