[NA] Small Business question

[jesse]

@jesse

Know your customers is critical. An associate had two stores in different cities. One he went with the CC surcharge and the other went with the cash discount. He got a lot more grief on the cash discount, mostly from CC customers wanting it. He now posts CC surcharge, and specifically states it is to pay the cost for processing the CC.

I am likely even less familiar with the granular rules. I am on the systems/development side of FinTech handling multiple payment rails.

Tim

I don't doubt there is some individual customer that thinks that way, but data supports, as a whole you're going to face a lot less friction implementing a cash discount. Surcharging requires more clear signage that a customer will notice. The main reason that surcharging is more common is simply that for many businesses its way too big of a pain in the ass to change their menu prices. Changing menu price often involves reprinting of physical menus, signage, etc. However, for other types of businesses, very easy.

Personally, I'd do neither in a business I owned. I think both surcharging and cash discounting are a really backwards way for a business to think about things. If a guy needs to improve his margin, just raise the price, or lower the expenses. I wouldn't want to offer a cash discount because quite frankly, I wouldn't want to encourage cash, cash is a pain in the ass and has its own loss risks. Neither accepting cash or accepting credit card are free.

The only reason I've spent time building technology around cash discounting or surcharging is simply because there is merchant demand (although almost always small business). I don't figure it's my job to tell people how they should run their business.

 

[Half Fast]

....cash is a pain in the ass and has its own loss risks. Neither accepting cash or accepting credit card are free.

DING! DING! DING! Winner!

And there's also the hidden cost of PO'd customers who don't like being charged for using their CC, and who may choose to do less business with you. If your business is a restaurant, a customer who gets a 2% or 3% CC upcharge just might take it back by reducing the tip, so you're really covering your cost on the backs of your servers. Is this a wise way to run a business?

Penny wise, pound foolish?