Cash Discounting, Surcharging and Clover – The Battle Continues

Several weeks ago, I discussed the Visa bulletin which declared cash discounting non-compliant with Visa rules.  If you missed it, please click here to read and listen to that information.  Since that time, I have been talking to and listening to various people in the industry while trying to evaluate the situation.  Now I am ready to make two predictions for the future of this issue.

#1.  Cash discounting in its current state will last at least six months.  That’s my opinion; things could work out differently.  I’ve been pleasantly surprised, if not shocked, that none of the big acquirers have folded on this.  Although the Visa bulletin was discussed as a hot topic, the consensus seems to be, “Okay, Visa, let’s see how serious you are.   Let’s wait for you to do something else.  Are you going to sue somebody?”  I think the ball is still in Visa’s court.  This reaction is very good in my opinion.  I am all about the freedom of the merchant to do whatever the merchant wants to do!

I mentioned in the past that Clover removed from the market place some apps which were non-compliant with cash discounting.  That two of those apps are back is noteworthy.  At the time of this writing, you can do cash discounting through the Clover system.  (Things are changing rapidly!)  Even during the time these apps were removed, a phone call to Clover tech support directly would give help to implement a discount/service fee.  This is another indication that the Visa bulletin is viewed by everyone in the industry as a lot of bluster without much action behind it.

#2.  Twenty-four to thirty-six months from today, there will only be surcharging – no cash discounting.  Knowing the difference between those two is very important.

·        Cash discounting  is raising the regular price of merchandise by 3.99% (or whatever amount) but then waiving that fee for consumers paying with cash.  Thus, consumers pay more for purchases when using any kind of card.       

·        Surcharging simply adds a fee for card payments.  However, there are regulations which prohibit surcharging on debit or check cards.  Plans are moving forward at this time to legalize surcharging in all fifty states.

As we all know, these things move very slowly.  I’ve been talking about this for a long time.  About a year ago you can find my warning that Visa would declare war on cash discounting and perhaps file a law suit after a while.  That seems to be the way it’s playing out.  The acquirers, processors, and ISOs are all standing their ground, which is awesome.  Now we have a waiting game to see what happens next.

There are some action steps you could take away from this.  If you’re selling cash discounting, my personal advice is to keep selling it.  That’s not advice from an attorney or legal expert – just my personal opinion.  Why would you do a surcharge when you could do a cash discount and save merchants so much more money?  And making that sale is easier.  Maybe down the line in a few months or a year you do have to switch them to surcharging because Visa took action.  If you do, you do.  Then instead of saving them 97%, you are going to save them 65%.  It’s still a big savings for the merchant.  It’s still a big win.

However, while selling cash discounting, stay aware of the situation.  Have a good plan B in place.  Be ready to fall back on surcharging.  Although big names like Home Depot or Lowes aren’t likely to implement cash discounting, they could certainly implement surcharging when it becomes legal in all fifty states.  Once the big names do it, the smaller merchants will follow suit.

I hope this clarifies my viewpoint from previous episodes and videos and, also, gives food for thought on the future.  Please share your own viewpoint in the feedback section.  I’d love to hear from you.  And, keep in mind that the Clover cash discount apps are back!