Regulations of Card Providers, State Law & Federal Law
This program is completely legal and is acceptable to offer a discount to customers for paying cash or charging them the “regular price” at the credit card terminal. If processing costs are built into your prices, it is possible that surcharging will allow you to lower prices across the board. This, in turn, could make your business more competitive, especially if most of your customers pay with cash, check, or debit card.
As stated in the Durbin Amendment (part of the 2010 Dodd-Frank law) businesses are permitted to offer a discount to customers as an incentive and to encourage customers to pay by alternative methods other than a credit/debit cards including either checks or cash in order to automatically receive a discount which is applied at the time of sale.
Under the Durbin Amendment there is no distinction between using a PIN or not and if the card is a bank debit card it is always considered a debit transaction – with or without a PIN number and never would such a transaction be considered a credit sale.
As of January 27, 2013 several Card industry changes went into effect with regards to the credit card company’s federal class action litigation settlement. The settlement requires Visa and MasterCard to change some rules for merchants who accept their cards, including allowing merchants to “offer discounts to customers who pay with payment forms less expensive than Bank Debit cards”.
1. Clear and conspicuous signage is required by law to be displayed at the business entry point and at the point-of-sale to easily and accurately explain the discount program payment options – if a customer “chooses to pay with cash or check the service charge is discounted”.
2. The customer service fee or discounted amount must be present on any generated receipts from the transaction. Cash Discount compatible device software provides customer receipts that clearly outline:
The businesses processor enables the Program through the POS portal.