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Q & A – How to Train Merchant Employees for Cash Discounting

Merchant Sales Podcast · Tips for implementing cash discounting for large ticket merchants The agent today is newer to the world of cash discounting. He has a car dealership client seeing more customer dissatisfaction than expected toward […]

The agent today is newer to the world of cash discounting.  He has a car dealership client seeing more customer dissatisfaction than expected toward cash discounting.  What advice can James give to make easier implementation of the program and offer better training to business staff?

JAMES:  Am I correct to assume the cash discounting program being used is adding the fee for signature debit transactions?  Also, I’m assuming this involves a service department at the dealership?

AGENT:  Yes, for signature debit.  And primarily the service department.  However, both sales and service are using it. 

JAMES:  There are two obvious differences between retail and the car dealership.

#1.  Average ticket size.  Higher ticket size will always be more sticker shock to consumers.

#2.  The dealership gives proposals/invoices ahead of time.  In any business giving proposals, having all information correct on the bid is crucial!  Customers are not happy if asked to pay more than quoted on the bid.  Adjust the system to show cash and credit price on the bid.  The consumer must be informed of the price difference at every step of the process.

AGENT:  There have been debates with customers about the signage.  Sales are down 43% only one month into the program.  Are we too forthcoming by keeping the signs in front of customers – rubbing their face in it?

JAMES:  Good signage and informing customers every step IS definitely the right decision.

By not informing consumers early and often, your acceptance would only be down 20% instead of 43%.  However, those 20% will be furious!  Although not super happy, the 43% will probably write a check rather than using a card.  But they won’t be ready to file action with the state attorney either.

Here are my two recommendations for this situation.


Train the staff and help adjust their systems so they can easily offer the “surprise waive.”  The only time customers will have any reaction at all is when the fee comes as a surprise.  The dealership has good customers who’ve been coming forever and never had to pay the fee before.  Then, BOOM! there it is!  It surprises them. 

Never engage in arguing with customers.  Rather, try this approach:  “I’m so sorry you were surprised by this.  We’d never want to do that to one of our valued customers.  We’re going to waive that fee for you this time.  That way there’s no surprises moving forward.”

That one strategy for larger ticket merchants is like gold.  In this case, the merchant would’ve saved 43%.  Most customers are only upset about the surprise of the fee.  Next time when the fee is expected; the customer will be fine.

AGENT:  If customers make an appointment online, they are surprised upon arrival to discover the extra charge.  Should the cash discounting fee be seen on the website? 

JAMES:  Showing it on the website is okay.  However, the surprise element is the issue either way.  There is always a percentage of customers who have negative surprise, but that number goes down over time. 

  • Train your team.
  • Change your systems.
  • Immediately waive the fees if there’s a problem.

This is an expectations game which you’re losing right now.  Soon, you’ll learn to win. 

There are two sides to the surprise / expectations: 

  1. Consumers expect not to pay this fee, so they’re unhappy.
  2. The dealership expects business as usual, just without processing fees. So, they’re disappointed.

Expectations need to be realigned!

  1. Customers are surprised and disgruntled by the fee. Therefore, the business says, “Okay, then there won’t be one this time!”
  2. The dealership should understand you will “dramatically reduce” processing costs, not completely eliminate them.

When the fee is waived, there should be a document – even business card size – to explain the “new policy.”  The document should explain to consumers that credit card processing fees have gone up steadily the last ten years, and the business can’t continue paying these fees. 

The staff member should give the document to consumers and say, “This explains the new policy.  But, of course, we’re going to waive it for you today since you’re a valued customer.  We would never want you to be surprised.”

No matter how well-intentioned the staff member is, a verbal explanation of cash discounting won’t make sense to consumers.  The system IS a bit confusing!  Train staff to use the document of explanation.

I suggest at least ninety days of using Plan A before considering a change.  In that time, all the customers who come in for quarterly car maintenance will have been informed of the new policy. 

I can’t over-emphasize the importance that staff DOESN’T have the conversation with consumers about cash discounting!  They’ll get it wrong every time.  Rather, employ the “surprise waive.” 

  • Consumer surprised – waive the fee.
  • Consumer upset – waive the fee.
  • Keep giving the information document each time, saying, “Here’s why we’re doing this.” 

To allow a waive for the same person two or three times in a row is acceptable.  That person will go from 43% to 12% at some point. 

Of course, there will come a time when the dealership feels confident all customers are well informed.  That will be the time to officially change the policy.  At that time, the merchant might impose the requirement for manager approval to waive the fee.

PLAN B                                                                                                                                          

Although Plan A is the best option, if it still isn’t working well after three to six months, you might consider a surcharge platform for the merchant.  This kind of business might want to offer the option of paying with debit without a fee. 

This option is bad for the agent because it wipes out a ton of profitability on the account.  It is also not great for the merchant because it won’t eliminate all the fees.  However, from the larger ticket merchant’s perspective, the cost of running debit transactions is very, very low – almost unnoticeable. 

A surcharge platform has no fee for signature debit card use; customers understand that better.

WARNING:  Be careful to ensure you’re making some margin on the debit side.  Sixty basis points would be nice.  You may think this plan would work great for you as far as margin since the business is only running 10% debit.  However, when you run a surcharge option, the business is running 40% debit. The net effect is still a much lower cost to the merchant.

In summary, give Plan A plenty of time.  Then, only if necessary, go to plan B.  With Plan B, customers can be informed that the merchant is only adding a fee on the expensive cards rather than debit.  That makes it a little more palatable.  But, realize you will give up some margin in doing so.


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