What Merchants Should Know About Non Cash Adjustment Fees When Implementing Cash Discounts

Did you know that credit cards accounted for 31% of all payments in 2022? That’s an all-time high since 2016, and the figure was even greater for higher-income households. 

Credit cards are ubiquitous, and no business (regardless of its size) can afford to ignore credit card payment processing in the current landscape.

On the flip side, however, credit card fees can eat away at your profits since a percentage of each credit card transaction goes toward processing fees. Here’s where concepts like surcharging and cash discounting come in. 

A cash discount program offers reduced prices to customers who pay by cash instead of credit or debit cards. In contrast, surcharging adds an extra fee to the total amount for customers who pay by credit card. This fee falls under the category of of non cash adjustment—a term that a term that describes any additional charges applied to non cash payments to cover processing costs.


  • In a non cash adjustment (NCA) program, the listed price shows the amount a customer would pay if they chose a debit or credit card as their payment method. However, if they paid by cash, the NCA fee would be deducted from their final bill. 
  • Surcharging only applies to credit card payments while NCA fees can apply to both credit and debit card transactions. In both cases, though, the NCA fee or surcharge has to be listed as a separate line item in the bill.
  • Customers need to be made fully aware of a business’ cash discounting program before they start purchasing. In-store personnel, especially those at points-of-sale, should be educated on cash discounting and surcharging, so they handle customer queries better and resolve payment issues faster. 
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What Are Non Cash Adjustment Fees?

Non cash adjustment fees are charges applied to purchases made with credit or debit cards, reflecting the higher costs associated with processing these transactions.

When a customer paying by credit card has to pay more than the listed price at the point of sale system (POS) or the payment terminal, the additional fee is known as a surcharge. This surcharge fee may also be called a service fee or convenience fee. 

In a non cash adjustment program (NCA), this surcharge is worked into the listed price of products. If a customer pays by cash, the noncash adjustment fee is removed from their final bill. 

Non cash adjustment fee vs surcharge fee

So, what’s the fundamental difference between a surcharge and a non cash adjustment fee? Surcharging only applies to credit card payments while NCA fees can apply to both credit and debit card transactions.

In both cases, though, the NCA fee or surcharge has to be listed as a separate line item in the bill. Customers should not have to wonder why they are paying more or less than the regular price. Businesses that fail to make these charges or discounts transparent risk losing their merchant accounts and facing heavy fines.

It’s also worth noting that a non cash adjustment program differs slightly from true cash discounting. An NCA program has the NCA fee (a small percentage not exceeding 4% of the product price) built into the listed price for debit and credit card payments.

In contrast, true cash discounting lists credit card prices and offers a discount to customers paying by cash. Merchants still pay for the costs of debit card processing out of their pockets.

What is a listed price or regular price?

To fully understand these concepts, you should know what “regular price,” “listed price,” or “posted price” means. Simply put, it’s the price listed on the product or the shelf. This is the price that customers see when they shop at a store or on a restaurant menu before they decide to purchase the product.

Example: If a coffee shop menu lists a latte for $4.50, that $4.50 is the regular price. Customers see this price and expect to pay that amount unless there are any applicable discounts (for cash payments) or additional fees for using certain payment methods, such as credit cards.

How Non Cash Adjustment Fees Work

As mentioned earlier, a surcharge program isn’t the same as a cash discount or noncash adjustment program. 

If a business chooses to implement a surcharge program, the regular or listed price shows the amount a customer would pay if they chose the cash payment type. Hence, the regular price is the “cash price” and a surcharge fee is added at the POS if customers pay with credit cards. 

In an NCA program, the listed price shows the amount a customer would pay if they chose a non cash method (i.e., debit or credit card) as their payment. Of course, if they paid by cash, the NCA fee would be deducted from their final bill. Here, the noncash adjustment fee indicates that the customer paid with a debit or credit card and that the fee was added to cover the payment processing cost.

The non cash adjustment fee should be visible on the bill. Also, ample signage at the POS, store entrance, and in-store should let customers know they will pay extra if they use credit or debit cards. 

Founder  of CardX by Stax, Jonathan Razi, highlights some important points about true cash discount programs and why many of them are non cashcompliant. 

When a business decides to set up a cash discount or non cash adjustment program, the regular product prices are calculated by taking into account credit card (and debit card) processing fees. At checkout, if a customer pays with cash, a discount is offered on this regular price so that the customer pays less. 

This discount can be shown on the bill as the credit card surcharge or noncash adjustment fee. A customer using a credit card pays the regular price.

A business must not add a surcharge to the final bill for a customer paying by credit card if the regular prices are already adjusted for credit card processing costs. It also should not add a surcharge and remove it from a customer’s receipt to give the impression of a discount. 

In a cash discount program, the cash-paying customer pays less than the listed price. These points are essential when implementing and managing a true cash discount program.

Benefits of Implementing Cash Discounts

Cash discounting offers several benefits, for businesses and consumers alike. Let’s take a look.

Reduce credit card processing fees

In 2022 alone, American businesses shelled out more than $160 billion in card processing fees. Out of this, a whopping $126.35 billion was only for processing credit cards, which means that more than 78% of total card processing fees paid by businesses were for accepting credit card payments. 

Cash discount programs are an effective way to encourage customers to pay by cash, thereby decreasing the amount businesses pay as credit card processing fees. For a small business, these fees can add up when they start accepting cards from credit card brands like Visa, Mastercard, American Express, Discover, etc., and as the volume of such sales rises, so do the overall credit card processing fees.

Thankfully, surcharge processing companies like CardX by Stax can help you understand cash discounting programs and how to implement them. 

Help customers pay less too

By implementing a cash discount program, businesses can avoid paying card processing fees. Moreover, these programs are beneficial for customers too, as businesses don’t have to pass on credit card processing fees to customers in the form of a surcharge. When customers use cash, they get a discount on the regular price of products which helps them save more when they shop.

Attract more customers and build customer loyalty

People are always looking for a good discount and ways to save money. Cash discounting allows you to reduce prices for your customers which, in turn, can help you attract more customers to your business.

It is also a great strategy to increase customer loyalty as customers will be more willing to return to a store that offers discounts. With different cash discount methods, you can even reward customers with better discounts and offers for different purchase amounts, increasing customer loyalty. 

Less complicated

Cash discounting is legal in all 50 states while surcharging comes with certain restrictions. Moreover, cash transactions are easier and faster to process. Customers and businesses don’t have to spend time entering information to process a credit card payment. With cash transactions, there’s no need to worry about card declines, refund issues, server issues, etc.

Potential Drawbacks and Challenges

All said and done, cash discounting does have a few drawbacks that merchants need to be mindful of.

Customer perception and acceptance

There’s a chance customers may view businesses that prefer cash payments as trying to avoid taxes. This can negatively impact the reputation of your business if you have a cash discounting program. 

Moreover, people prefer using credit cards as they are more convenient and easier to carry around. As per a survey conducted in February 2024 by Forbes, 35% of participants used credit cards to earn reward points and 33% said they used credit cards as they were safer to carry than cash. Customers might get annoyed if they are forced to carry cash and may avoid businesses not accepting cards.

Legal and regulatory considerations

Although cash discounting is allowed in all states, there are strict rules to follow to avoid being fined. Businesses must be fully aware of signage, payment structures, when cash discounts are not allowed, etc., before they offer cash discounts.

The listed price should be increased to reflect credit card surcharges, but businesses should be aware that surcharges cannot exceed 4%. So you should be careful while calculating regular prices when implementing a cash discount program.

Best Practices for Merchants

When implementing a cash discount or a noncash adjustment program, follow these best practices to stay compliant.

Communicating the program to customers effectively

Customers should be fully aware of a business’ cash discounting program before they make a purchase. Businesses must place signs where they are visible. In fact, in some states, it is required that dual prices are listed on products so that customers know how much they’ll pay for each product if they choose credit cards or cash. 

Training staff on handling cash discounts and non cash adjustments

In-store personnel, especially those at points-of-sale should be educated on cash discounting and surcharging. This way, they will be able to handle customer queries better and resolve any payment issues faster. Training in these programs will also help them calculate the regular prices of products more easily. 

Monitoring and adjusting the program as needed

It must be noted that businesses are legally obligated to track all non cash adjustments separately in financial and income statements. This offers an excellent benefit as businesses can easily track the health of their noncash adjustment programs and make changes if required. 

Final Words

Surcharging and cash discounting programs can be tempting as they help businesses offset the cost of accepting credit cards. However, they can be complex to set up so it is best to work with a surcharge solutions provider like CardX by Stax. 

There are a lot of rules surrounding non cash adjustments and implementing these programs can be a huge change for any business. It is critical for business owners to understand everything related to non cash adjustment fees and cash discounting so that they can reap the benefits of such programs. Contact CardX by Stax today to speak to one of our experts or see a demo.

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