CardX in the Green Sheet: “What Visa’s bulletin on cash discount means to you”
“Although some in the industry use the terms ‘surcharging’ and ‘cash discounting’ as if they were interchangeable, they are, in fact, two distinct pricing models. The most important difference between the two, which the Visa bulletin addresses emphatically, is that cash discount programs cannot add a fee at the register.
Per the bulletin: ‘Models that encourage merchants to add a fee on top of the normal price of the items being purchased, then give an immediate discount of that fee at the register if the customer pays with cash or debit card, are NOT compliant with the Visa Rules and may subject the acquirer to non-compliance action.’
All major programs marketed as ‘cash discount’ add a fee at the point of sale for an obvious reason: merchants don’t want to raise their prices across the board. No business wants to appear excessively expensive or uncompetitive by increasing its stated price on shelves, so every purported ‘cash discount’ program adds a fee at the POS to recover the costs associated with card acceptance.
When the fee is added at the point of sale it is, by definition, a surcharge.”