Protect Your Business: Stay Compliant with Cash Discount and Surcharge Programs
Many businesses believe they are running a compliant cash discount program, but the reality is that most are not. This could put your business at risk of hefty fines ranging from $1,000 to $150,000. At Retail Systems Inc. (RSI), we specialize in helping businesses like yours navigate compliance regulations to avoid penalties. To do so, you need to implement the right payment solutions and effective cash discount merchant services to protect your bottom line.
Are You Running a Non-Compliant Cash Discounting Program?
If your business advertises a lower cash price and then adds a fee at checkout, your program is not compliant. No terminal or signage can make this practice legal. This puts your business at risk of penalties from major card brands like Visa, Mastercard, and American Express.
How RSI Can Help You Avoid Costly Fines
Many business owners simply aren’t aware of compliance regulations. Your current cash discount processing provider may not have explained these rules or the risks involved. That’s where RSI comes in—we provide expert guidance to help you transition to a fully compliant program, ensuring that you can continue accepting card payments without worry.
The Risks of Non-Compliance
Running a non-compliant program isn’t just a minor issue—it can lead to severe financial consequences:
Customer Complaints: A single complaint to a bank or card brand can trigger an investigation.
Secret Shopper Audits: Card brands will send a secret shopper to make a purchase using a debit card. They record the advertised price, the actual price charged, and may ask if a fee is added.
Escalating Fines:
First Violation: $1,000 fine and a notice to become compliant.
If Not Addressed: The fine increases to $5,000.
Repeat Offenses: $25,000, then $50,000, and eventually $150,000.
How to Ensure Your Business is Compliant
RSI can help you transition to a fully compliant program with these two options:
Switch to a Compliant Dual Pricing or Cash Discount Program
Dual Pricing: Clearly display both the card price and the lower cash price.
Cash Discount: Advertise the higher price and offer a discount for cash payments.
Key Takeaway: You cannot display a lower price and then add a fee at checkout—the pricing must be updated to reflect compliance.
Implement a Legal Surcharge Program
Credit Card Surcharges: Visa, Mastercard, and Amex allow merchants to add up to a 3% surcharge on credit card transactions but not on debit cards.
Debit Card Fees: Merchants must absorb debit fees, typically around 1.25% + $0.25 per transaction (negotiable).
State Restrictions:
Banned: Massachusetts, Connecticut, California, and Maine prohibit surcharging.
Limited: Colorado caps the surcharge at 2%.
Take Action Today
Non-compliance is a growing issue, and once fines start, businesses often have no choice but to switch to a compliant provider. RSI is here to help you avoid this risk by making compliance easy and seamless.