How Does a Cash Discount Merchant Services Program Work With Tips?

Cash discounts are great for businesses that routinely collect credit card payments. You can announce before someone pays for things that a customer can get a discount by paying for something with cash instead of a credit card. The effort is convenient for the customer, plus you will offset the possible credit card processing charges you would routinely spend.

But what if your business accepts tips for employees? You may be curious on how a cash discount merchant services program can work with tips.

The merchant services program can review the tips your customers provide when paying for credit cards and will subtract from them based on the charge you are applying to card-based transactions. The process keeps customers from coming across surprise charges, but it also works with whatever interchange and network rates you would spend on something. You’ll have more control over how you’re collecting funds here, especially since it is easier to predict what you will earn.

Keeping Tips In Check

A cash discount merchant services program will entail a processor taking out money from the check that the customer inputs. The customer will not have to pay anything extra outside of the tip that the person is applying. But the merchant services partner will take out a percentage of the tip surrounding the network charge and interchange fee that the merchant will manage.

The original money for the transaction will go to the merchant. The employee will continue to receive the money left in the tip. The effort ensures the employee will continue to be paid, but the merchant will not be subject to any significant charges.

When Are Tips Inputted?

coins in jar with tips label 108581949

The tips will be inputted when the customer pays for something. The processing fees are collected from the tip and are then paid off. You will then get the rest of the money from that tip to the employee who will receive those funds.

The customer will not experience any substantial differences when completing a payment. The customer will still have the option to add one’s tip as desired. The process provides a sensible setup that doesn’t take long to manage.

The tip is the only extra charge that the customer will pay, as the cash discount offer does not entail any potentially illegal surcharges. The customer doesn’t have to pay the tip every time, as it is an optional charge. The customer still has the power to manage one’s funds through a tip.

A Quick Example

Here’s an example of how a cash discount merchant services program can handle tips. Let’s say you have a 3 percent charge on all credit card transactions. A customer would pay $100 for an item with a credit card but would only cost $97 if the person paid with cash.

The customer may then add a $15 tip to the order. The customer is charged $115 for the order after the tip.

The tip is calculated with 3 percent being deduced to cover the processing charge. The amount the employee will get from the tip will now be worth $14.55.

You will continue to receive $111.55 from the order, as you are sending the $3 from the original order and the 45 cents from the tip to the processor. You will send the $14.55 from the tip to the employee who will receive it, while the remaining $97 will be yours.

The effort ensures you will still earn the proper money you are owed from a product or service, but the employee will also receive the tip. The customer who paid with a credit card will not be subject to any new charges, especially since the customer was made aware before paying with a card about the possible discount for a card or check-based purchase.

All charges and other features will still appear on receipts. The customer’s tip will appear on that receipt based on what someone enters. It can entail someone writing it down on a paper receipt, or it could involve entering in the tip through a mobile platform. But whatever works, the tip is treated the same way through a full review of how the transaction works. The sensible and swift approach to handling your payments will be worth spotting, especially if your business tends to collect significant amounts of money through payments.

What About Cash-Based Payments?

Cash-based payments will still be subject to the same rules in any process. The customer will still pay for something with straightforward cash if one wants, but that person will receive a discount for the effort.

The customer’s tip will still come in the form of cash for a cash-based payment. The cash tip would be applied separately from the rest of the payment, usually at a table or in a jar next to a register. The process remains unchanged here, which is useful for those who enjoy something familiar. The fact that the customer will be more encouraged to use cash-based payments through a cash discount program is especially something worth finding for any purpose.

A Useful Plan

Don’t worry about whether your employees will still be capable of accepting tips while on your cash discount merchant services program. Your employees will continue to earn the tips they deserve, and your customers won’t have to pay extra outside of the tip that one charges. Talk with a service provider for more details surrounding the work and how it can be managed to your advantage.

Be sure you look at this point when seeing how a cash discount merchant services program works. Your employees will continue to receive the tips they deserve for the work they complete. But the discount process ensures tips will still be complete regardless of the method of payment someone offers. You might even find your employees will get more tips if the customers are saving money by paying for their things with cash instead of through cards.

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