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Everything Flat Cash
How does this work?
Flat cash works by applying a small customer service fee on all customer transactions. This fee is removed if the customer pays with cash or in-store gift card. True cash discount technology will automatically determine the service fee or discount amounts depending on the payment type. Legal flat cash discount programs must present a clear receipt detailing the service fee or cash discount amount. Service fees are collected by the technology provider who then pays off the credit card charges on behalf of the merchant, essentially removing the need for any back-end accounting or complex statements. The merchant will usually see their credit card fees dramatically reduced with only a small technology fee to pay at the end of the month.
Is this legal?
There has been much confusion around flat cash programs in the past, as people tend to associate them with surcharge programs.
The final verdict on flat cash programs can be found in the Durbin Amendment2 (part of the 2010 Dodd-Frank law), which states that 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. Such alternative methods include checks or cash in order to receive a discount which is applied at the time of sale.
How do I use this correctly?
To implement a truly successful flat cash program, a merchant must overcome the confusion and questions consumers and employees have surrounding a flat cash program.
At a minimum, a merchant is required to provide at least one point of notification prior to sale that there is a service fee applied to all sales and a discount given if a cash payment is made. Multiple points of notification are recommended - such as at the door, register of the store and throughout the establishment if needed. Additionally, the reference to the program should be made verbally at point of sale. It is important the correct language is used, such as “Would you like to save (X amount) today by paying in cash, or use your card?” This language clearly indicates the service charge applies to all transactions. It is also recommended the merchant has quick reference information handy to give to the customer if they have any additional questions. Unlike surcharge programs, flat cash programs are seen in a better light, and fare better with the end- consumers.
There has been a misconception that a flat cash program would prohibit sales if a customer does not carry cash. This has been researched with multiple merchants using this program and found it to be unbiased fear. In all cases, the credit card volume has remained consistent or even increased month over month, with reports from merchants that their customers disregard the convenience fee in 99.2% of transactions.