FecFin FEC Financial Group LLC

Traditional vs Cash Discount Processing

Let’s look at each type of processing:

Traditional Processing

– Legal in all 50 states
– Business pays the fees
– Negative impact bottom line
– Counts as an expense
– Historically accepted by all
– Multiple rates and pricing options
– Requires posted signage

Cash Discount Processing

– Legal in all 50 states
– Customers pay the fees
– Positive impact on bottom line
– Savings count toward income
– May experience initial customer pushback
– One rate for all customers (up to 4% max by law)
– Requires posted signage

Why do some businesses adapt to cash discount while others stick with traditional? Everyone’s situations and reasons
vary but for the most part businesses who don’t switch are simply used to paying the fees and are concerned over
customer acceptance. Some simply don’t want to be “first” in their area. Some are comfortable with their rate or with
how much they are paying in fees.

Businesses switching to cash discount cite equal and opposite reasoning. They are tired of paying the fees for customers
card perks like
flyer miles, rewards and cashback. With costs going up everywhere, cash discount is an easy way to
increase bottom-line without forcing it on the customer since they have an out by paying cash. Others note the sheer
amount of money as too big to ignore (~$20-30k per 1M sales).

Either way, both traditional and cash discount are here to stay. FECFIN is currently seeing around a 70% adoption rate
for cash discount. Which way do you prefer and why? We would love to hear your thoughts!

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