Making Sense (and Cents) Out of Cash Discounting & Surcharging Programs

Clearent’s Vice President of Sales Operations, Phil Ricci, was recently part of a panel of industry experts during the Keynote Breakout Session at the SEAA Annual Conference. The panel tackled sales strategies for selling Cash Discounting and Surcharging. In case you missed it, here’s a quick overview.

Merchants are increasingly becoming open to the concepts of Cash Discounting and Surcharging. Faced with rising interchange rates, especially those for rewards cards, merchants continue to see their profits erode. This makes them more open to solutions that can protect their profitability. When merchants share their credit card processing fees with their customers, it’s not uncommon for them to lower their processing costs by as much as 75-95%.

However, Cash Discounting and Surcharging programs often come under intense scrutiny, from the card brands all the way up to state capitols and the U.S. Supreme Court. There is a tremendous amount of interest in these high margin/high retention products, and they continue to be highlighted in breakout sessions and panel discussions at both regional and national payments industry events.

Sales professionals are eager to learn how they can earn residuals that are 5 times higher than what they usually make on traditional Interchange Plus accounts. Making more money is great, but you have to make sure you’re working with a partner who thoroughly understands the laws, regulations and card brands’ guidance on these types of programs.

Changing Laws are Opening More Doors

Thanks to the Durbin Amendment, merchants in all 50 states can participate in Cash Discount programs. However, it’s important to note that surcharging has special rules and is prohibited in six states: Colorado, Connecticut, Kansas, Maine, Massachusetts and Oklahoma.

Reigning in the Wild, Wild West

“Cash Discount is probably one of the most misunderstood yet simple programs to understand,” said Ricci. “Merchants have been doing Cash Discount on their own for years.” The Durbin Amendment made Cash Discounting legal, but there wasn’t a lot of guidance from the card brands. The lack of regulation created what Ricci referred to as “the wild, wild West. Yeah you can do it. But how do you do it?”

This is easily seen in how some payment services providers market their programs, such as by promising “no fees” or saying that they offer “zero fee solutions”. This is when it’s good to remember the old adage that when things seem too good to be true, they usually are. Merchants often have to pay other fees that cover things like account maintenance, support and PCI DSS compliance.

Some may argue its semantics, but as these programs continue to grow, we will undoubtedly see more interest from the card brands, especially as it relates to how these programs are marketed.

Clearent’s Solution: The Empower Program

Ricci also highlighted Clearent’s Empower Program during the panel discussion, and how it differs from other programs in the market. The Empower Program is a Cash Discount program that also follows Surcharging guidelines. We empower merchants to make decisions about their pricing, including if they want to share their credit card processing fees with their customers. We also navigate the card brands’ discount offer rules so merchants can rest easy knowing they’re fully compliant.

Interested in learning more about the Empower Program? Contact us and we’ll show you how you can elevate your residuals while helping your merchants thrive.

About Author

John Shipley

John Shipley

John has 25+ years of operations, product management, and vendor relations experience in the payments industry, including leadership roles at Comdata, National Processing Company and Bank of America Merchant Services.

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