June 27, 2023

Industry Trends

Cash Discount vs Surcharge

Industry Trends

Processing costs can eat into the profits of many merchants. To deal with this problem, merchants need to evaluate cash discount vs surcharge. Both options allow merchants to save money but are very different in how they impact customers and the rules merchants need to follow. Merchants need to follow different practices for each option. 

Cash Discount Essentials

Before diving into cash discounts vs surcharges, it's important to understand the essentials of cash discounts. Cash discounts are straightforward at their core as they are discounts for customers willing to pay with cash rather than using credit cards. This means that for specific goods or services, at least two prices will be listed—one for credit card purchases and one lower for cash transactions. 

Many merchants use a form of cash discount known as a credit card minimum. This requires customers to spend a certain amount of money before they can use their credit card. However, this cannot be done with debit transactions, and merchants must allow customers to use their debit cards whenever they want. 

Both merchants and customers can benefit from cash discount programs as they take away the processing costs for the merchants and offer customers lower prices

Surcharge Essentials

On the other side of cash discount vs surcharge, a surcharge is also about avoiding processing fees. However, unlike cash discounts, the costs of processing fees are passed onto customers. Merchants will charge an extra fee on top of purchases to at least partly cover the transaction costs. It is essential to note that the regulations for surcharges are very different from cash discounts. 

Surcharges are especially useful for merchants that have very thin profit margins. Processing costs can cut into their profits dramatically, and being able to pass this cost on to customers is incredibly helpful

Cash Discount vs Surcharge 

Eliminate Fraud with Cash Discounts

Cash-only transactions eliminate the possibility of fraud, leading to costly chargebacks for merchants. Each chargeback costs a lot for a merchant to resolve, and having too many of them will result in higher processing fees for a merchant. Cash discount programs incentivize transactions that are much safer for merchants. 

This is an important consideration when looking at cash discounts vs surcharges. While surcharges work to take away processing costs like cash transactions, they do not prevent fraud from occurring. Fraud and the chargebacks that come with it are present with all credit card transactions, whether a surcharge is present or not. 

Discounts for Customers

Another vital component of cash discount vs surcharge is the different impact on customers. With surcharges, customers will have increased prices for credit card transactions. In contrast, with cash discounts, the customer is able to choose a payment option with a discount. In this regard, cash discounts offer more value to customers by allowing them to get a discount rather than only increasing the overall price of transactions


When considering cash discount vs surcharge, knowing the expenses that come with each is essential. With cash discounts, merchants can Avoid credit card processing fees, But the Merchant has to handle physical cash. This includes counting, storing, and transporting it. All of this will result in additional expenses for merchants. 

Surcharging on the other hand can be incredibly streamlined. All transactions are digital and can be integrated with automatic accounting software that requires little effort on the merchant's part. Additionally, the surcharges used can cover the baseline processing cost for the merchant. 

However, fees come together differently than when considering cash discount vs surcharge. Merchants can avoid processing fees entirely with cash discounts. And depending on the jurisdiction a merchant operates in, a surcharge may be limited so it does not cover the entirety of baseline processing costs


Laws and regulations are very different with cash discounts vs surcharges. While cash discounts are legal in every state in the US, there are still a few States in which surcharging is illegal. And even in the States, where it is legal, there are additional restrictions or requirements for merchants that choose to surcharge. Merchants must also meet card network surcharge requirements to avoid costly fees or legal action. 

Cash Discount Best Practices

Following the best practices is essential to making the most of cash discount vs surcharge regardless of which option a merchant goes. For cash discounts, merchants must use proper signage to inform customers that cash discounts are available and that they verbally remind customers at the register. 

Cash discounts also need to be listed as a separate item on receipts, and merchants must ensure that their payment hardware allows them to do this easily. Merchants should also reach out to their payments provider to get assistance with setting up their cash discount program. 

Surcharging Best Practices

Merchants must verify what the local laws are with surcharges. Some may prohibit the amount of surcharge merchants can charge or require the merchants to have specific signage in their stores. Surcharges must be clearly labeled on receipts, and cash discounts should be listed separately. With most card networks, merchants must inform their payment processor or card networks with a written notice ahead of time. Transparency is essential for surcharging and is always a best practice for any merchant using surcharges. 

Cash Discount vs Surcharge with Treati

With Treati, it is very easy to set up the best payment system for them. Cash discount vs surcharge does not matter to Treati as we will provide excellent service and assistance to make sure our service brings the most value possible. Our team will be happy to assist you in setting surcharges and ensure that you are meeting the proper state or card network regulations. 

With cash discounts not able to guarantee that customers will use cash instead of credit cards, your payment processor must have low processing rates when customers do use their cards. Fortunately, Treati has some of the most competitive and transparent pricing in the payment space. Merchants save money when they do have to process cards, and merchants can charge lower surcharge rates saving their customers money.