Visa’s rules allow a merchant to offer a discount or incentive to a cardholder to pay with an alternative method other than their Visa card known as a “discount offer” or commonly a “Cash discount”.
You might have read articles stating that Visa doesn't allow merchants to offer a discount to customers if they will pay with cash instead of their Visa card. The rules surrounding both cash discounting and applying a surcharge for credit card use have undergone many changes over the last few years.
Overview: Because cash discount or discount offer programs have become increasingly popular at merchants, Visa is reminding U.S. acquirers, merchants, processors and agents that discount offer programs should be evaluated to ensure compliance with the Visa Rules.
Cash discount is an option many merchants have turned to in order to save on the processing fees. It may seem simple but, in this attempt to save money, merchants and some merchant service professionals have misinterpreted the Visa rules related to cash discount programs.
Visa allows merchants to offer cash discounts to customers as long as the discount is offered to all customers regardless of the payment method used. This means that merchants cannot charge extra fees for credit or debit card transactions and then offer a discount for cash payments.
To make this all possible, merchants must use compliant terminals that add an automatic service charge fee to every transaction, and then apply a discount to customers that pay with cash with an equal amount of the service charge fee.
When asked about cash discounts, Visa told CardFellow: “ A discount for cash is different from a surcharge. The rule states the posted price must be for cards, however, merchants can provide a lower price for cash acceptance. Discounts for cash are allowed by Visa.
Don’t be afraid to reach out to Visa, regulators, and your payment partners for a clear understanding of rules and how to tailor “secret shopper proof” programs to specific industry segments, from retail and grocery to restaurant and other merchants.
Dual pricing—also known as Cash discounting—has become a powerful way for merchants to eliminate credit card fees and boost profits. But with great opportunity comes great responsibility.
There are no laws prohibiting merchants from offering their customers a discount if they pay with cash. There are programs in the marketplace that are advertised as a cash discount program, but when reviewed more closely, the program resembles a surcharge program.
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