That I am a huge proponent of the concept of passing charges to consumers is not secret.  I’ve published much content on this subject.  However, I want to address this topic again.   Since the corona virus situation, I’ve been hearing three conflicting viewpoints.

1.    Cash discounting is amazing because merchants are ready to get rid of expenses, and consumers will understand that.

2.    Business owners are not willing to screw their customers right now.  They want to ensure their customers come back.

3.    Some maintain the position which says, “I don’t think cash discounting is a good idea, so I don’t sell it.”

My advice to group #1 is to take caution.  Don’t dive in like a bull in a china shop, asserting that corona virus has made cash discounting a good idea.  That would be a big red flag; don’t do it!

Rather, take an approach from the reality of what merchants really need.  The cost of processing is one merchants can’t afford to pay.  And consumers are perhaps more prepared to work with the new programs now.

The bulk of this episode is addressed to groups #2 and #3.   I’d like to challenge those who are not on board yet with cash discounting and surcharging.

One reason cited for hesitation is that these programs are bad for merchants.  I have consulting clients who do hundreds of cash discounting and surcharging deals per month.   I’ve seen the data and can tell you for a fact these are not bad for 95% of merchants!

Yes, there are some situations where they’re a bad fit.  And there are geographies where the programs haven’t infiltrated enough.  In those locations, there’s a disadvantage for a pizza shop on one side of the street to use cash discounting and the one on another side of the street not to use it.

However, I find there are more common problems.  Agents and ISOs aren’t properly educating merchants and consumers, which creates a big mess.  There are also some crazy non-compliant programs which pay money to merchants or other similar nonsense.

The vast majority of sales being made now are cash discounting.  Sorry to all my surcharge friends.  I am all for surcharging, especially for bigger accounts .  But the fact remains that whereas surcharging is more compliant, cash discounting saves the merchant more money.

If compliance is the pitch, surcharging is still extremely profitable.  I am just stating the fact that there are more cash discounting than surcharging sales being made.  The main point is that both are being sold; we are seeing it in the marketplace.  It IS happening.  Merchants are not canceling, nor are they losing business.

Recently one of my ISO consulting clients mentioned finding a video of mine from three years ago.  At that time, I was giving reasons for my opposition to cash discounting.  I thought it was a terrible idea!

However, I have since admitted I was wrong.  At what point will you make the same statement?  The jury is out; it IS a good idea.   The market likes it; business owners like it; ISOs like it; agents like it; and consumers don’t care about it!

Maybe you think the 3.99% is a rip-off for merchants.  You want to stay on the moral high ground.  You don’t want to make so much money at the expense of others; I get that.  But what’s the problem?  Just do it differently so that you don’t feel it’s a rip-off.  Sell cash discounting at 3% instead!

In my opinion, that 3.99% is not a rip-off.   Consider the massive amount of value we provide for that:

·       Customer service

·       Tech support

·       Underwriting

·       Equipment

·       On and on the list goes.

The banks make 1.7% off interchange when they only move the money electronically.  We know how expensive that can be!  Yet some think we’re ripping off everyone if we make more than 50 basis points.

But if you disagree with me, just sell it cheaper!  I don’t understand the problem!  It’s what the merchants want, right?  I say, “Go for it.”

Another excuse I hear is that Visa is going to eliminate the programs anyway.  I’m not an attorney.  This isn’t legal advice, just my personal opinion.  Visa hasn’t taken action in the last 24 months.   Do you really think following this corona virus situation that VISA execs want to anger all small business owners doing cash discounting by enforcing fees on them?

Is Visa also thinking of any other way to get class action lawsuits against themselves?  No, this is probably not the time they’ll be taking action.  But if they do, just switch to a compliant surcharge program.

I firmly believe cash discounting and surcharging are poised for take-off, if they weren’t already!  There are market forces at play with these programs which are unstoppable.  Merchants want to save money.  ISOs and agents want to make more money.  And consumers are truly getting used to the programs.

Think how much consumers are saving.  There are markets which are thoroughly penetrated with this.  In some places you can’t go to a restaurant or retail business without paying a fee when using a card.  It DOES work.

Twenty years ago, many people said the ATM would never last.  They thought no one would pay $2 to get $20 from an ATM.  But ATM machines are still thriving!

Consumers adapt.  If they want the convenience, they’ll pay the fee.  Of course, the cash discounting fees won’t stay at 4%!  There will always be a race to the bottom in our industry.  The fees will come down over time.

Make money when you can make money by providing a unique service.  As the service becomes less unique, lower your margins.  That principle is simply “Economics 101.”

Are you ready to take off with these programs or will you get left behind?

Obviously, I realize there are certain verticals where these aren’t a good fit.  I’m not talking to those of you going for large accounts, B2B accounts.  But those going after “mom and pop” businesses are missing out by not discussing cash discounting.

I hope all of you will jump on board.   Make some money; make some sales; help some merchants.

Thanks everybody.  Hope you have an awesome day.