Cash Discount Programs: A Win-Win For Consumers And Businesses

For the last few decades consumers have been using credit cards at a much higher rate than in the past. Much of the attraction for the consumer was the fact that they would get “points” or many other perks for using the plastic. The Durbin Amendment disrupted a lot of these actions. This congressional act limited the interchange fees merchants could charge for using cards for payment. For businesses that sell small ticket items, such as a convenience store, the free-market flexibility provided by the processing companies actually let them keep more of the profits. In this circumstance some businesses had costs rise, since the percentages are now regulated, and in some cases the percentage is higher than it was for lower priced goods and services.

From the credit card companies’ perspective, they felt they needed to recoup some of the revenue. They used a large portion of these fees to cover fraud prevention. On one hand they began decreasing perks and points for their consumers. This helped them to regain some of their lost revenue. They also began charging the maximum allowed, instead of using a sliding scale, which of course cost businesses more that were selling low-cost items.

The Durbin Amendment also protects businesses rights to offer a cash discount. DJJ Events and Consulting out of Baltimore, Maryland, partners with Merchant Pro’s Cash Discount Program. This program automatically adds a small service charge to a purchase. This can cover the credit card processing fees. Customers are offered the option to pay with cash, and if they do, they get a discounted price. Merchant Pro calls this program “Practically Zero”. There are stipulations that need to be adhered to in order to take advantage of this remarkable program. The cash discount option needs to be clearly posted at the entrance of the establishment and at the cash register or point of sale. The discount also needs to be clearly laid out on a receipt. Merchant Pro can have up to a 3.99 percent service charge added. The cashier or whomever is accepting payment needs to verbally offer the cash discount to the consumer as well.

Many businesses that have small ticket items could really benefit from this program. It is easier for people to have cash on hand if the purchase is relatively small. They may have $5 on them, but not $500. Thus, it is more likely that at a small ticket business, cash payments could become the norm. These businesses also generally have smaller profits per transaction, so the cost savings could be a game changer. Of course almost 4% of a large purchase is a huge amount to save if you are a customer. So the enticements for larger ticket businesses to offer this benefit to their consumers is something that might give them a huge advantage over their closest competitors.

DJJ Event Management and Consulting and Merchant Pro Merchant Processing Solutions have solidified a partnership which has a goal of providing small and medium sized businesses with a plethora of options on how to process payments. They help to find a solution which will benefit their clients greatly. As the Dodd-Frank Act and Durbin Amendment help to illustrate, different programs benefit different sized businesses with different sized ticket items. It’s an extraordinary idea to call DJJ for a free 15-minute consultation to see if they can save your business money.

Credit card companies make billions of dollars off of transaction fees. With cash discount programs, consumers certainly benefit by paying less for products and services. Small and medium sized businesses can benefit by keeping a larger percentage of the revenue for profit.