Name some of the most common challenges merchants deal with when accepting credit card payments – interchange fees, processing fees, high chargeback ratios, etc. What do you notice about these challenges? They all impact how much you pay for credit card processing, and more importantly, they all pose a direct threat to your business’ cash flow, profitability, and sustainability.
In this article, we show you 4 surefire ways to optimize your cash flow and help boost profits through our cash discount program. If you are a new business owner or a seasoned veteran who’s frustrated with uncontrollable fees, a cash discount program may prove beneficial for your business in the long run.
Using the most common method of processing credit cards, called interchange plus, the merchant (YOU) shoulders the fees for processing credit card payments. Interchange fees average roughly 4%, and on top of that, business owners have to pay chargeback fees as high as 15% to 40% of the transaction value disputed when a customer submits a claim.
To add insult to injury, a business’ reputation is at risk when it incurs high chargebacks. It’s a lot harder to get approved at a bank when they see a history of extensive chargebacks. And even if you get approved, this will still limit any business owner’s negotiating power for better rates and terms.
These are all the reasons why a legitimate and effective cash discount program should be an attractive and sustainable option for retail merchants these days.
What is a cash discount program?
A cash discount program, as the name implies, is a customer payment option that provides a 4% discount to customers who pay in physical cash. This option encourages payments in cash, which in turn reduces the risk of chargebacks, and additionally, helps merchants avoid almost ALL processing fees associated with credit card payments. While you might have heard of a program like this, and you might have also heard that it was prohibited by credit card companies, the program you probably heard about is actually called “surcharging”. Surcharging, in its most common form, is indeed prohibited by credit card companies. However, a properly designed cash discount program is in line with credit card company regulations, and it is a great way for merchants to reduce, or even ELIMINATE, their credit card processing fees.
Read on to find out more about how our cash discount program helps you increase your business’ cash flow, maximize your revenue, and minimize your expenses.
How a cash discount program helps you improve cash flow
Significant savings on processing fees
Besides just interchange fees, merchants also regularly see a whole host of other processing fees included in their monthly bills from credit card companies. This is because of the variations of interchange prices. With a cash discount program, you can now minimize these interchange fees, and subsequently reduce some other fees imposed by card companies. Now, your business is free to allocate its revenue to other crucial aspects of the business such as product development and marketing strategies.
Decreased chargeback cases
As mentioned earlier, having high chargeback ratios risks the liquidity and reputation of a business. With a cash discount program in place, customers are encouraged to pay via
Cash, and in turn, your business can minimize chargeback cases, lowering your expenses and keeping a high rating with credit card companies by maintaining a good business reputation.
Immediate access to sales proceeds for growth and sustainability
If your business is preparing for an aggressive growth strategy, you need immediate access to your funds. You need to be able to supplement your marketing strategies and green-light new business capabilities such as hiring new talent or upgrading your business technology. The problem with running a business that incurs mostly credit card transactions is that it robs you of immediate access to your sales proceeds. It takes at least a day, and sometimes up to four days, before customer card payments are transferred to your business account, depending on the risk level of your business according to your credit card processor. With a cash discount program, customers are encouraged to pay in cash and be rewarded with a discount. Once that cash is in your hand, you can immediately use your sales proceeds to go hire or expand your business when and how you see fit.
In addition to saving on costs and maximizing profits, implementing a cash discount program in your business is relatively easy. However, there are some regulations that your business needs to abide by. You must clearly explain to customers that each item in the store is priced with built-in card service fees, and that they can enjoy a 4% discount if they pay in cash. Finally, all your receipts need to reflect that 4% service charge on your products and show that cash payments eliminate these charges. Staying compliant is a piece of cake when you’ve got a trusted partner like me who knows all the regulations.
NuWay Business Solutions, at your service. This is where I step in. My 10+ years of experience will be invaluable when I help you jumpstart and implement an easy and effective cash discount program. You will witness a significant decrease of costs in your monthly bills, if not a complete elimination. Rest easy knowing you also minimized your chargeback risk, and enjoy the convenience of accessing your profits anytime with our cash discount program. To find out more about how a cash discount program can positively impact your business, contact me today!