It was Thursday, March 30, 2023. I was sitting in a conference center at The Westin Boston Seaport District Hotel for the Northeast Merchant Acquirers conference.
The information was not a surprise to anyone who closely follows the industry. But to several, you could see the look of disbelief on their faces.
The speaker went on to explain. According to VISA, the very popular Cash Discount Program that many of us offer, is not compliant if the merchant is adding any kind of fee at the register. This includes a non-cash adjustment, or admin fee, which is what most programs offer.
We were told that simply putting up a sign stating that all prices were based on paying in cash and include a cash discount, was not enough. Merchants are required to show two prices – cash price and card price, or list the higher card price only, with a ‘cash discount’ line added on the receipt when a customer used cash.
This information was part of a broader announcement by VISA that was released a few months earlier regarding new rules for surcharging.
VISA Makes a Surprise Announcement
In February of 2023, VISA announced unexpected changes regarding surcharging. Starting April 15th, 2023, surcharging is capped at 3% in states where it is allowed (surcharging is illegal in NY). With most surcharging programs adding 3.50% – 3.99% this caused a ripple effect for businesses and merchant service providers.
Terminals & point of sales systems would need to be adjusted to reflect this change. Merchant accounts would have to be reprogrammed at the back end as well. Why all the sudden changes?
We can only speculate that surcharging & cash discount programs have impacted the bottom line for card issuing banks and the card brands, with more consumers paying in cash.
Did Merchant Service Providers Respond?
Immediately after the conference, I saw several merchant service companies discontinue the non-cash adjustment program and move to a true cash discount option. With true cash discounting, all prices are increased by 3.99%. When a customer pays with cash, a line item discount of 3.99% is listed on the receipt.
When a customer pays with a card, there is no additional charges to the sale or receipt since the prices have already been increased. The merchant service provider switches the merchant to a flat rate daily discount. This allows the transactions to balance and the merchant receives the same amount that they were receiving prior to the price increase.
Other companies have not changed anything, taking the position that a non-cash adjustment is complaint.
In my travels as I visit local businesses, I will say that most people are still doing it the old way. I have only come across a few who offer a true cash discount program or dual pricing. I have not heard of any verifiable enforcement yet either, but there are rumors of businesses being fined.
My opinion – why take a chance?
I consider myself fortunate. Last year, through a private social media group, I learned about the upcoming changes from a member who works closely with VISA. Since then, we have only been offering dual pricing or true cash discount programs.
Confused yet? As if the merchant service industry was not already confusing! When it comes to your business, we are extra vigilant and make every effort to ensure that you are operating in full compliance with all card brand and government regulations. We would be happy to review your existing program, please contact us to discuss any concerns.