Surcharges, Cash Discounts - Thoughts?


Did you know th3D man cutting prices with an axe - isolated over white-2at cash discounting and surcharging programs for credit card fees is legal in most states. We have seen an uptick in the use of these methods to offset credit card fees in some locations locally, but isn't common in most businesses - yet.  So, we decided it was time to learn more:


First, what is cash discounting and surcharging?

We first went to  VISA's website:

Cash Discounts - A merchant is permitted to offer discounts for paying in cash, however, the discount must be given as a reduction from the standard price.

Surcharging - Surcharging is currently permitted in Australia, Mexico, and New Zealand, and on certain credit card transactions in the U.S.

Surcharging isn't allowed everywhere in the U.S. Currently, there are laws limiting surcharging in Colorado, Connecticut, Kansas, Maine, Massachusetts, New York, Oklahoma, and Texas. California's and New York's laws limiting surcharging have been enjoined from enforcement pursuant to court orders, but appeals are pending. An order upholding Florida's law limiting surcharging was reversed on appeal, but remains subject to further litigation. Consumers who are subjected to a surcharge in states where they may be prohibited from surcharging may want to report the retailer to their state attorney general's office.

(Alaska is not on the list where it is limited.)

Other things we learned in our searches:

  • Surcharges can be applied only to credit card transactions, but discounts for cash can be offered on would-be credit and debit card sales
  • Point of Sale systems are adding these "features" to their system.
  • It is common for gas stations to offer a cash discount, for example.
  • A surcharge notice must be placed by the merchant’s front door, at checkout counters, and on receipts.
  • Programs that add a fee to normal prices, then give an immediate discount for cash or debit card payment, do not comply with Visa’s rules.

It is also important to note that you are forbidden by Visa, Mastercard, and your processor’s rules to profit on a credit card transaction, which could happen if you accidentally charged more than you were charged by your processor.

So, we are interested to know - how do you think your customers would react to a surcharge? (We have seen 3 - 4% for a typical surcharge rate.)  Or a cash discount?

Let us know your thoughts?  Would your customers care?  In restaurants, how would this affect tipping? (Someone pointed out that if a customer sees 3-4% surcharge fee, they might feel inclined to reduce their tip by that amount??)

We Would Love to Get Your Feedback Here:

Cash Discount/Surcharge Y/N?


About The Author

Lynn grew up in the point of sale and cash register industry working in the family business – and is now at the helm of Skurla's POS Solutions. She enjoys working with local Alaskan businesses, especially restaurants, grocery stores, and retail operations - helping them control costs and increase revenues through well managed point of sale solutions. Besides running the company, Lynn has also served on the Board of Directors, and as Chairman of the Board, for the Retail Solutions Provider Association. In her spare time, she loves cooking, camping and volunteering with organizations that are passionate about helping children.