Merchant Account Cash Discount Program Sign, How it works, Pricing, Compliance, How to use it
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- čas přidán 25. 07. 2024
- #cashdiscountprogram #merchantcashdiscount #cashdiscountsigns
Merchant account cash discount programs are very popular and if you’re researching one for your company, take a look at today’s video to learn more about how merchant cash discount programs work.
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There are cash discount merchant account programs that now operate like a surcharge program.
But they’re cash discount programs.
For the sake of showing details of this program, i’ll quickly compare and show you how it’s NOT surcharging, and I’ll discuss rates, and prices for this program as well as how to set it up in yoru business.
INTRO
So you’re probably already familiar with the general concept and understand that the program effectively passes the credit card processing fee along to your customer.
So while that’s the baseline knowledge for this video I'll lay out the details of traditional or historical cash discount programs and what has now become a popular trend in merchant services which is the new cash discount program that’s really seen a rise in popularity in the last few years or so.
If you haven't seen the first video in this series where I compare cash discounting, surcharging and convenience fee programs, here’s the gist of how a traditional cash discount program works.
Sample transaction with numbers
Understanding the numbers and how each transaction is processed, is important for the comparison, so let’s simulate 3 transactions.
First, traditional merchant account transaction:
Let’s say a business has a product for sale at a listed and stated price of a nice round number of $100.
You, as the business, run the credit card on point of sale device for $100, and collect that $100 dollar with your next settlement or batch. Usually next day funding or maybe within 24 hours.
Then, at the end of the month, you would be billed for the merchant account fee of approximately 3% (let’s just say, for this example)
So you would net $97 for that purchase.
Next, let’s simulate a traditional cash discount merchant account transaction:
In that same scenario, If you offered the customer a cash discount at the time of sale, instead of using their credit card, you’d just reduce the listed and stated price by $3 and sell it to them for $97 cash.
Right there on the spot, by verbally asking your customer if they want to save some money by paying with cash, you just reduce the price you’re done.
You collect your cash, and you’re off to the back.
THAT $3 is the CASH DISCOUNT!
So obviously, this discount is a reduction from listed and stated price. Literally just how it sounds.
Again, it’s important to realize, that the customer does actually end up paying the extra fee by paying MORE for their product if they want to use their credit card because you have to baked it in as a cost of goods sold.
Finally, there is a surcharging program
Using the same numbers, instead of discounting like we did for the cash discount, we’re going to add a fee to the original listed and stated price IF the customer pays with a credit card.
So that listed and stated price of $100 becomes $103 because the customer paid with plastic.
Is Debit Technologies' software the only one in the industry that makes a cash discount program compliant?
Hello I tried booking a consultation, please advise how I go about booking a call with you . Thanks
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Those surcharge laws definitely came into place because of credit card companies.
Which payment option I should go for my dropshipping business. On my website www.Tulipliy.com
I need a stable payment option not getting freezes or banned
Need you help!
I don't see any difference. look exactly like surcharge and convenient charge.
You're right. They are very similar as I mentioned. The differences are how they operate and the software that controls each of them. It's all about compliance :) Thanks for watching.
Have you heard of the cash discount merchant programs? Are you thinking of setting one up at your company/store? Let me know in the comments... -Brian
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Ridiculous! All prices are charged 4%! If cash, we wave 4%! More confusing to customers than just surcharging!
Yea, I hear you. As I said there's some compliance and red tape to get around. the most important thing to a business owner is making sure you are surcharging or offering cash discount with a COMPLIANT program. Thanks for watching! - Brian
I hate getting calls for these programs! Just got one yesterday and glad I found this video to explain that it's basically the same thing as what's been around, as I suspected. Running a medical facility, collecting co-payments, I don't need another layer of compliance issues to worry about.
@@MrJ.S. Thanks for watching! Glad the video helped! -Brian