No, the Cash Discount program is very different in multiple respects. The Durbin Amendment from 2013 (added to the Dodd-Frank Act of 2010) decided against the card brands effectively clarifying that merchants have the capacity to apply an additional charge. The additional charge (surcharge) is permitted in every state except 10.
If you live in California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, Texas, or the U.S. region of Puerto Rico, you cannot participate in a surcharge program.
The main reason those 10 states do not permit a surcharge is they feel that it is unfair to pass the cost of the transaction on to the customer. Most will argue that the merchant is having to bear all of the burden of a transaction and that prohibiting a service fee or surcharge is unfair to the merchant. The surcharge is also intended to cover the perks of using a credit card – like the rewards program. See, each swipe means money is taken from that transaction to pay the operating costs of the card brand, like Visa, Mastercard, etc. It also pays for the costs of your processor whom you have a contract with. As well as it pays for the rewards programs offered by the card brands. A surcharge is designed to pass on the cost of using a credit card to the customer.
A compliant surcharge requires the following:
- Must be domiciled in a state that permits surcharging.
- Credit cards only! This does not apply to other types of cards, like debit.
- Merchants cannot charge more than 4% as a surcharge fee. This surcharge is against the labeled price.
- Specific signage. A merchant is required to display compliant signage for a minimum of 30 days before applying a surcharge to any transaction.
Distantly related, yet very different, is the Cash Discount program. The main distinctions is that the merchant applies a pricing increase, via sticker adjustments or with appropriate signage notifying of a general service charge to all items when a card is used (credit or debit), but then gives an immediate discount to those individuals who pay with cash. This is a clear distinction, and most importantly, one which Visa, Mastercard, etc. and the courts have all agreed upon.