The government and courts
are getting involved in the credit card processing industry once again. Please
remember that the last time they did this the consumer ended up suffering and
the savings were never realized by the consumers. Now the courts are mandating
that merchants can offer cash discounts for purchasing. Sounds great doesn't
it? Well don't get too excited. It won't be to a merchant's benefit for many
reasons.
First....By offering a discount for paying for your products and services with
cash, you are actually PENALIZING your customers who choose to pay with their
credit cards. It's all about perception. It is your customers freedom to choose
if they want to buy from you AND how they choose to pay for it. If they know
they will be penalized, they will either lower the amount of their purchase or
take their business elsewhere.
Secondly....A merchant who gives a discount for cash purchases is automatically
reducing the size of their average ticket, reducing the opportunity for add on
sales, and is controling in a negative way what and how much their customers
will buy from you.
On the surface it sounds like a really good idea, but think it through: A local
Florida restaurant gives a sizable discount for paying with cash. A party of
six ate at this establishment last weekend. They had appetizers, dinner, and
drinks. They were offered a 15% discount if they paid with cash. Who among us
walks around with over $200 cash in their wallet? So in their opinion as a
customer, they were penalizing for spending too much and for paying with a
credit card. Their calculation is they each paid $2.50 more for their dinners
because of the penalty. How do I know this? One of them called me and asked me
to help the restaurant owner out because he HAS to be paying too much for his
processing. If this restaurant continues with this policy, either this consumer
will stop going or will cut way done on what they order at this restaurant. So
was this a smart decision on the part of the restaurant owner? Of course not!
If you feel you need to penalize a credit card customer, call ME first. You
must be paying too much!
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