10 FAQs on Cash Discount Programs

Business owners often use cash discount programs to attract more customers and facilitate faster money processing. Simply put, a cash discount program is a small monetary benefit given to the customers who pay for the product/service with cash, debit cards, or checks instead of credit cards. When customers pay with cash over credit cards, the business owners save money on credit card processing fees. These business owners then can decide to pass on these benefits to their customers, thereby reducing the overall cost of the product/service.

Several minute nuances of the cash discounting program make it a little difficult to understand. This mini-guide will help you answer the most common questions on these programs.


Consumers’ Q&A on Cash Discount Programs

Are you a consumer who wants to understand the basics of cash discount programs and how it helps you save money? Here are six Q&As that can help you understand the program better.  

Question 1: What is the difference between surcharges and cash discounts?

This is perhaps the most common question we get from consumers and business owners alike. Confusing terminology often makes both these programs seem similar. However, there are some key differences that you must understand to save more money. Here’s a small breakdown:

Cash discount: In this case, the business owner’s posted prices (the prices you see in the shop) include an extra service fee for customers paying through credit cards. However, if you, as a consumer, decide to pay the bill through a debit card, cash, or a check, you will see an additional discount line item on the receipt that reduces the overall price of the product/service.

So, you end up paying LESS (if paid in cash or ACH for online transactions) or EQUAL TO the posted price. 

Surcharge: In this case, the business owner’s posted prices are called “cash prices.” These prices do NOT include an extra service fee for customers paying through credit cards. So, if you do decide to pay the bill through a debit card, cash, or via a paper check or e-check with ACH payments, you will pay just the posted price. But, if you pay through a credit card, you must pay an additional “service charge” (which is the processing fee for using a credit card).

So, you end up paying MORE (if paid via credit card) or EQUAL TO the posted price.

Still unclear? Learn more about  cash discount programs.

Question 2: Do all businesses offer a cash discount?

No. All businesses do not offer a cash discount. The business owner decides to offer such a discount to their customers. However, most business owners that deal with heavier transactions provide such discounts to help their customers offset the hefty credit card processing fees.

Question 3: How can I avail a cash discount?

Most businesses that offer a cash discount advertise it openly to attract more customers. However, a few business owners might not explicitly say that they provide such discounts. In such cases, you can always inquire at the billing counter to see if you can get a discount if you choose to pay in cash.

Question 4: How do I spot a surcharge program?

If you see a business owner saying that they have posted “cash prices” and that they will charge extra for payment through credit cards, you are looking at a surcharge program.

Question 5: What are dual prices?

For the sake of clarity (or due to mandatory constraints), some business owners post two different prices for the same product. Usually, the first price denotes the “cash price” (non-inclusive of the fee for credit card), and the other price denotes the “listed price” (which includes the cost of the product if you choose to pay through credit card transactions).

Question 6: Can I pay by check online?

Some business owners let you pay checks online. If they have a tie-up with a reliable third-party payment processor, they can easily offer an additional payment method to their customers. To pay online on a hosted payments portal with ACH solutions, the business owner will send you a link to enter your bank account and routing number, along with the authorization to withdraw money. Once you enter the correct details, the business owner can withdraw the set amount from your bank account.

Important: If you deal with recurring transactions and want to process funds through checks to save processing fees, you should discover ACH. Learn more about ACH processing here


Business Owners’ QnA

Now that we know the basics of a cash discount program from a consumer point of view, here are a few things that you should know from a business owner’s point of view. 

Question 7: Do I need to offer cash discounts out of my own pocket?

No. You don’t need to offer cash discounts. However, if you choose to offer a cash discount, make sure that you do not end up paying the credit card companies an additional fee on behalf of your customers. Such practices will end up eating into your profit margins.

Question 8: Is surcharging illegal?

Surcharging is currently banned in 5 out of the 50 states in the U.S. The states where surcharging is banned include Colorado, Connecticut, Kansas, Maine, and Massachusetts. Cash discounts, on the other hand, are encouraged and completely legal in all states.

Question 9: How do I set up a cash discount program?

The fastest way to set up a legal and complete cash discount program is by partnering up with Nacha’s preferred third-party payment processors

Question 10: Do I need to make any changes to my receipts?

Yes, you must make minor edits to your receipts to implement a cash discount program correctly. However, if you partner with a payment processor, you can leave the regulation management up to them. These payment processors will ensure that you can start accepting cash payments correctly. They will also help you offer your customers the benefits of paying through a debit card, cash, or check.


There is no reason NOT to start a cash discount program for your customers. It is beneficial for both you as a business owner and your customers. With a reliable and complete implementation of such a program, you can avoid the fee for credit cards, and ensure that this fee does not eat into your bottom line profits. 

To ensure that you can offer a discount and the best possible service to your customers, you should always prefer relying on the top payment processors out there. Want to learn more about the various ways you can enhance your merchant services and get more customers? Speak to our relationship managers today!


Date originally published: January 27, 2022


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