Shocking trends that bode well for the future of cash discounting.

3 hurdles successfully crossed have been a shock!  What seemed controversial at first has generated hardly a ripple.  What IS the future for passing costs of processing to consumers?


I have been shocked by some trends concerning cash discounting and surcharging.  Surcharging and cash discounting are done in very different ways.  But I’m lumping them together.  Both are the concept of passing processing costs on to consumers.

When this concept was brand new to our industry

The first hurdle to be crossed was consumer reaction.  I (along with many others) expected a significant, negative consumer reaction to the change in prices.  This concept didn’t even seem legitimate!

However, so far there has not been a negative effect on buying decisions.  Hardly a ripple of complaint from consumers has been heard.  That was a bit of a surprise to me.

The REAL shock to me…

There has been minimal kick-back from card brands and consumer advocacy groups.  I expected to see and hear much more negative responses from them!  I thought especially consumer advocacy groups would petition and seek laws passed in Congress.

To my surprise, there have been no national debates.  And the media has been quiet on this subject.  I did some extensive research and found only a few articles here and there.

The one article I found from New York was siting consumer distress because of the changes.  However, that article wasn’t picked up by anyone.  And from what I could tell, the writer only mentioned three consumers.  That hardly constitutes a “trend” in New York!  New York has more cash discounting than probably any other state.

I discovered that consumer advocacy groups are viewing this concept from a totally different angle.  They are not just neutral but generally in favor of these programs.

One article from the ACLU strongly advocates passing costs to consumers.  (Refer to this link for the article.) perspective is protection for consumers who are not “fully banked.”  This is a term with which you should be familiar.
To be “fully banked” refers to consumers who have full access to the services provided by banks.  They have bank accounts, credit cards, and access to capital.  This allows convenience and offers rewards.
Contrary to what we might expect…

America is not 100% fully banked.  Certain minority and lower income groups, in particular, are not banked at all.  There is a huge segment of U.S. population not fully banked.  Although that is sad from a socio-economic perspective, it is an economic reality.

The consumer advocacy groups are not so concerned about whether passing costs to consumers is “okay.”  They want people who WISH they could have rewards cards, savings accounts, etc., not to pay the same price for products and services as consumers WITH bank benefits.  Their viewpoint says, “Why should someone who makes less pay more, so someone who makes more can pay less?”
These groups realize someone must pay for payment acceptance.  Either everyone will pay through business price increases.  Or only certain consumers who benefit from the use of cards will pay.  Thus, consumer advocacy groups are endorsing the concept of passing costs on to consumers.
The concept of cash discounting and surcharging has passed the first three hurdles:
·       Consumer reactions
·       Card brand and media reactions

·       Consumer advocacy reactions

These shocking trends certainly bode well for 2020 and beyond for the concept of passing costs on to consumers!


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