Cash Discount Program FAQ
You Have Questions, We Have Answers
Congress enacted financial regulations in 2010 as part of the Dodd-Frank Act. The Durbin Amendment was one of the bill's later amendments. The Durbin Amendment established the cash discount program, which enabled companies to reward and encourage customers to pay in cash.
In 2011, Mitchell Katz (the Federal Trade Commission's spokesman) cited from the legislation, stating that "the Dodd-Frank law forbids any payment card network, such as Visa, from impeding an individual's right to provide a discount for payment with cash, checks, debit cards, or credit cards." He continued by stating that "neither surcharging nor offering a cash discount is illegal."
Cash Discount is a special initiative in a variety of ways. The Durbin Amendment of 2013 (added to the 2010 Dodd-Frank Act) ruled against the card brands, effectively clarifying that merchants could charge an extra fee. Any state except ten permits the additional charge (surcharge).
You cannot enroll in a surcharge scheme if you reside in California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, or Texas.
The primary reason those ten states prohibit surcharges is that they believe it is unjust to pass on transaction costs to the consumer. The majority would argue that the retailer carries the entire responsibility of a transaction and that banning service fees or surcharges is unreasonable. Additionally, the surcharge is meant to offset the benefits of credit card use, such as the rewards program. Essentially, each swipe means that money is deducted from the transaction to cover the running costs of the card brand, such as Visa, Mastercard, or American Express. Additionally, it covers the expenses of the processor with whom you have a deal. Additionally, it includes the expense of the loyalty services offered by the card brands. A surcharge is meant to pass on to the consumer the expense of using a credit card.
TPS is pleased to report that after several years of offering this system, we've discovered that the benefits far outweigh the drawbacks.
Customers are aware that paying with a credit card incurs fees, but it also has several advantages. Despite the potential to save money by paying with cash, more than 98 percent of customers opt for credit.
Implementing a cash discount program correctly does not result in consumer loss.
Unlike the majority of processing firms, TPS never locks you into a confusing deal.
Many of our contracts are month-to-month.
Although you might be required to pay a contract termination fee to your current business, the savings associated with a cash discount program far surpasses any cancellation fee.
The standard cash discount rate is 3.75%.
In rare cases or for larger accounts, we can suggest alternative payment methods.
If a lower cash discount percentage is determined to be appropriate, we will need current processing statements and management approval.
The majority of flat fee plans do not remove all fees associated with credit card processing.
We do not offer a flat fee program that way we can eliminate your processing fees.
No transaction fees will ever be charged for our cash discount program.
While this is an unusual occurrence, if you are unhappy with cash discount processing, we will happily turn you back to conventional processing at no charge.
Furthermore, we will reduce your rates in comparison to your existing provider.
This protection applies to all merchants.
You will never be charged for card handling. Chargebacks and tips were exceptions to this rule.
We do not include the 3.75 percent service charge in tip calculations.
Disputes are settled in the same way.
If you lose your dispute, you will continue to be charged chargeback fees.
You can begin in 7 to 10 business days after we receive the necessary paperwork.
There is no dollar cap on any purchase.
All cards except EBT cards are subject to the service fee.
EBT cards are not subject to the premium, but they are also not subject to any transaction fees.
Yeah, with management approval, the cash discount of 3.75 percent may be changed for high-volume retailers.
A cash discount is not the same thing as a surcharge.
In contrast to surcharging, cash discount processing is legal in all 50 states, so you should have no trouble implementing it in your business.
If you were to add 3.75% to each transaction it would be a surcharge. Surcharging is prohibited by the card brand's rules unless the account is correctly configured to accept them.
Our cash discount program is accepted by all major credit card issuers.
Additionally, we include all signage needed for an authorized cash discount program.
To legally introduce a cash discount program, you must remind consumers of the service charge at all entrances and points of sale.
We will provide you with all necessary signage to assist you in successfully establishing a cash discount program.
Funding is available the next day if the terminal is batched out by 11 p.m. EST.
Yes, the customer's credit card statement will continue to look the same as it does now, except your business's name will appear on it.
To make cash discounts as simple as possible to introduce, all of our terminals come pre-programmed and ready to accept payments.
Additionally, instructions on how to use the terminal are provided.
If you continue to experience difficulties or want to conduct a test transaction, please contact our helpful customer support team.
We can configure the terminal to batch all non-tip transactions at your specified time.
On special request, we may create businesses that need a tip line.
You have to use the terminal, but thousands of our customers continue to use their existing point-of-sale system in conjunction with our terminal solution.
At the moment, terminal reprogramming is not available. Our cash discount service is only available by the use of our terminal.
For terminal sales, we do not require leasing or high-end purchases. We assume that if we handle you well, you can remain with us for a long period.
We are so sure that you will love our service that we will provide a free terminal to any company, regardless of size!
No, companies have long offered discounts to customers who pay with cash. In the United States, it is very popular for service-based industries.
Through charging a consistent customer service fee for all goods and payment methods, merchants who participate in the Leap Payments Cash Discount program adhere to the standard regulations established by all major card service providers, state law, and federal law. As part of our standard list product pricing, a nominal service fee (similar to an automatic service gratuity in certain dining establishments) is charged on ALL purchases regardless of the method of payment, including checks, cash, credit-debit cards, and gift cards.
As specified in the Durbin Amendment (part of the 2010 Dodd-Frank law), companies are allowed to give a discount to consumers as an incentive and to allow customers to pay with methods other than credit/debit cards, such as checks or cash, in order to obtain an automatic discount at the time of sale.
There are no inconsistencies regardless of whether a PIN was entered or not. There is no difference under the Durbin Amendment between using a PIN or not, because whether the card is a bank debit card, the transaction is only considered a debit transaction – with or without a PIN number – and is never considered a credit sale.
As of January 27, 2013, several amendments to the card industry's federal class-action lawsuit settlement became effective. Visa and MasterCard are expected to amend some laws regulating merchants that accept their cards, including allowing merchants to "give discounts to customers who pay through payment methods other than Bank Debit cards."