Who doesn’t love a discount? Most business owners have noticed that implementing a cash discount program leads to earlier payments and improved cash flow. It is easy to understand why most business owners decide to implement such a program, as many are losing anywhere between 2% to 4% in credit card processing fees with every transaction. With the help of a cash discount program, credit card processing fees can be reduced to a minimum or even zero. But how can you implement a cash discount program in your business?
How to Implement Cash Discounting
The idea behind a cash discount program is to recoup the processing costs. That is why the first step in implementing cash discounting should be determining how much you pay in merchant service fees. Suppose you pay an average of 2% for card purchases, meaning you should add 2% to prices. Those paying in cash will have the two per cent deducted from their total price because the transaction will not incur any processing fees.
Then, choose the right company to handle your cash discount program and guide you into the process. Moreover, they will offer the highest quality payment solutions, such as POS equipment. You can eliminate the cost of your credit card process fees by enrolling in a compliant cash discount program and having a team that will identify your needs and determine a solution to help you slash the cost of burdensome credit card fees.
You should then post signs at the entryway or at a point-of-sale to let your customers know that they can save some money if they pay in cash. It would be best to clarify on your signage that the cash discounting does not apply to debit card purchases.
Is a Cash Discount Program a Good Thing to Implement?
Accepting credit cards has become a necessity for all businesses. However, to accept credit cards, there are some fees associated. By implementing a cash discount program, you will provide your customers with the option to pay as they wish. Unlike a surcharge program, which is added to the costs of items, a cash discount program represents a method to save money off the posted price. Although the outcome is the same for your business, a discount program is an incentive, while a surcharge program seems like a penalty. That is why most business owners choose a cash discount program.
There are various benefits of implementing a cash discount program. For example, you can adjust the posted price of your goods to make the discount smaller or bigger based on your margins. A cash discount program is flexible, easy to create and implement, and ultimately, it has a more positive perception than other fee recovery methods. Suppose you are looking to build a solid customer base, stand out from the competition, and offer an extra incentive for your clients to pay you early. In that case, it might be worth starting to implement a cash discount program and offer discounts to your customers.