There’s a lot of confusion about surcharges and cash discount programs. There are distinctions to understand. Let’s go through a few distinctions and ideas. Is there a difference between the cash discount and surcharge? How to make a good buying decision?
Cash Discount verses surcharge
A Cash Discount provides exactly what it says, a cash discount. Prices throughout the store include a credit card processing fee, for example 4%. When cash is used to pay, there is a discount. For example, there is a $100 purchase. The customer pays with cash. The item is discounted by 4% and the cash price is $96. If a credit card was used to purchase, the price would have remained $100. Cash Discount programs are legal in all 50 states. Click here for more details.
Surcharging is legal in 43 states according to a recent article here accept Florida, Colorado, Connecticut, Kansas, Maine, Massachusetts, and Oklahoma. Surcharge is defined by cash prices and a fee assessed when a credit card is used for payment. In order to comply a merchant must have signs clearly disclosing the fee. Here’s how the transaction works. Same $100 item, here’s the difference. When a credit card is presented for payment, there is an additional fee assessed. $100 purchase, 4% (maximum surcharge allowed) is charged, total is $104. Must print out on the receipt as a separate line item Click here for more details.
How does it work?
Cash Discount
- All prices in the store include the credit card fee.
- If cash is used, a discount is given at the purchase.
- If a credit card is used, the final price includes the fee for the credit card.
Merchant pays nothing for the credit card transaction. A discount is provided for cash payments. Cash Discounts are legal in all 50 states.
Surcharging
- 43 states allow surcharging.
- Merchant account is properly setup with the card brands for surcharging.
- Surcharging signs have to be displayed in the business. Signs are required in two places, at the door and checkout.
- If the customer decides to use a credit card for purchase, there is a flat surcharge for the use of the credit card.
The surcharge is automatically calculated by the credit card terminal and is a separate line item on the receipt. The surcharge is a fixed percentage.
For example, 3.95% is the surcharge. The sale is $20. Payment is via a credit card. The surcharge is $0.79 and the total on the credit card terminal receipt is $20.79. The customer is billed $20.79.
The surcharge is the same as the flat rate charged to the merchant on their merchant billing statement. Therefore, the merchant is paying $0.00 to accept credit card payments. The merchant is prohibited from profiting from this program. Flat rate pricing keeps the fee consistent. Therefore, the merchant’s surcharge matches the flat rate. They aren’t profiting staying in compliance.
Merchant benefits
- Eliminate up to 95% of fees to accept a credit card payment. That is almost free credit card processing. Imagine if you are paying $1000 per month in merchant fees and now you are paying only $100 or even less, $29.95?
- The Reverse My Fees Program is available on dial-up or ip credit card terminals, mobile payments, virtual terminals, and wireless credit card terminals.
- We deduct the surcharge at the end of the month or daily. The merchant chooses. If daily deduction, assuming a $100 batch and a 3.95% surcharge, the deposit into the bank account would be $96.05. Surcharge = $3.95, subtract from $100 batch amount = $96.05 deposit. With daily deduction, assuming a credit processing account only, merchant would pay only $29.95 at the end of the month.
- Reverse My Fees works on mobile, virtual terminal, counter top credit card terminal, and wireless credit card terminal.
Businesses be aware
Free processing is here. Merchants can fight back against high reward card fees. There are numerous companies popping up every day. They are the supposed cash discount experts. Their surcharge program is the best. Be aware of scams. The revenues on surcharging and cash discounts are lucrative. Could the higher revenues be the reason for so many companies offering cash discounts and surcharges?
Be ultra careful, just like in any business arrangement. Is this a new vendor for your business?
Here are some questions to ask.
- Where are the local testimonials?
- Are there any testimonials?
- How long have these testimonials been using the program?
- Does the sales person have references?
- For what are you signing?
- If you feel pressure to sign the deal, stop. Fear of loss, typically is manipulation. This is a terrible sales tactic.
Take your time to check references and testimonials. A good deal, will remain after validation. In our research, we have found numerous leasing scams. A leasing scam is overpaying for your processing device. Processing device is usually a credit card terminal. For example, “the credit card terminal is $200/mo., and we are saving you $700.” Solution sounds good. It saves $500 per month. Ponder this, please. Why would you pay $9,600 plus tax for a credit card terminal?
It’s ok to say no to the deal. Ask questions about the equipment cost. Ask someone you trust in business. Be aware of the documents you are signing. Credit card terminals run from $300-$900. Wireless credit card terminals can go for $500-$1,100.
Here’s some information about leases. A decent 48 month lease at $30/mo will cost $1,440 over 4 years, plus tax. Yearly, the lease costs $460 plus tax. Bottom line, understand the pitfalls of any contract or agreement. If the agreement is broken are there consequences? Consult your attorney if you are uncertain of the agreements. For more information on credit card terminal purchases, please click here.
Yes, free credit card processing is real.
Try our no risk, Reverse My Fees Program. 
Convenience fees are common, online. Typically, a person sees these types of fees online for ticket purchases to events. The Cash Discount and Reverse My Fees Programs can eliminate up to 95% of merchant fees or more. Credit card processing is virtually free.
We can help your business save. Call us 877-651-1655.
Video Testimonial for Reverse My Fees:
Full Disclosure (Fine Print)
- Cash discount or convenience may not exceed 4%
- Surcharge only applies to credit card transactions.
- Visa and Mastercard prohibit surcharging debit cards.
- The merchant can choose to offer pin debit.
- Must be on flat rate pricing for cash discount program.
- A flat monthly fee may apply as little as zero and as much as $39.95. Fees vary by average ticket and merchant type.