Surcharge Vs Cash Discount

Merchant services are available to offset the burden of credit card processing costs to allow businesses to continue accepting card payments while reducing associated fees.


A surcharge is a specific charge or fee that is added towards the price of products or services. In the US, surcharge fees are allowed in 40 states. Surcharges can be added to customers who pay by credit card. Debit card purchases can never be surcharged. It is illegal to include sales tax in a surcharge percentage in states required to collect sales tax.


Since surcharging is legal, and even now, New York is going to be authorized to surcharge up to as high as 10%. The question is, is this right for your business?

There may be a better way for your business to achieve the same results without creating dissatisfied customers. An option is available for your business to continue to accept credit card payments while removing all credit card processing costs.


Advanced software is currently available that automatically offers your consumers the option to receive a discount if they make a purchase with cash. Like a surcharge, a business is required to notify all customers of a service or convenience fee added to all transactions prior to purchase. The difference between a surcharge and cash discount is that with a cash discount, the fee can be removed with the consumer paying with cash.

Businesses are permitted to offer a discount to customers as an incentive and to encourage customers to pay by alternative methods such as checks or cash to receive a discount on their purchase. The cash discount 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. Legal cash discount programs must present a clear receipt detailing the service fee or cash discount amount.

The consumer sees your prices upfront and the convenience or service fee is openly disclosed for transparency. Offering a discount for a cash payment gives your customer the option to save money and your business keeps card processing expenses at an all-time low. 


It’s important to note that every business is different, and a surcharge or cash discount may not be a sensible option. No matter how you look at it, the world is going through unprecedented times and we all need to be informed to make the best decisions.

If you’re interested in learning more about payment solutions, we’re here to help you determine what’s best for your business.

Referenced articles:,NYC%20restaurants%20can%20soon%20add%20a,19%20surcharge%20to%20customers’%20bills&text=An%20outdoor%20restaurant%20in%20New%20York%20City%20in%20September%202020.&text=%22If%20you%20go%20to%20a,they%20want%2C%22%20Borelli%20said.

*Source: Learn more about the Durbin Amendment –