Ultimate Holiday Planner for Restaurants
Download Now!
In simple terms, cash discounting is the method you use to offer lower rates on products to your customers who pay in cash. A cash discount program is a common pricing strategy that is legal in all 50 states in the USA.
Whether you run a restaurant, a retail store like a salon, an auto shop, a liquor store, or any other, you can implement cash discounting with your POS provider. In this blog, let’s understand more about cash discounting (also known as dual pricing) and how a business owner can benefit from this. Ready?
Cash discounting, also known as dual pricing, is a pricing strategy that offers customers a discount if they choose to pay with cash instead of a credit or debit card. This approach incentivizes cash payments by setting two different price points (approx 4% difference) for the same product or service: one for card payments, which includes the cost of processing fees, and one lower price for cash payments, where processing fees are eliminated. This method helps businesses cover credit card processing costs, which can be a significant expense, while also providing value to customers who prefer paying with cash.
Imagine a coffee shop implementing cash discounting. The price for a cup of coffee is listed as $3.00 for card payments. However, if the customer pays with cash, they’ll pay $2.85. This encourages customers to pay with cash, helping the coffee shop save on the card processing fees that would have applied if the customer paid with a credit card.
While cash discounting and surcharging might sound similar, they have a crucial difference.
Adaptation to Fee Increases: As credit card processing fees rise, more businesses are turning to cash discounting to protect their profit margins without alienating customers.
Customer Transparency: By showing both prices up front, businesses can be transparent about their costs and provide an opportunity for customers to save, which can enhance customer satisfaction.
Here’s the implementation guide for cash discounting with bullet points for restaurants, retail stores, and liquor stores:
- Choose a POS system that supports dual pricing, adjusting prices seamlessly at checkout.
- Ensure the system can automatically apply cash discounts to avoid slowing down service during high traffic.
- Configure the POS to handle cash discounting across various menu items and dining settings (dine-in, takeout, delivery).
- Opt for a POS that clearly shows both cash and card prices, helping customers understand the savings at checkout.
- Use a system that allows printing receipts with both cash and card prices for transparency.
- Ensure the POS can handle the wide range of prices found in retail without requiring manual adjustments.
- Set up a POS that includes dual pricing with a breakdown of cash and card prices for each item, especially in multi-item purchases.
- Confirm that the POS is compliant with any state regulations on cash discounting for liquor sales.
- Ensure clear visibility of discounted prices to meet regulatory standards.
- Place signage at entry points, host stands, and on menus to inform customers of the cash discount policy.
- Add small table signs as gentle reminders for diners.
- Ensure receipts display both cash and card prices to maintain transparency and avoid customer confusion.
- Position signs at store entrances, checkout counters, and near promotional displays to communicate the cash discount policy.
- For shelf labels, consider noting cash versus card prices, or indicate a cash discount on the card price.
- Use clear, concise language on signage to streamline the customer experience and reduce inquiries.
- Place prominent signs at the register, near coolers, and on display shelves to inform customers early about the dual pricing.
- Ensure signage meets state regulations for pricing transparency, especially in states with strict alcohol pricing rules.
- Keep signage simple yet visible to avoid misunderstandings at checkout.
- Train all staff, including servers, cashiers, and managers, to explain the cash discount policy and answer common questions.
- Provide scripts or sample explanations, such as, “We offer a small discount for cash payments to reduce processing fees.”
- Encourage staff to be proactive in explaining the policy when customers inquire about pricing differences.
- Equip staff to give brief, clear explanations of cash discounting at checkout.
- Prepare employees with quick responses or scripts for when customers ask about the dual pricing.
- Ensure employees are aware of signage locations to help customers understand the pricing structure.
- Ensure employees understand the cash discount policy and relevant state regulations.
- Train staff to offer concise explanations to customers who may be unfamiliar with cash discounting in a liquor store setting.
- Reinforce the importance of explaining the policy clearly to avoid confusion and ensure regulatory compliance.
Emphasize the need for clear signage and transparent communication at point-of-sale locations.
Mention any legal notices required for displaying dual prices.
Brief overview of any major states with specific rules or nuances (if applicable).
Sahana is a seasoned GTM leader with a passion for building startups. She excels in crafting GTM strategies for tech products, driving revenue growth.
