Who doesn’t love a good discount? Especially when it comes to cold, hard cash.
Chances are that you’re wondering if you can offer cash discounts to your customers to boost sales. After all, what’s not to love about getting paid in cash?
The answer is: it depends.
While there are some legal considerations to keep in mind, offering cash discounts could be a great way to entice customers to do business with you.
In this article, we’ll discuss everything you need to know about offering cash discounts, from the legalities to the best practices.
Let’s get started!
What Are Cash Discounts?
A cash discount is a deduction that a seller offers to a buyer for paying with cash instead of credit.
For example, let’s say you run a coffee shop and offer a 5% cash discount to customers who pay with cash. If a customer buys a $5 cup of coffee, they would only have to pay $4.75 if they used cash.
While credit card companies typically charge merchants a fee for processing payments (usually around 1.5%-3.5%), there are no such fees for cash payments. As a result, many businesses offer cash discounts to save on credit card processing fees.
The Pros and Cons of Offering Cash Discounts
Offering cash discounts has benefits and drawbacks. Let’s look at some of the key considerations:
The Pros
#1. Cash discounts are a great way to attract customers.
Today, people are used to getting discounts and coupons for everything from groceries to clothes. Because of this, offering a cash discount can be a great way to entice customers to do business with you.
#2. Cash discounts are easy to implement
Offering cash discounts is a relatively easy way to save on credit card processing fees. All you need to do is create a sign or announcement letting your customers know about the discount and how they can take advantage of it.
#3. Cash discounts help you save money
Credit card processing fees can consume a big chunk of your profits, especially if you’re a small business. Fortunately, offering cash discounts allows you to significantly reduce these fees.
The Cons
#1. Cash is riskier
There’s always a risk that someone will steal cash from your register or that you’ll lose track of the money. So if you’re offering cash discounts, you need to have a good system in place for tracking the money.
#2. Cash discounts can be costly for businesses
While cash discounts can help businesses save money on credit card processing fees, they can also be costly in other ways. For example, companies may end up losing sales because customers don’t want to hassle with counting out cash or dealing with change.
#3. Credit cards are more convenient
For many customers, credit cards are simply more convenient than cash. They don’t have to worry about carrying large amounts of cash or keeping track of change. So if you’re considering offering cash discounts, consider carefully weighing the pros and cons before making a decision.
Best Practices For Providing Cash Discounts
Are you interested in offering cash discounts? Keep these best practices in mind:
#1. Be clear and consistent
When offering a cash discount, it’s essential to be clear and consistent in your advertising. Make sure you clearly state the terms of the discount (e.g., “5% off for cash payments”), and that you offer the discount to all customers who pay with cash.
Try not to change the terms of the discount too often, as this can confuse customers and make them less likely to take advantage of the discount.
#2. Use signage
Use signage to advertise your cash discount. This will ensure customers know the discount and how to take advantage of it.
Place signage in a prominent location, such as near the register or at the entrance to your store.
#3. Train your employees
Train your employees on the terms of the cash discount, and make sure they’re aware of any restrictions. It will help ensure that your employees can properly explain the discount to customers and avoid misunderstandings.
#4. Keep track of your cash
If you’re offering a significant discount for cash payments, consider keeping track of the cash that comes in. This can help you prevent theft and ensure your revenue is correctly accounted for.
#5. Offer other discounts
In addition to offering a cash discount, consider offering other discounts, such as discounts for customers who pay with credit cards or for customers who make large purchases. This can help you attract more customers and encourage them to do business with you.
Cash Discounts, Made Simple
Offering cash discounts can be a great way to attract customers and save on credit card processing fees. If you’re going to offer cash discounts, though, keep in mind that it is essential to follow best practices so you don’t lose out on sales or risk non-compliance.
