Cash Discount Program
The Cash Discount program was developed to allow business owners to pass the cost of processing credit cards to their card holders. Merchants post a sign that states the prices listed at their business are cash prices only, and if any other form of payment is used – the 4% cash incentive is removed, therefore the price of the transaction will be 4% more. The terminal will prompt the card holder to agree to 4%, and they will collect that amount on the transaction.
The Law states, in the Durbin Amendment (part of the 2010 Dodd-Frank law), businesses are permitted to offer a discount to customers as an incentive and to encourage customers to pay by alternative methods other than a credit/debit cards including either checks or cash in order to automatically receive a discount which is applied at the time of sale.
Signage in business
Clear and conspicuous signage is required by law to be displayed at the business entry point and at the point-of-sale, to easily and accurately explain the discount program payment options and if a customer chooses to pay with cash or check the service charge is discounted.
A marketing tool
Also, for many businesses, the cash discount program when marketed appropriately function as a tool to attract new customers. Most of the customers like the idea of discount, and this is the reason why most stores have a "SALE" sign displayed throughout the year. A 4 percent price across the board might achieve your goal as a merchant with respect to covering the expenses for processing, but it would not be as powerful as a cash discount program correctly implemented.