Credit card processing fees can take a large portion of a business’s profits, but with people spending more with cards than ever, it’s becoming less of an option to go without a card reader. Accepting credit cards can be not only expensive but also hard to understand as charges at the end of the month are often unclear. For these reasons, it can be unnerving to start accepting credit cards, and if you already do, changing your processor can be a stressful process. Most merchants just accept that they will lose some profit every time someone pays with a card. However, that doesn’t need to be the case. With new rules and regulations by MasterCard and Visa, your business can implement a discount for cash. What this means is that each product or service you provide has two prices, a slightly lower cash price and a card price. Here are four ways that offering a discount for cash can add value to your business and reduce your credit card processing fees.
1. Discounts Increase Sales
When your business is able to accept more payment options than just cash, you are able to service more customers. Reaching more customers generally increases sales. When you have slightly higher prices but then offer a discount for cash, your card customers are now able to pay for your product or service, and your cash customers feel as if they are getting a better deal, even if the discounted cash price is the same as the old price. This discounted price can attract more customers and increase sales. These cash prices are good for the customer and your business.
2. The Processing Fee is Covered by the Card Price
When you offer a discount for cash, you might worry about still paying your credit card fees while you now offer your product or service for less. However, with just the cash price being less, you can look at it as the difference in price is offsetting processing fees you may face. This way, you don’t have to raise your prices, just lower them and everyone wins.
3. The Discount for Cash Price Still Makes a Higher Profit
When you were first going through your inventory and pricing your products or services, chances are that you accounted for processing fees in your initial prices. This way, you were set to make a higher profit with cash while still making some profit when customers or clients pay with cards. When your business offers a discount for cash, up to half of your customers might start paying with cash. With the majority of people paying with cashless options now, this much of an increase in cash transactions can add value to your business while increasing your profits even at a lower offering price after you discount for cash.
4. Increase ATM Usage
If your business has an ATM, offering a discount for cash is a win-win. Your lower cash prices encourage customers to pay with cash, which nets you a higher profit. However, less and less people are paying with cash and often don’t carry any in their wallets. This is where incentivizing with a discount for cash helps. Customers are more likely to use your ATM to retrieve the cash they need to gain access to these lower prices. Your business profits off the ATM usage and the cash transaction.
It can be discouraging to see how much processing fees cut into your profits. However, it’s hard to run a business without letting customers pay the way they want to pay. Offering a discount for cash solves this problem by increasing sales, reducing your processing fees, increasing your profit, and benefiting your ATM business.