Delight customers and reduce credit card costs with Clover Cash Discount

U.S. merchants paid around $100 billion in Visa and Mastercard credit card fees in 2023–up from about $33 billion in 2012. Earlier this year, Mastercard increased fees for both credit and debit card transactions by more than $250 million. Currently, credit card processing fees for merchants equal approximately 1.15% to 3.15% of each credit card transaction, according to data from The Motley Fool Ascent.

Increased card fees are forcing merchants to look for alternative ways to subsidize costs and protect their bottom line. Cash discount is a compelling solution that’s proven to offset processing costs, drive repeat business, and keep customers satisfied. Today, Clover is excited to make it easy for merchants to offset their processing costs by offering cash discounts at checkout through the Clover Cash Discount tool. 

What is a cash discount?

A cash discount serves as an incentive to customers who pay with cash. What’s more, merchants who offer cash discounts can adjust their shelf price to offset credit card processing costs and protect their profit margin from the discount given.

Restaurants and other specialty industries have been using this process for years. During the past decade, the practice has become more common and used by business owners in many industries.

What’s the difference between a cash discount vs surcharge?

Cash discounts and surcharges both aim to help businesses manage credit card processing fees, but differ in terms of legal considerations, customer preferences, and business goals.

Cash discounts are applied at the checkout. A product’s listed price includes the cost of credit card processing, and the discount is applied when a customer makes a cash payment. Essentially, the customer pays less than the advertised price if they choose to pay with cash.

Cash discounts are legal in all states without specific regulatory requirements. Because cash discounts are presented as a reduction in price, customers may find them more appealing because they perceive it as a saving. 

Comparatively, a surcharge is a fee added to the total purchase amount when a customer pays with a credit card. Surcharging is prohibited or restricted in several states, including Connecticut, Massachusetts, and Puerto Rico. Surcharges have to be clearly disclosed to customers, and it should not exceed the cost of acceptance or 3% of the transaction total. 

This table highlights some of the key differences between cash discounts and surcharges.

Meet Clover Cash Discount

Clover’s new Cash Discount tool is available on all Clover devices that accept cash. With no registration required and simple setup, Clover is making it easy to offset processing costs and provide customer incentives right from your existing POS system. 

How does Clover Cash Discount work?

Imagine you run a cafe that earns $200,000 in revenue annually. The café pays approximately 3% in credit card processing fees, amounting to $6,000 each year. 

Clover Cash Discount allows merchants to set discount rates ranging from 1% to 5%. The default value is 4%–your café decides to stick with this default. 

Of your customers, 10% of sales opt to pay with cash to take advantage of the immediate discount being offered. The café offsets the processing fee for the sales that are paid with card, saving $6,000 annually. 

What’s more, your customers are thrilled to see they can save on their morning coffee simply by paying in cash. The positive response leads to a 5% increase in repeat business, contributing an additional $10,000 in annual revenue.

Ultimately, the Clover Cash Discount tool brings a $16,000 financial benefit to your café. Plus, with the uptick in repeat customers the café sees–thanks to the cash discount–you’re able to build a loyalty program that incentivizes your regulars and word-of-mouth referrals, among other intangible benefits that fuel growth. 

3 benefits of Clover Cash Discount

As the example above demonstrates, the benefits of implementing Clover Cash Discount go beyond offsetting credit card processing fees. Adding a certain percentage to your products’ shelf prices helps offset credit and debit card processing fees, and you can still earn 100% of the product price. But, that’s not all Cash Discount has to offer. 

1. Cash discounts preserve the bottomline 

Cash discounts can significantly boost a business’s bottom line by reducing payment processing fees, which typically range between 2% to 4% per transaction for credit card payments. Over time, these savings accumulate, creating a substantial positive impact on the bottom line.

2. Cash discounts drive higher revenue

In general, consumers are highly responsive to discounts and incentives. That means the perceived value of saving money can encourage customers to increase the amount they spend per visit. And, an uptick in spending can mean more revenue for the business. 

3. Cash discounts improve customer satisfaction

Last but not least, implementing Clover’s Cash Discount can enhance the overall POS experience and improve customer satisfaction. Customers appreciate the opportunity to save money instantly when paying with cash, leading to a positive perception of the business

Cash Discount is available on all Clover devices that accept cash–no registration required. All you need to do is reflect your ‘shelf’ prices as card prices and provide disclosure to your customers that you’re offering a cash discount.

To start using Clover Cash Discounts, contact a Clover Business Consultant. 

Editorial Team

Clover product news, Full Service Restaurants (FSR), Payments & processing, Quick Service Restaurants (QSR), Retail

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