Should I Keep Selling Cash Discounting? – The Individual Rep
A few days ago I wrote a post about the Visa Bulletin declaring war on Cash Discount Service Fees. While this post was primarily intended for owners of ISO and executives at the acquiring companies, it was read by several thousand individual sales reps who were left wondering, “Should I keep selling cash discounting?” […]
A few days ago I wrote a post about the Visa Bulletin declaring war on Cash Discount Service Fees. While this post was primarily intended for owners of ISO and executives at the acquiring companies, it was read by several thousand individual sales reps who were left wondering, “Should I keep selling cash discounting?” In this post, I want to talk specifically to merchant level sales people about how best to proceed.
Disclaimer: I am not an attorney, this is not legal advice.
First off, I would advise that you follow the instructions of your ISO / Acquirer in the coming days, since they are the ones who will ultimately bare the repercussions of any decisions they make. While the Visa bulletin is a serious event and one that will require your ISO or Acquirer to take action in the coming weeks and months, Visa is a private company and not a government agency. The bulletin represented Visa’s opinion of how Cash Discounting, in its current state, fits into the framework of the “Visa Rules” that merchants have agreed to follow. If the acquirers disagree with Visa, the decision will ultimately be made by a judge many months from now. It was no big surprise to anyone that Visa was against Cash Discounting and so most of the big shops already have contingencies in place.
So my first piece of advice for individual agents this morning is to go sell. Sell what you were selling last week, make new merchant relationships and continue to build your pipeline. You should get in touch with your ISO or Acquirer sometime this week, but don’t expect them to have a plan of action ready this morning, they will need some time to plan their response to the Visa bulletin and they will, in many cases, need to wait until they hear more from higher up the chain of command at their acquirer.
My second bit of advice is to think. As sales people, we don’t often get this particular instruction, but you are more than a sales person. If you are a straight commission 1099 rep, you are also a business owner and you must look out for your own interests. How do you think this will all turn out? Where do you see your local market headed? How are local merchants responding to Cash Discounting and how would they respond to Surcharging or to an “anti cash-discounting” pitch? Change always brings opportunities to those who think it through, decide what they believe and then take action in accordance with their beliefs. Business is war and for those of you that sell cash discounting, an enemy has just made an attack, how will you use this attack to your advantage?
Lastly, let me help you think through the potential risks and the most likely scenario of how this will play out. As I have said several times in videos and blog posts, I believe that 24 to 48 months from now, this will all be surcharging and surcharging will be legal in all 50 states. Now that Visa has made a move, you could see that shift coming sooner, if all of the acquirers decide to abide by the bulletin from Visa and shut down Cash Discounting service fees all together. Some ISOs may hold out and continue offering this program long term, but I think over time, that will become less and less likely unless one of the big acquirers stands their ground and takes Visa to court. If that happens, all bets are off and cash discounting will continue in its current state
The last time I checked, Colorado, Connecticut, Kansas, Maine, Massachusetts, New York and Oklahoma do not allow surcharging based on state rules. If you are in one of these states, you will need to think more carefully about your next step. I personally believe that you will be able to offer surcharging in the next 12 to 24 months, but you can’t offer it today. This means you are stuck with deciding to either keep selling cash discounting or switch back to traditional processing.
If you are in one of the other 43 states, this is honestly not as big a deal for you, because you will almost certainly be able to switch your merchants to a compliant surcharge program, in the event that the acquirer shuts down cash discounting. This is where you come to the merchant and explain that Visa just made a new rule that while you can still add the service fee to credit cards, you can’t add it to check cards and so they will save an enormous amount of money, but not as much as you had originally hoped. By providing them with the bulletin and letting them know they need some new signage, and you need to notify Visa, etc. you should be able to make this a smooth transition. So, if you sell someone on cash discounting today, you know in the back of your mind that in a few weeks or months, you may have to switch them to surcharging, so you might talk about that option as well and start preparing the ground work.
The primary purpose of this post was to calm the waters a bit. I received hundreds of emails and social media messages over the weekend from sales reps who feel lost and while this is a natural emotion after a big shift in the industry, the truth is that your greatest value comes from your willingness to jump on the phone or get out in the field and generate business. None of that has gone away or even changed today, so keep doing what you do best and stay in touch with your ISO / Acquirer as they make a plan to move forward.