The customer is ready to pay, and enters their card into the terminal. They will then be prompted to confirm the amount with the Cash Discount applied.
The transaction will go through on the terminal, charging the customer a 4% fee on their transaction.
The 4% will cover the merchant's credit card processing fees, practically eliminating the credit card processing fees.
The biggest reason businesses switch over to a cash discount program is because in most cases they can eliminate most, or all of their credit card processing fees.
This is a huge saving for small businesses that can then use these funds to expand operations and marketing efforts, or simply increase their savings.
When customers pay with cash you receive payment instantly. There’s no waiting for the transaction to process or risk of chargeback. While you always want to offer your customers the ability to pay by credit, you also can offer cash paying customers a discounted price for paying with cash.
When you work with a cash discount program, you are essentially offering your customers two different prices. Customers that pay with cash will pay a lower price. Customers that choose to pay with a credit card will pay the regular price which is higher.
Cash discount programs ultimately make the payment process more simple. When customers pay with cash, you significantly reduce the risk of chargebacks, pricing disputes, data breaches, fraud, and other complications.
Traditional processing fees are charged as a percentage of every transaction. This creates a lot of volatility and uncertainty for business owners looking to budget or plan ahead. Cash discount programs eliminate this issue, so you’ll have a more consistent view of your profit margins.