Category Archives: Cash Discount

cash discount program

What is Cash Discount payment processing?

Cash discount payment processing is a popular credit card payment option that gives the merchant selling to consumers an immediate 1-2% cash rebate or deduction on each transaction. The amount of money given back to the merchant is equal to the percentage of cash discount rate assigned and negotiated by both parties. With payment processing, merchants who accept this form of payment receive a discounted rate on credit card fees, making it an attractive alternative to other forms of payment.

The cash discount program is beneficial to both the consumer and business owner as the merchant receives immediate access to this portion of the transaction as revenue. When you accept a credit card as a form of payment, many businesses don’t receive their money for two weeks or longer. The cash discount payment processing option gives the merchant access to 1-2% of the transaction as revenue right away, allowing for more flexibility and added customer service.

Cash discount programs can be offered as part of a specific credit card processing agreement or as an incentive through merchant accounts that process all types of credit cards such as Visa, MasterCard, American Express, Paypal, and Discover. The cash discount rate offered by providers is usually much higher than the typical 2% that merchants are charged for credit card processing fees.

How much do I save with Cash Discount Payment Processing?

Typically a 1-2% cash discount payment processing fee can be negotiated when signing up for a merchant account from a credit card processing company. This cash discount rate can also be negotiated to increase depending upon the volume of credit cards processed each month for that specific business.

Some providers will allow a merchant to take a lower cash discount or flat fee per transaction if their processing volume is high, allowing them to pass along savings to both parties in the transaction.

A business owner can also request a cash discount when accepting PayPal, Google Checkout and other forms of payment that don’t offer low rates for this service.

What is a Cash Discount Rate?

The cash discount rate is the percentage of each credit card transaction collected by the merchant account provider to cover costs associated with accepting this form of payment. Typically, the cash discount rate is much lower than the 2-3% that merchants are charged for credit card processing fees.

The cash discount level offered by providers is often quite high as they receive none of the transaction fees from credit card companies if a business owner accepts alternative forms of payment such as PayPal, Google Checkout, or other third-party merchant services.

The cash discount rate is negotiated by the business owner and provider based on processing volume, type of products sold, and other terms specific to that account. Providers will sometimes offer differing discounts to individual businesses depending upon their own costs associated with processing transactions for that company. The cash discount rate can range from 0.5-2.00%, which can also be negotiated lower if the monthly processing volume is high.

How does Cash Discount Payment Processing Work?

When a business accepts this form of payment, it enters into an agreement with the merchant account provider to give 1-2% of each credit card sale back to the company in the form of a cash discount as soon as possible. Businesses that accept Visa, MasterCard and other credit cards usually have the option of choosing from several payment processing solutions including software, hand held devices or stand alone terminals.

The rate negotiated can be offered to each business depending upon their monthly volume. The provider receives the 1-2% cash discount, but they are required to pass along 100% of the credit card payments received minus the cash discount rate.

Businesses with high monthly volume can sometimes negotiate a lower cash discount level if this will save them money. Providers are willing to do this because they receive none of the processing fees associated with these types of transactions and often make little on high-volume businesses.

What Are the Benefits of Cash Discount Payment Processing?

Merchants operating an online or mail-order business can save money by offering this form of payment to their growing customer base. The cash discount rate is usually much lower than the 2-3% they are charged for credit card processing fees. This fee can be reduced further if the business accepts a large volume of payment through this method.

A cash discount is also beneficial to businesses that accept alternative forms of payments such as PayPal, Google Checkout, and other third-party merchant services because they will receive none of the processing fees collected by these companies. Providers can offer these rates to businesses with high volume as they receive none of the transaction fees for this service.

surcharge program

What is a Surcharge Program? Surcharge Explanation and Benefits

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.