Enforcement of Cash Discounting - Zero Dollar Credit Card Processing

In October of 2018, Visa released a bulletin detailing its position on the “Cash Discounting” programs that has become popular with merchants who pass on the credit and debit card fees to the customer. The problem with the so-called cash discount programs is that they add fees at the POS without complying with the surcharge rules. Visa will now focus on stopping this practice and push for enforcement of cash discounting rules to ensure customers no longer are charged for debit usage.

Per the bulletin: "Cash Discount models that encourage merchants to add a fee on top of the normal price of the items being purchased, then give an immediate discount of that fee at the register if the customer pays with cash or debit card, are NOT compliant with the Visa Rules and may subject the acquirer to non-compliance action."

The Visa bulletin effectively means that this "cash discount" model is now dead. With processors anticipating enforcement of cash discounting from the card brands, ISOs and agents should be prepared for "cash discount" merchants to be assessed fines or, even worse, shut down for non-compliance.

The good news is that the surcharging rules provide a compliant path forward for acquirers and merchants who previously offered non-compliant cash-discount programs to do what they always intended: add a fee at the POS to offset the high cost of credit card acceptance.