Cash Discount vs. Surcharging

Understanding Cash Discount and Surcharging

Both cash discounting and surcharging are strategies designed to help businesses manage credit card processing fees by passing costs to customers. While they share the goal of reducing merchant expenses, they differ significantly in execution, customer perception, and legal requirements. Asheville Merchant Advocates is here to help you understand these options and implement the one that best suits your business.

Key Differences Between Cash Discount and Surcharging

Aspect	Cash Discount	Surcharging
Definition	A program where the listed price includes credit card processing fees, and a discount is applied at checkout for cash payments.	A program where an additional fee is added to the listed price for customers paying with a credit card to cover processing costs.
Pricing Display	Lists a single price (including fees). Cash payers receive a discount at checkout, reducing the price.	Lists the base price. A surcharge is added at checkout for credit card payments, increasing the total.
Customer Perception	Seen as a reward for paying with cash, often viewed positively as a savings opportunity.	May feel like a penalty for using credit cards, potentially deterring card-paying customers.
Legality	Legal in all 50 states with proper signage and disclosure at the point of sale.	Prohibited in some states (e.g., CT, MA, ME, OK). Requires strict compliance with card brand rules and state laws.
Compliance Requirements	Requires clear signage and receipts showing the discount for cash payments. No prior notification to card brands needed.	Requires advance notification to card brands, clear signage, and receipts showing the surcharge as a separate line item. Cannot apply to debit cards.
Implementation	Needs a POS system to automatically apply cash discounts at checkout.	Requires a POS system to add surcharges only for credit card transactions and comply with regulations.
Example	A $100 item is listed as $104 (includes 4% fee). Cash payers pay $100 after a $4 discount at checkout.	A $100 item is listed as $100. Credit card users pay $103 with a 3% surcharge (capped at 3%) added at checkout. Debit card users pay $100, with processing fees covered by the merchant.
Best For	Businesses seeking a customer-friendly way to encourage cash payments without complex regulations.	Businesses with high credit card transactions (e.g., B2B, high-ticket retail) where surcharges are legal and customers accept fees.

Why Choose Asheville Merchant Advocates?

At Asheville Merchant Advocates, we help businesses in Asheville and beyond implement compliant and effective payment processing strategies. Whether you choose a cash discount or surcharging program, we offer:

• Expert guidance on compliance with Visa, Mastercard, and state regulations.
• Customized POS solutions to seamlessly integrate your chosen program.
• Clear signage and staff training to ensure a smooth customer experience.

Let us help you reduce processing fees while maintaining customer satisfaction. Contact us today to find the best solution for your business!

Get Started with Asheville Merchant Advocates