Interchange Deferral Cash Discount Program and the Effect on Your Business
For much of the 21st century, large retailers, the federal government and the card brands such as Visa and MasterCard have been fighting over what should and should not be allowed regarding businesses that accept credit card as payment. (These disputes were the precursor to the Interchange deferral Cash Discount Program.)
The businesses, wanted more control over how they advertised acceptance of credit cards and wanted the ability to charge more for taking credit cards. The government wanted to make
sure they got their cut related to taxes and ensure that the practices were fair. The card brands wanted to maintain control their brands to ensure that they were represented consistently and professionally.
These conflicting interests resulted in lawsuits back and forth, as well as government legislation being enacted. Through resolution of these matters, an application process by which a business owner can be approved to charge a surcharge without violating card brand guidelines was created. However, this process was not simple to navigate and was not realistic for most small businesses to capitalize on. Therefore, many businesses continued to charge surcharge fees in violation of the Visa and MasterCard guidelines, so a much better solution with the help of technology was put into place.
What we refer to as the Interchange Deferral Program is in fact a Cash Discount program to incentive customers for paying with cash. There may seem to be a very fine line between what is a cash discount and what is an unauthorized surcharge and there is a very fine line.
Within that small area is the ability for a business to offer their posted prices as CASH prices and to charge the credit card price at the point of sale. Through a combination of software and hardware this has become ever less painful for both the business owner and the customer.
The Interchange Deferral Cash Discount Program allows the business owner to pass on low prices and quality service to its customers without personally absorbing the credit card processing fees. It has proven to be most successful in quick serve restaurants and small ticket retail businesses, but the success or adoption of the program is dependent on the business and the business owner.
Just like any other product or service related to businesses, it is not a silver bullet catch all for everyone. If it is something that peaks your interest, we would recommend speaking to a local representative about.