Is the cash discount program legal?

In the past, Payment Card Networks—Visa, MasterCard, Discover and Amex, prohibited
business owners from offering a discount to a customer who used a different kind of
payment, say cash, rather than a credit or debit card. Federal Legislation changed all of that,
with the passing of the Durbin Amendment Financial Regulation Reform and Consumer Act,
within the Dodd-Frank Wall Street Reform and Consumer Protection Act. It specifically
addressed Discounts to Customers by stating that “A Payment Card Network cannot stop
you from offering your customers a discount or another incentive for using a certain method
of payment, as long as you offer it to all your customers and disclose the offer clearly and
conspicuously” (Federal Trade Commission Facts for Business. New Rules on Electronic
Payments Lower Costs for Retailers).

Is the Cash Discount Program Legal ? Part 2

In May of 2011, Mitchell Katz, spokesman for the FTC reiterated that “The Dodd-Frank law
prohibits a payment card network like Visa “from inhibiting the ability of any individual to give
a discount for payment by cash, checks, debit cards, or credit cards,” said Katz. “Neither
surcharging, nor a cash discount is unlawful”. The courts backed him up on this. On June 29,
2011, the Federal Reserve ruled on the Durbin Amendment. The effective date for the
Durbin requirements was October 1, 2011. Cash Discount Programs are now Legal in all 50
states.

What is a cash discount program?

A Cash Discount Program allows you as a business owner to offset some or all of your credit
card processing fees without increasing your overall prices. Cash Discount Programs do not
discriminate one card over another. A Cash Discount is a way of rewarding customers who
pay by cash or check, instead of with a credit or debit card. It implements a non-cash
adjustment fee to all customers, while giving a discount to those who pay with cash.
Therefore, your posted rates now become the rate for those who pay with cash. Interest in
cash discount programs is on the rise because business owners can now easily and legally,
offset their high monthly credit card processing fees.

Is Cash Discount a new program?

No, in fact it’s been around for decades in Europe and is being used in the US in gas
stations where a cash discount is offered at the pump. Gas stations have been using this
program in the US for more than 15 years. Also, numerous national, state and local
governments, including the DMV, Secretary of State, Post Offices, Schools, Courts, and the
IRS implement a non-discount Fee.

What is AmeriChoice Cash Discount?

AmeriChoice is a Legally Patented State and Federal Cash Discount Program created
exclusively for business owners as an alternative to their current traditional credit card
processing model. With our proprietary software technology programmed into your terminals
and point of sale system, applying the service fee is automated, simple and keeps you within
legal and payment card network guidelines.
How is a Cash Discount different from a Surcharge?
A surcharge is when a merchant increases the cost for card purchases. A cash discount is
when a merchant provides a lower cost for cash prices, with the posted prices being cash.
With the cash discount program you are not implementing an additional fee for accepting a
credit card, you are providing a discount for those who pay with cash. This is a clear
distinction and one that Visa, MasterCard and the courts have agreed upon. Although
seemingly similar there is one major difference, surcharging can only be applied to credit
cards and no other forms of payment like debit or gift cards. The cash discount program
allows for a non cash adjustment fee on any payment that is not cash.

Why can’t I just implement the program myself?

If a fee is incorrectly applied to a transaction, you run the risk that the additional fee charged
to customers would be labeled as a Surcharge, which is prohibited in 10 states (California,
Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, and
Texas). If the fee is not a Cash Discount and is deemed as a Surcharge, even if allowed in
your state, it has strict requirements on the amount of the Surcharge. As a merchant, you
must register with Visa/MasterCard in order to legally apply the surcharge. A Cash Discount
Program has no necessary registration.
Caution: It is important to note that you are forbidden by Visa, MasterCard, Amex and
Discover, as well as state and federal law, and your processor’s rules of conduct, to profit on
a credit card transaction. This is something that would happen if you accidentally charged
more than what you were charged by your processor.

Why go with AmeriChoice Cash Discount?

While other providers may offer their version of a Cash Discount program, not all of them
offer or utilize compliant technology. A true cash discount technology automatically
determines the non cash fee or discounts depending on the payment type. Legal cash
discount programs must also present a clear receipt detailing the non cash fee or cash
discount amount. Service fees are collected the technology provider who then pays off the
credit card charges on behalf of the merchant, essentially removing the need for any back-
end accounting or complex statements. The merchant will usually see their credit card fees
dramatically eliminated with only a small technology fee to pay at the end of the month.