Cash Discount

Also called cash discount program, discount for cash

Posting card prices and offering a lower price for cash. Legal everywhere - but only if it is genuinely a discount, not a fee in disguise.

What it is

A cash discount means your posted price is the card price, and customers who pay cash receive a reduction. It is the oldest and most legally protected of the cost-offset models: it is permitted in all fifty states, including Connecticut, Massachusetts, Maine and Puerto Rico where surcharging is prohibited, and Florida's own surcharge statute contains an explicit carve-out for discounts offered to all customers for paying by cash, check or other non-credit-card means. No card network notice is required. No 30-day letter to your acquirer. No cap. No debit restriction, because you are not charging anyone anything - you are reducing a price. The mechanics that make it real: the posted, advertised, menu-board price must be the card price. The customer paying cash pays less. If your menu says $10 and a card customer pays $10.35, that is not a cash discount - it is a surcharge, with every surcharge obligation attached, including the 30-day acquirer notice, the 3% cap, the debit prohibition and state law. That is the entire compliance question, and the industry gets it wrong constantly. Labeling does not change legal character.

Why it matters to your business

If you're in a state where surcharging is prohibited, or you want the simplest compliance posture available, a genuine cash discount is the safest cost-offset model in existence. No notice, no cap, no debit exclusion, no network filing. But if you're running what you were told is a cash discount and your posted prices did not change, you're running a surcharge program without any of the surcharge compliance - no 30-day notice, no cap logic, likely no BIN-level debit detection. In Florida that's also a FDUTPA disclosure exposure, and the Attorney General states plainly that undisclosed fees may constitute an unfair or deceptive trade practice.

Where it gets contested

The cash discount name has been thoroughly abused. A large share of programs sold as cash discount are point-of-sale fee programs: the merchant keeps their old prices and the terminal adds a percentage at checkout. That is a surcharge wearing a compliant label, and if a fee is added to a posted price, it is a surcharge with all surcharge obligations attached. Why the mislabeling happens is straightforward. Cash discount sounds unlimited and unregulated, so a rep can sell it in Connecticut or Massachusetts where surcharging is banned, and can skip the acquirer notice, the cap analysis and the debit detection work. Every one of those shortcuts transfers risk to the merchant. The genuine version has a real commercial cost that nobody discusses: your posted prices go up. A restaurant running a true cash discount program must raise menu prices by the offset amount, which is a marketing decision, not a payments decision, and it affects how you look next to the place across the street. That's the honest tradeoff, and it's the reason many merchants who understand it choose dual pricing instead. Florida note: a genuine cash discount is expressly carved out of Fla. Stat. 501.0117, which means it is the one model whose legality in Florida does not depend on constitutional case law.

How to check it yourself

Look at your menu, shelf tags or price list, then look at a card receipt. If the card customer paid more than the posted price, you have a surcharge, not a cash discount - regardless of what your agreement calls it. If that's the case, confirm your 30-day acquirer notice is on file, your cap is set to the lesser of your MDR and 3%, and debit is excluded at BIN level.

Receipts

Claims above that are checkable, with where to check them. Published so you do not have to take anyone's word for it.

Cash discount requires the posted price to be the card price with the cash price shown as reduced; no network notice required and no cap
intellipay.com ↗
Cash discount programs that add a fee at the POS are surcharges with all surcharge obligations attached; labeling does not change legal character
intellipay.com ↗
Florida's surcharge statute carves out discounts offered to all customers for paying by cash, check or other non-credit-card means
flsenate.gov ↗
Cash discounting remains permitted in Connecticut, Massachusetts and Maine where surcharging is prohibited
merchantcostconsulting.com ↗