Best Cash Discount Programs

Do you want to use a cash discount program and are looking for the best credit card processors? Find out about cash discount programs in this guide.

Frank has been writing about payment processing and business services since 2015. He is a retired Air Force officer and a former practicing attorney. He has a Bachelor of Science degree in Psychology from The Pennsylvania State University and a Juris Doctorate degree from the Ventura College of Law, and currently resides in Paso Robles, California.

• WRITTEN & RESEARCHED BY

  Frank Kehl Frank has been writing about payment processing and business services since 2015. He is a retired Air Force officer and a former practicing attorney. He has a Bachelor of Science degree in Psychology from The Pennsylvania State University and a Juris Doctorate degree from the Ventura College of Law, and currently resides in Paso Robles, California.

  Expert Contributor



Feb 9, 2023

UPDATED

Every small business owner has to struggle to balance the high cost of accepting credit cards. The interchange fees charged by the major credit card brands and issuing banks have steadily risen over the years, making it more expensive than ever to allow your customers to pay for their purchases with credit cards.

To lower the cost of accepting credit cards, many small business owners have sought ways to pass some (or all) of these costs back to consumers who choose to use credit cards. Offering a cash discount to customers who pay with cash or debit cards is one of the easiest and most popular ways to keep more money in your pocket and help your business thrive.

This article will explain how cash discount programs work and how they differ from credit card surcharges.

We’ll also review several of the best credit card processors that offer cash discount programs and explain how to properly set one up for your business.

Learn More About Our Top Picks

Read more below to learn why we chose these options.

What Is A Cash Discount Program?

A cash discount program offsets the cost of credit card processing fees by encouraging customers to pay in cash. The system applies a small discount (up to 4%) to transactions paid in cash. Customers using credit cards pay the full price, thus covering the payment processing costs.

Cash discount programs are most typically used in traditional brick-and-mortar businesses but can also be applied to eCommerce sales. Virtually any type of business can implement a cash discount program.

Is A Cash Discount Program Legal?

Cash discount programs are fully legal within all jurisdictions in the United States as long as all compliance requirements are met. The Durbin Amendment to the 2010 Dodd-Frank Law authorizes cash discount programs to incentivize consumers to use alternative payment methods rather than credit cards.

Cash discounting alleviates some of the burden merchants face in paying the cost of transaction processing fees. It’s important to understand that a cash discount is not the same thing as a credit card surcharge, where the cost of processing is added to the regular price at checkout if the customer uses a credit card.

While anti-surcharging laws have been repealed or overturned in most states in recent years, surcharging remains illegal in Canada and a few US jurisdictions.

Setting up a valid cash discounting program requires that you comply with federal and state law and policies laid out by the credit card associations themselves. While this isn’t terribly complicated, it can be confusing — especially if your business operates across state lines. We highly recommend that you consult with an attorney or local business consultant who can advise you of the specific requirements and limitations that will apply to your business before you start using cash discounting.

What about Canadian businesses? Well, cash discounting is allowed in Canada by the Code of Conduct for the Credit and Debit Card Industry in Canada.

Again, you will have to comply with Canadian law and the rules set forth by the credit card associations if you use cash discounting. The Code of Conduct also allows convenience fees but prohibits surcharging. As in the United States, both cash discounts and convenience fees must be clearly disclosed in advance to the customer.

Best Cash Discount Programs For Small Businesses

Providers offering the best cash discounting programs are also among the best providers in general for small businesses. Although your transaction processing fees will be passed onto your customers, it’s still important to select a provider that offers high-quality hardware and software products, flexible contract terms, and excellent customer service.

National Processing: Best for cost-conscious merchants

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PaymentCloud: Best for high-risk businesses

Get Started With PaymentCloud

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Host Merchant Services: Best for medium-sized retail & eCommerce businesses

Get Started With Host Merchant Services

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VizyPay: Best for merchants using Clover processing hardware

Get Started With VizyPay

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KIS Payments/NoPay.ca: Best for Canadian merchants

Get Started With KIS Payments

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Payment Processing Rating Methodology

Merchant Maverick has been researching the payment processing industry since 2009. Our writers have reviewed hundreds of credit card processors, merchant account services, and mobile payment apps, evaluating each provider carefully on several different metrics.

When comparing different payment processing companies and applications to one another, we consider numerous data points. Our experts start by comparing credit card processing rates, the presence of additional fees, contract length, sales practices, and the presence or absence of additional features and services, like point of sale software. Each provider is judged on its own merits and how well it stacks up to industry standards; then it is weighed against the other providers on the list.

We spend an average of 10-15 hours researching and updating each one of our lists, making sure every company or application included meets our internal standards for quality and reputation. Any list of recommended payment processors on our site might contain a mix of standard merchant accounts, third-party payment processors, mobile payment devices, and high-risk payment processors, depending on what our expert feels is the best fit for certain scenarios or business types.

For additional details about Merchant Maverick’s review and rating processes, please refer to any or all of the following methodology pages:

• Credit card processor rating criteria
• High-risk merchant account rating criteria
• Credit card reader & mobile payment device rating criteria

3 Things To Know Before Implementing A Cash Discount

Switching to a cash discounting program is a significant change from traditional credit card processing, where the merchant absorbs the full cost of processing transactions and maintaining a merchant account. Before you decide to give cash discounting a try, you’ll want to ask yourself the following three important questions to determine whether this is a good idea and how to go about setting up a program. Here’s some information to help you make a more informed decision:

Trying To Lower Your Merchant Fees? Alternatives To Cash Discount Processing

Although cash discounting can be an effective way to lower your credit processing costs (down to zero, in some cases), it’s not the only way to achieve this goal. Here are some alternatives to cash discount processing to consider before deciding to implement a cash discounting program:

Does Your Business Need A Cash Discount Program?

The interchange fees charged for credit card processing are high and getting higher all the time.

Although the COVID-19 pandemic delayed rate increases by Visa and Mastercard until 2022, those rates have now gone up — and may continue to do so. eCommerce businesses have seen particularly steep adjustments due to the dramatic rise in online fraud in recent years.

There is currently a strong push within the payments industry to sell cash discounting programs to merchants as a way to save money. Unlike the problem of higher interchange fees, you can’t blame the credit card associations for this phenomenon.

Visa, Mastercard, American Express, and Discover all dislike cash discounting because it disincentivizes customers from using their credit cards. Likewise, the issuing banks hate it because it directly deprives them of lucrative interchange fees when customers put their credit cards back in their wallets and use a different payment method to get a discount.

So who really benefits from cash discounting (besides you, of course)?

Of all these business entities, your merchant services provider has the most to gain when merchants use cash discounting. Besides the sometimes-hefty fees they can charge for the program, providers will typically enjoy a much higher markup on credit card transactions than they would with traditional processing. After the interchange fees have been paid, providers can often keep a profit of 1.5% or even higher. Compare this to the 0.30% (or lower) markup that they might typically receive for a traditional interchange-plus processing rate.

Cash discounting hurts your credit card-using customers — not because they have to pay their fair share of the processing costs, but because they have to pay significantly more.

Let’s put it this way: Would you sign up with a merchant services provider that would charge you a flat 4.0% for every credit card transaction? Probably not, right?

With all that said, cash discounting programs can benefit merchants in some industries where the practice is common and won’t put you at a competitive disadvantage. Just be careful about which provider you sign up with, and look for one that doesn’t charge a monthly fee for their program.

For more information on the pros and cons of cash discounting and surcharging, check out our article, The Truth About No-Fee & Zero-Cost Credit Card Processing. Good luck!

FAQs: Cash Discounting Programs

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