Many of you may already be aware of this big development in the cash discounting world. For months I’ve been warning reps not to do cash discounting on Clover. First Data does not believe in cash discounting. I cautioned that when First Data realized what is going on, they would cut it. That’s exactly what happened.
Cash discounting is a huge opportunity which we don’t want to squander. But I fear our industry is handling cash discounting the wrong way. By examining the rationale of Clover and First Data, hopefully some helpful insights can be found. We should consider how Visa will attack cash discounting.
The Clover action involved a simple logic which gives insight into the path of attack. They removed apps from the app store that are adding a service fee only to credit card transactions at the point of sale. They maintain those apps are surcharging the consumer in a way not in accordance with Visa and MasterCard rules. This viewpoint says putting a sign at the counter stating there’s a price increase which will be waived by cash payment is not a true price increase / cash discount but instead, it represents a surcharge. Surcharging is not allowed on check cards.
If you are an individual rep, there’s nothing really to do about this yet. I just want you to be aware that it’s happening. We all knew it was going to happen; we knew Visa was going to come after cash discounting. This process will take a while. I don’t anticipate a podcast next week or even next year saying cash discounting is over. I forecast about three years. But during that time there are going to be some compromises that need to be made. If you are an ISV partner or a CEO of a processing company, think about this. What if we just added the service fee to everything, like a delivery charge or some other fee that is regularly added, and then did the cash discount? That would make cash discounting more legitimate – then cash discounting would clearly be cash discounting.
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