In recent years, surcharging and cash discount programs have become increasingly popular among business owners looking to offset the cost of credit card processing fees. Both options allow businesses to shift the cost of accepting credit cards onto the customer, but they differ in their approach. In this article, we’ll explore the differences between surcharging and cash discount programs, and help you decide which one might be right for your business.

Surcharging: What is it?

Surcharging is the practice of adding an additional fee to the total purchase price when a customer pays with a credit card. This fee is intended to offset the cost of credit card processing fees, which can be a significant expense for businesses that accept credit cards.

Pros of Surcharging:

• It allows businesses to offset the cost of credit card processing fees, which can add up quickly.
• It encourages customers to pay with cash or other forms of payment that don’t incur additional fees, which can help reduce the business’s overall processing fees.

Cons of Surcharging:

• Surcharging can be seen as an inconvenience by customers who prefer to pay with credit cards.
• In some states, surcharging is illegal, so businesses need to be aware of the laws in their state before implementing a surcharge program.

Cash Discount Programs: What are they?

Cash discount programs are another option for businesses looking to offset the cost of credit card processing fees. Instead of adding a surcharge to credit card transactions, businesses that use cash discount programs offer a discount to customers who pay with cash or other non-credit card payment methods. This discount is typically equal to the amount of the processing fee that the business would have otherwise paid.

Pros of Cash Discount Programs:

• Cash discount programs are legal in all 50 states, so businesses don’t need to worry about breaking any laws.
• Offering a discount can be seen as a positive customer experience and can help build customer loyalty.

Cons of Cash Discount Programs:

• Cash discount programs can be confusing for customers who are used to paying the listed price for a product or service.
• Cash discount programs require businesses to re-price their products or services to reflect the discount, which can be a time-consuming process.

Which one is right for your business?

Deciding whether to implement a surcharge or cash discount program depends on a variety of factors, including the type of business you run, the amount of credit card processing fees you pay each month, and the preferences of your customers. In general, cash discount programs tend to be more customer-friendly, while surcharging can be more effective at reducing credit card processing fees. Ultimately, the decision is up to you and your business needs.

In conclusion, both surcharging and cash discount programs are effective ways for businesses to offset the cost of credit card processing fees. While there are pros and cons to both options, the decision ultimately comes down to what works best for your business and your customers.