Cash discounts are an efficient way to reduce merchant credit card processing charges by offering additional discounts to encourage cash payments for any purchases by the customer.
These discounts are flexible and versatile which may be incorporated in many types of businesses, although some business may be more suitable than others. To put it simply, cash discounts simply leverages the credit card processing fee to the customer as a result of which they may be discouraged for card transactions.
However, there are 3 factors to consider before opting for Cash Discount Program for any business:
1. Average sale value: If your business generates lower ticket value customers are more likely to pay in cash. In that case, a 4% surcharge amount would be very less, so the customers would not mind. But higher ticket sales, would usually encourage customers to use credit and in that case the service charge may be a burden for your clients.
2. Age group of customers: If your customer base consists of millennial population, those between 18-30 then you may lose out on considerable business if you offer cash discount. On the other hand, for an age group above 50, cash discounts may be lucrative.
3. Access your competition: It is very important to get ahead of your competitors to make higher profits. Hence, innovating strategies to match up to and exceed their offers may fetch you a larger client base.
Why do certain banks not provide merchant services credit card processing?
There are certain banks which do not offer merchant account, due to the following reasons:
· High chargeback rates of many businesses.
· To avoid risk of fraud associated with online/card business transactions.
· Reputational issues in working with certain sectors.
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