The Pros and Cons of Offering Cash Discounts

Over the last several years I have been offering credit card processing services in Dallas, Texas. I enjoy cold calling and as a result, I talk to many business owners. A lot of these business owners are fed up with credit card fees.

A discussion that I continue to have with many small business owners is whether or not they can surcharge or offer a cash discount to their customers. In the state of Texas, only government institutions are allowed to charge a fee for credit card processing.

If you are a for-profit business your only option is to offer a cash discount to your customer. You are essentially doing the same thing, but you have to advertise it as such in your place of business.

The Pros of Offering Cash Discount to Your Customers

• Don’t pay for credit card fees. If you have an annual processing volume of $500,000 and your overall effective rate is 2% then you just saved $10,000.
• Customers who often use cash most likely appreciate getting a discount. This could potentially attract new customers.

The Cons of Offering Cash Discount to Your Customers

• Offering cash discount means that you may have more cash on hand because you are running more transactions. This means that more cash on hand is opening yourself up to potential theft.
• On the flip side, a customer who uses a credit card may realize that they are being penalized for not using cash. Sometimes the reason people use a credit card is for the rewards, so they may walk away feeling disappointed having realized they could have paid less if they paid with cash.

You want everything about your business to be positive and happy. Which means you want your customers walking away with that same feeling of being happy and satisfied with their purchase.

All in all, the pros and cons of offering a cash discount to your customers need to be weighed up when you are making your decision.

Credit Card Processing Dallas/Fort Worth & Surrounding Areas

We do offer a cash discount program for our customers in the North Texas area. If that is something you are interested in or for more information, please feel free to call us on 817-228-7245.