Right after our mobile app services, our cash discount program is one of our favorite topics. But what, exactly, is a cash discount? The short answer is that it’s a better way to accept credit card payments—but let’s take a deeper look at what, exactly, sets a cash discount program apart.
If your business or organization is like most, you fall into one of two camps: Camp Arm-and-a-Leg, or Camp Already Burnt.
Joe is in Camp Arm-and-a-Leg. His pizza parlor accepts credit card payments, and it’s costing, well, an arm and a leg. He’s paying monthly and transaction fees, equipment leasing, and early termination fees. The customers like the arrangement, but Joe wonders when he’ll have to raise their prices just to make a decent profit again. Credit cards are costing him over $1,500/month—that’s $18,000/year.
Camp Already Burnt is the home of Jill. Her non-profit used to accept credit card payments, but she got a surprise fee of $30/month for a terminal worth $200 brand new. (Sound familiar to anyone?) When she tried to cancel services, she was charged a $1,300 termination fee that she’s still paying off. No credit card payments here, thank you very much!
The good news is that there’s a new camp in town: Camp Cash Discount.
At Swoop, we’ve partnered with SignaPay® to offer the Paylo Cash Discount Program. It’s based on a simple concept: let your customers know what your fees are, while cutting up to 90% of your costs.
The Paylo Cash Discount program works as follows:
A small service fee is added to all transactions. When a client pays using Visa, MasterCard or Discover, they pay the service fee as well. The business owner incurs no transaction fee. When a client pays via check or cash, the fee is removed—hence, the “cash discount.” The business is charged a flat monthly rate of between $50 and $100.
Per year, that’s a total cost of about $1,200.
How does that compare to your current rate?
The only time the business sees another fee is if a customer pays with American Express. For every $1,000 in Amex revenue, the fee is about $1.50. If you want, you can also lease equipment from us, but we don’t recommend it, since we can usually provide a new terminal, or an online payment option, at no cost. More expensive options, like a Clover, are also available, but we suggest buying them outright—if you lease, you’ll pay for them three times over, and they’re usually $500 or less.
Let’s pretend Joe tries our cash discount program for his pizza parlor. He pays a flat monthly fee of $89.99, and a one-time payment of $200 for a new terminal. Most of his customers keep using their cards, and one person pays with American Express. Joe’s first monthly statement looks like this:
Joe’s estimated costs are now just under $1,300/year. Compare that to the $18,000/year he was spending before, and you’ll understand why Joe’s doing the happy dance behind the counter.*
Who’s Using Cash Discount?
The Paylo program is perfect for businesses with an average transaction between $5 and $50, like clothing boutiques or corner marts. It’s also great for businesses with a loyal customer base, such as salons, local restaurants, or that hobby store that’s been in the family for generations. Non-profits, such as schools, can also benefit by using a cash discount program, since it keeps costs low while still allowing easy payment and donation options.
So, let’s just look at the Paylo Cash Discount program in summary:
Your customers pay a minimal service fee, but only if they choose to use a credit card.
The monthly fee is a set rate for your business—no surprises.
You receive a basic terminal or online payment option for free.
Your only other cost is a negligible fee on American Express cards.
Total yearly costs: usually around $1,200.
Total savings: you tell us, but they’re usually fantastic!
The cash discount program can sound confusing at first, but when implemented, it’s surprisingly simple. It’s available for in-store, online and in-app transactions. If you think the Paylo Cash Discount program could work for your organization, please, reach out—we look forward to helping you. In future articles, we’ll cover topics like customer reactions, how to implement cash discounts, and why it’s legal in all 50 states.
*Joe’s Pizza Parlor is a fictional example. Any resemblance to one or many real pizza parlors is purely coincidental—but if there is a real Joe’s Pizza Parlor, we’re sure they make a great pizza, and that they should be using a cash discount program.