Cash Discount Program Rules

Is Cash Discount legal?

If done the correct way, yes, Cash Discount Programs are legal and compliant.
Giving customers a cash discount or charging them the advertised price and adding a "service fee" to those who pay with a credit card is perfectly acceptable IF you follow the rules as implied by State and Federal laws.

The essential Cash Discount Program Rules being:

Correct Signage

Signage must be posted at the door and check-out.

Amount of the Added Service Fee

The amount of the added service fee must be clearly displayed on the receipt.

Offer the Cash Discount Verbally

You must offer your customers a cash discount verbally. Your posted prices are considered cash prices and the signage allows for a fee if the payment is not made with cash.

In order to be compliant, merchants with a Cash Discount Program need to display the Base Amount of the transaction, the Cash Discount, and the Total Cost of the transaction on the customers' receipt (see below)

The Durbin Amendment 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 including either checks or cash in order to automatically receive a discount which is applied at the time of sale (2010 Dodd-Frank law).

In addition, on January 27, 2013, several credit card changes went into effect due to the credit card company’s federal class action litigation settlement. The settlement includes allowing merchants to “offer discounts to customers who pay with payment forms less expensive than Bank Debit cards”.

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