The topic of credit card processing fees is often dominated by the expenses of processing cards. Rarely do we actually get to talk about the savings which can be passed down to business owners when their clientele pay with cash. To incentivize cash payments, some merchants offer cash discounts. However many merchants are hesitant to do so because they are unfamiliar with federal, state, and local laws amongst other reasons.
So how exactly to cash discounts work? Today, we will review the concept of cash discounts, when they are applicable, why offering a cash discount may benefit your business, and answer a few frequently asked questions.

Is it Legal to Offer Cash Discounts?
In the United States it is legal to offer cash discounts to customers. This is thanks primarily to the Durbin Amendment, an add-on to the 2010 Dodd-Frank Law. The Dodd-Frank Wall Street Reform and Consumer Protection Act included wide-reaching financial reform in the wake of the 2008 financial crisis.
The Durbin Amendment expanded on the Dodd-Frank laws by placing limits on transactional fees when using credit and debit cards to make purchases. Unfortunately, the amendment was met with a backlash, as banks and credit unions raised rates in other places and reduced perks for cardholders to make their money back.
As for cash discounts, the Durbin Amendment protects the rights of business owners to offer cash discounts in all 50 states.
Cash Discounts Rules and Regulations
As part of this right to offer discounts, business owners must also adhere to a handful of rules to do so legally, including:
Posting the cash discount details at the entrance and at the checkout counter
Clearly denoting any cash discounts on receipts
Clearly offering the cash discount verbally before completing the transaction
There are other details about pricing regulations, posted prices, and cash discounts. To be safe, work with a qualified merchant services account representative to make sure that your business is adhering to cash discount laws.

Benefits of Offering Cash Discounts to Customers
Cash discounts almost seem like a no brainer. For customers who are looking to get the lowest possible price, they have the option of paying with cash. For customers who prefer the convenience of a credit card at a slightly higher cost, that option exists as well. There are also a few fringe benefits which can positively impact businesses and consumers alike.
For example, businesses with high transactional volume and low profits per transaction, the amount of savings from avoiding credit card processing fees can be massive. So massive that it can surpass offering cash discounts, which of course lowers the price for your consumers as well.
Credit card transactions also run a certain risk of issues such as chargebacks. Cash transactions largely eliminate these risks, which again benefits all parties involved. Your customers will likely appreciate the option of paying with cash and receiving the discount no matter their preferred payment method.

Small Business Cash Discount & Service Fee FAQs
How Can I Represent a Cash Discount to Customers?
With customizable receipts, you can itemized cash discounts just like any other purchase or savings. How you choose to represent this information is up to you, but many customers appreciate seeing the “cash discount” item so that they can see exactly what they saved.
How to Apply a Service Fee for Card Customers
Depending on your merchant services agreement, POS System, and/or the nature of your credit card processing, this will likely take care of itself. Your system will recognize that a customer has used a credit card, debit card, or other form of electronic payment and apply the relevant service fees accordingly.
Are There Any Limits to Service Fees?
It is illegal for merchants to take a cut of credit card processing service fees. In other words, these service fees must go directly to your credit card processor or the credit card companies, and none may find its way back to your register. Any business with an automated system should be free and clear in this regard, but it is important to understand that even accidental overcharging of service fees can have serious legal ramifications.
True Merchant Helps Small Businesses Offer Cash Discounts
At True Merchant, we are proud to offer a broad spectrum of merchant account services that are tailor-made to meet the needs of our clients. Unlike the industry behemoths, we take the time to work with our clients to provide services like credit card processing, payment processing security, and even cash discounts. If you are looking to implement a cash discount program at your small business, we can help make that a reality!
If you are looking to start or change a merchant service program, please feel free to contact us by calling 1-888-770-2018 or through our online email form. A qualified merchant service professional will be waiting to walk you through the process!