Are you looking to offer cash discounts to customers to incentivize them to use cash instead of credit or debit cards?
A cash discount program can help your business reduce expenses on processing fees for card transactions, and there are guidelines you must follow to ensure you are implementing the program the right way.
One of the most important requirements is cash discount signage, which will be the focus of this article.
Let’s dive in.
TL;DR
- A cash discount program encourages your buyers to opt for cash or check instead of cards, and it is a system that offers a discount on the listed price of a product to all customers who pay with cash, while customers making purchases with a debit or credit card will pay the full listed price, which includes the service fee (per transaction fee).
- All the major credit card issuers have requirements that must be followed when designing cash discount signage, which boils down to providing the exact details of your cash discount program in legible letters on a banner positioned in visible locations in your store.
- A verbal explanation at the point-of-sale of your cash discount program to customers is also required by most card issuers.
Understanding Cash Discounts
A cash discount program is a system that offers a discount on the listed price of a product to all customers who pay with cash, while customers making purchases with a credit card will pay the full listed price, which includes the service fee (per transaction fee).
The idea is to display a notice stating that a service charge (the two or three-percent processing fee) will be applied to ALL SALES in your retail store, while customers paying with cash will be given a discount as an incentive—that notice is your cash discount signage.
It encourages your buyers to opt for cash or check instead of cards, and given that businesses spent $160 billion on credit card processing fees in 2022, cash discounting can help you save lots of money by passing along the costs to customers or avoiding it entirely.
Cash discount programs aren’t new, and they have been used by gas stations for decades.
As you can see from the image above, gas stations usually display a “cash price” and a “card price.” The cash price is the actual pump price without any additional charges, and the card price is the pump price plus the processing fee.
As a retail business owner running a cash discount program, you are permitted to display only the card price of the product and offer a discount on that price, but once you introduce additional fees specifically for card transactions, it becomes a surcharge.
For example, if you want to create a cash discount program, you will simply post a notice offering a 3% discount on the listed prices for all cash purchases in your store.
In contrast, a surcharge notice will add a 3% service fee on top of the listed price, specifically for all credit card purchases, without any other beneficial offer to the customer.
Note that surcharging is legal in all US states and territories except Massachusetts, Connecticut, and Puerto Rico. Meanwhile, cash discounts are legal in all 50 states according to the Durbin amendment of the 2010 Dodd-Frank law, and don’t require any registration.
You will need a merchant account to run a cash discount program, but not all payment service providers offer compliant technology that will display the cash discount line on the receipt.
If the service fee and cash discount are not applied correctly to your receipt, it will be legally classified as a surcharge. You must ensure your terminal is pre-programmed to support cash discounts before committing to a payment service provider.
Designing Complaint Cash Discount Signage
All the major credit card issuers (Visa, American Express, and Discover) have strict requirements that must be followed when designing cash discount signage.
These guidelines are mandatory, and non-compliance will attract penalties. You will find instructions and tips on the website of each credit company, and they all sum up to the following three key guidelines:
Explicit mention of cash discount offerings
The signage must be displayed in locations where it is visible to your customers. These include your door/main entrance, store window, and the check-out counter of your store.
As you can see from the image above, the signage is positioned on the store window where every customer can see it. The words are also big, bold, and easy to read. They can be clearly viewed by visiting customers from any distance.
For eCommerce stores offering a cash discount program, the signage must be displayed on your product and checkout pages. It must have clearly written text with all the required information.
Legally compliant cash discount conditions
The text of the signage must clearly state the exact service charge and the conditions under which it is applicable (for example, “on all store sales”).
It must also state the cash discount percentage, which will be the same as the service charge. Offering a lesser percentage is ill-advised since profiting from credit card transactions is illegal in many states.
As you can see from the text in the compliant notice above, it is clearly stated that the 3% processing fee was already factored into all product prices. The discount incentive for customers to use cash instead is also explicitly stated.
In contrast, the non-compliant notice below only states that the service charge is added on top of the listed price without offering any incentive to convince customers to pay with cash.
Offering your customers a cash discount verbally
You are also required to verbally offer the cash discount to your customers at the point of sale.
You are to state the actual cash price of the product and the service charge to be borne by any customer paying with a credit or debit card.
Placement of Signage
Below are three prime locations to place your cash discount signage in your retail store to ensure it is always visible to customers and compliant with relevant regulations.
At the entrance and on the store window
Placing your cash discount signage banner on your front door to welcome customers is one of the surest ways to attract their attention to your notice.
Just like you would for promotional digital signage, the door front is the perfect place to provide an unobstructed view of your signage.
Near point-of-sale displays
The space around your cash register is an excellent location to position a table-top banner or hanging banner with legible information about your cash discount signage program.
Also, placing it at the point-of-sale makes it easier when you are fulfilling the requirement to verbally explain the details of your discount program.
Highly trafficked spaces
If you have a large store with many distinct areas, you can place your discount signage banners in all the places where your customers usually congregate.
These include spaces like elevators, changing rooms, reception rooms, checkout areas, etc.
Communicating with Customers
Below are four key tips to help you effectively communicate the details of your cash discount program to customers without alienating them.
- Honesty and clarity: communicate the exact details (percentage) of the service charge being deducted from the listed product prices and how it helps pass along savings from per transaction processing fees to customers.
- Legal relevance: your customers should be informed of your legal obligation to educate them about your cash discount program. It builds credibility and trust.
- Multiple payment options: communicate the availability of other payment options in your signage and verbally to customers who still prefer to pay with their credit cards to ensure you don’t turn them away from your business.
- Well-trained staff: your employees must be properly trained on how to effectively discuss the impact of the service charge on card-using customers without alienating them.
Template for Cash Discount Signage
You can use any of the following three templates for your signage.
Template 1
Title: Customer Pricing Notice
A xx% service charge is applied to all store sales.
Subtitle: Pay By Cash And Save!
As an incentive for our valued customers, we now provide a discount to pay with cash or in-store gift card by giving a xx% instant discount on the service charge.
Subtitle: We accept:
Bottom Column: Visa, MasterCard, American Express, Discover (insert card images for each issuer).
Template 2
Title: Dear Loyal Customers
A xx% service charge is applied to all sales at this location.
Subtitle: Cash Discount
As an incentive for our valued customers, we now provide a discount to pay with cash giving a xx% immediate discount on the service charge.
Subtitle: Pay by Cash and Save!
Bottom Column: Visa, MasterCard, American Express, Discover (insert card images for each issuer).
Template 3
Title: Cash Discount Available
We are now offering an instant xx% cash discount for cash-paying customers.
Subtitle: Non-Cash Payments
If you use a credit card or another form of payment, then you will not be taking advantage of the cash discount, and that difference will be a non-cash adjustment of xx% automatically added to your payment amount.
Creating Your Own Cash Discount Signage
This article has explored the legal guidelines for creating discount signage and templates you can use to create compliant signage for your store.
We also mentioned the importance of working with a reputable payment processing company to ensure your receipts are compliant with relevant rules and regulations.
Stax Pay is the perfect payment services provider for business owners looking for a seamless cash discount solution. It provides an easy-to-use platform that will effortlessly process complaint receipts for your cash discount program.
For those interested in implementing a surcharging program, look no further than CardX by Stax. It is the leader in surcharging in the US market, and it lets you easily accept credit payments at 0% cost.
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