A surcharge program is a discount that allows a customer to purchase goods or services by charging the purchase to their credit card and then having the business pay a fee outside of the transaction fee charged by the credit card company. In other words, this type of program is beneficial for both businesses as well as consumers as it provides them with various benefits.
The benefits of a surcharge program are plentiful. For businesses, they get to increase their cash flow, while consumers receive the benefit of acquiring goods and services that are more expensive via traditional means with lower interest rates or even waivers on fees involved.
What Is a Cash Discount Program?
A Cash Discount Program is when a business takes payment via credit card and offers a discount for payment in cash. Also known as a “discount for cash” or “cash back program”, this type of program can offer your business more profits as well as other benefits.
For example, if you use a Cash Discount Program, businesses may be able to save on transaction fees from using cards as well as increase their cash flow because customers are able to purchase items or services at a lower cost rather than getting them for free if they paid with cash.
Also, Cash Discount Programs may help your business avoid issues regarding PCI compliance rules and regulations which can be involved in accepting credit cards.
Before you sign up for one of these programs or begin offering it to your clients, make sure you research what benefits are available. While there are numerous benefits to a Cash Discount Program, there are also some drawbacks that you should keep in mind as well.
How is the Surcharge Rate Determined?
The surcharge rate can be determined by looking at your profit margin on each product or service as well as the transaction fee charged by credit card companies.
For example, let’s say you offer a product that is $100 and your profit margin is 10%. If the transaction fee set by MasterCard or Visa (the two most common credit cards) for this type of item is 3%, then you would charge 3% more for this product or service and make $103 instead of the usual $100.
As you can see, surcharge programs can benefit your business in many ways. For more information on these types of programs and how they may be able to help your business, contact a representative from GSI Commerce today.