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January 07, 2020

Increase Your Residual Payments with a Cash Discount or Surcharge Program

Samantha Hubay

Written by:

Samantha Hubay

Increase Your Residual Payments with a Cash Discount or Surcharge Program

If you’re a sales agent in the payments industry, you know how important it is to retain merchants in your portfolio. After all, you receive income from your merchants through residual payments. If you lose one or more of those income sources, your business will suffer.

Would you like to significantly increase your residuals this year? In this post, we will explain how you can help merchants reduce their processing fees while simultaneously increasing your own residuals by over 300%.


How to Choose between a Cash Discount or Surcharge Program

Popular topics in the payments industry right now are cash discounts and surcharge programs. You may know that EMS offers these programs, but do you know the differences between the two? Let's explore.


Cash Discount Program

A cash discount program allows merchants to offer customers a discount on their transactions when they choose to pay with cash instead of card. The discount amount typically falls within 3 - 4% of the total sale amount.

You may have seen signage for this type of program at your local gas station. Participating stations typically post a per gallon price for credit card customers next to the discounted cash price to encourage customers to step inside and pay with cash. This type of program is legal in all 50 states, but some major card brands have rules for how the discount should be displayed. Visit the Visa, MasterCard, and Discover websites to learn more. 


Surcharge Program

Through a surcharge program, merchants charge an additional fee on credit card transactions only, which helps them to offset the fees associated with processing those transactions. This program is not yet permitted by all 50 states. The states that currently do not allow surcharging are Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, and Oklahoma. If a merchant conducts business in multiple states, they can still surcharge, but only in states where it is legal.

When presented with a surcharge program as an option for their business, some merchants may express a fear of upsetting their customers and therefore losing business. However, the industry consensus is that merchants who complete just one month of the program are generally very pleased. The amount of money a merchant can save on their processing fees by surcharging transactions simply outweighs the handful of customers who may balk at the fee.

EMS provides these programs to qualified merchants to help them keep profits healthy for their business. Plus, Cash Discount and Surcharge Programs provide our Agents with opportunities to grow their residual income.


EMS Agent Case Study: Significantly Increase Your Residuals

EMS Agents have been finding success through these programs. When you explain the benefits and show their value, it’s an easy sell for small to mid-sized retail stores, restaurants, service businesses, and more.

As we highlighted above, these programs allow merchants to either substantially reduce their monthly credit card processing fees, or improve cash flow for their business. When customers are required to pay for their own credit card convenience, merchants can rapidly increase profitability, which can be especially impactful for smaller businesses.

Once merchants have enrolled in one of these programs and realize the true savings, it’s rare for them to want to switch back to traditional processing. This is great for Agents like you because it means you retain more merchants in your portfolio and will continue to increase your residuals. 

Let’s look at a real-life example.

We examined the portfolio of an EMS Agent who switched 15 of their merchants to a surcharge program in 2019. Before the switch, this agent received $875.20 in residual payments from these accounts. After the switch, their residual payments were $3,823.80, which amounts to a 337% increase in residuals for the agent.

Does that sound too good to be true? We thought so too at first. So, we triple and then quadruple-checked our math.

Here’s how it works. First, the merchant’s fees are raised to a level where you make money. The merchant, however, never is charged these fees because they are paid by the customer. This eliminates the merchant’s costs to accept credit cards, but you still make more money on the surcharge account than you would with a traditional processing account priced at interchange plus.

There’s no doubt about it, our surcharge program is a win-win for you and your merchants.


Examine Your Current Portfolio

As we move forward through 2021 and beyond, take a step back to examine your current portfolio. What opportunities are there for you to grow your business and residuals? Do you have small retail or restaurant merchants who may benefit from implementing a surcharge program? Or, are they better suited for the Cash Discount model? If you haven’t focused on selling this program before, it may be time to change selling priorities.


Contact us to learn more about becoming an EMS Agent and taking advantage of these programs today!


Sources: GreenSheet, Digital Transactions

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