What is the Cash Discount Program?

Cash discounting is when a business offers two prices – a regular price, and a discounted cash price. The difference between the cash price and regular price ranges from 3.50% – 3.99%.

The additional amount charged and collected when a customer pays with a card is used to offset any processing fees the merchant would have paid.

The program has been very popular across USA for many years but ruled illegal in NY. This led to a long running lawsuit, which was settled in January of 2019. The ruling allowed merchants to add a fee to the final sale price.

Sounds Simple, Right?

The story continues… While the ruling allowed merchants to add a fee, merchants were required to post the cash price and the credit price. Gas stations have been doing this for years.

But imagine a retail store with 10,000 items. Was the merchant supposed to label every item with a cash / credit price? Technically, yes.

So what happened?

Were merchants listing two prices? No. The accepted belief was that merchants could display a sign stating all posted prices were based on paying in cash and included a cash discount.

The sign stated that a non-cash adjustment of 3.89% would be added to the final price. This required consumers to calculate on their own what the final price would be.

To date, there has been little or no enforcement from NYS regarding this matter. However, even before it was legal in NY, VISA had been monitoring this program across the country.

On October 18, 2018, VISA issued a bulletin stating this type of program was not compliant. There was no enforcement however and it was mostly ignored.

In April of 2022, VISA crafted a memo that was worded much stronger.

They also started sending secret shoppers to businesses to see if they complied. There have been a few reports of businesses receiving warning letters. We feel the need to take this very seriously and decided to offer our clients additional options.

Your Choice:

How you structure no cost processing is up to you. We can offer compliant surcharging, which is now available in NY. (Does not apply to prepaid or debit cards).

Cash Discounting is still available and has not been discontinued. Dual Pricing is being rolled out to avoid any possible issues with VISA. Dual pricing is simple. Your customer will see a cash price and a higher card price.

Please understand – this topic is hotly debated in the industry right now. We are doing our best to stay ahead of all compliance and regulatory issues.

Either way, we can reduce or completely eliminate your fees to accept cards!