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Digital Payments

We are here to solve shortfalls for any business

Digital payments are increasingly intricate for U.S. businesses, primarily due to the involvement of card brands and credit/debit card issuing banks.

Let's dissect the financial flow to discern who reaps the most substantial profits. Three main entities claim a slice of every transaction coursing through digital payment platforms.

Foremost among them are the card issuing banks, securing a whopping 70% share of each transaction right off the bat. Their advantage resembles a game where they always win — a classic heads, I win; tails, you lose scenario.

Card brands such as Visa, Mastercard, Discover, and American Express command around 15% of every transaction, akin to a self-serving government voting itself a raise. These brands, essentially banking entities, dictate their own profit margins as card issuers.

Lastly, the credit card processor claims the remaining 15% of the transaction, divvying it among sales organizations, salespeople, and retaining the balance.

Next time you grumble about credit card processing fees, direct your ire towards your own bank. They're the ones orchestrating the markups and incessantly seeking ways to extract more from each transaction.

Overcoming Merchant Service Fees

Absolutely, there's no obligation to shoulder merchant service fees. In every U.S. state, it's entirely legal to provide a cash discount for transactions made with cash, checks, and pin-based debit cards. While these payment methods incur lower costs for businesses, some may have longer processing times. Nowadays, to comply with card brands, we refer to this practice as "Dual Pricing". Essentially, it involves displaying both cash and card prices for products/services or pricing all items with card prices while offering cash discounts through signage throughout the store, including at registers. However, businesses still need to cover the costs of payment gateway technology, which typically range from $10.00 to $120.00 per month, with most averaging around $40.00 per month.

Despite the card brands' strenuous efforts, including legal battles and lobbying in Congress, which involved significant financial resources, to prevent U.S. businesses from offsetting merchant service fees through cash discounts, the businesses ultimately emerged victorious. In 2010, the Durbin Amendment was introduced as part of legislation that later became law. This amendment compelled the card brands to permit U.S. businesses to offer cash discounts and set minimum purchase amounts for card transactions or incur a service fee. Consequently, any business desiring to reduce the burden of merchant fees can now do so without facing repercussions from the card brands. There are regulatory measures in place to safeguard consumers from unscrupulous business practices. It's straightforward: if you prefer to continue paying these fees, you may; however, if you wish to maximize your profits as initially intended, you now have the option to do so.

Cash Discount
Uses Cases 

Small Field Service Company

A small field service company operating in a rural area had expended $167 thousand in the year prior to implementing "Cash Discounting". Over the subsequent 12 months, they spent $600, experiencing a 12% rise in business. This enabled them to allocate $125 thousand toward acquiring an additional van and hiring another employee, utilizing the newfound funds. Presently, they are conducting business in the manner it ought to be done!

Small Auto Mechanic Shop

A small auto mechanic shop found itself continuously entangled in the promises of merchant service providers, which often failed to deliver on their pledges of cost savings. We introduced "Cash Discounting" to address this issue, although the owner harbored concerns about potential customer reactions, given the wide range of transaction values, from $375.00 to $3,000.00. Assured of the option to revert to traditional processing if needed, the owner committed to a trial period of 90 days. Remarkably, three years later, the business has flourished. They've expanded their shop, doubling its size, and have even hired two new mechanics, with a consistently full waiting room. Cash transactions have increased by 10%, and remarkably, there have been no complaints from customers regarding card usage. The savings in the first year amounted to over $41 thousand, and today, it translates to an annual equivalent of $90 thousand.

A Small Cafe in a Rural Community

 

A small cafe, grappling with bill payments and staff retention, faced significant challenges. They continuously switched credit card processing providers in hopes of alleviating their financial strain. Upon implementing "Cash Discounting", they experienced a turnaround the following year, gaining stability. In the subsequent year, their business expanded by 40%, allowing them to prioritize food quality and service. They diversified purchasing options for customers, and even amidst the pandemic, they thrived. Reallocating $38 thousand back into their annual budget transformed their operational capacity. In today's terms, this saving equates to over $100 thousand annually, providing substantial financial relief.

High-end Hot Tub and Swim Spa Retailer

A hot tub and swim spa retailer, known for high sales volume and substantial transaction amounts, had been spending over $300 thousand annually through their long-time bank relationship. Contemplating ways to enhance their operations and provide bonuses for their employees, they faced the dilemma of either raising prices or maintaining the status quo. Upon introducing them to the "Cash Discounting" program, they were intrigued but hesitant about its impact on sales. However, their concerns vanished as they received not a single complaint. In fact, they observed a 7% increase in check payments and never looked back. They were able to fulfill all their aspirations and more, while their annual cost for accepting credit cards plummeted to just $600.

It is Your Profits, Shouldn't You Try to Retain Them?
Ask us how to create a new revenue stream with your Accounts Receivables & Accounts Payables!

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