Both surcharge and cash discount programs aim to help merchants recover credit card processing fees. However, they work differently. A surcharge adds a fee to credit card purchases, while a cash discount reduces the price for customers who pay with cash. The end goal is similar, offsetting transaction costs, but how customers perceive and respond to each model can vary widely.

Many businesses turn to these strategies to stay profitable in a high-fee environment. The Nilson Report estimates U.S. merchants paid over $160 billion in card processing fees in 2022. Choosing the right fee-offset strategy can significantly improve margins without damaging customer loyalty.

At Payment Genie Pro, we work with merchants to implement Zero Pay Processing, which supports both surcharge and cash discount models across a variety of POS platforms.

Case Study 1: Using a Surcharge Model with Clover POS

The Business: A Boutique Salon in Austin, TX

A salon owner with a growing customer base noticed monthly card fees averaging $1,800. She adopted a surcharge model using Clover POS, where a 3% fee was added to credit card purchases automatically. The system displayed the surcharge on the screen, receipts, and signage at checkout.

Clover made it easy to program these settings and offered automatic calculation during each transaction. Customers were informed ahead of time, and 95% continued using cards despite the fee. Those who wanted to avoid the surcharge began paying with debit or cash.

Within three months, the salon had offset over $5,000 in fees and used the savings to hire a part-time stylist. Merchants using Clover often benefit from simple built-in configurations, which can be customized without external software.

Case Study 2: Running a Cash Discount Program with Square POS

The Business: A Quick-Service Restaurant in Phoenix, AZ

This busy takeout location processed around 2,500 transactions per month. The owner implemented a cash discount program using Square POS by marking all prices as “cash prices” and applying a 3.99% non-cash adjustment at checkout.

Square’s default system required some third-party software to clearly separate the fee on the receipt and avoid legal complications. However, once the system was configured, it ran smoothly. Clear signage helped customers understand the discount, and roughly 20% of customers started paying with cash.

By encouraging cash transactions, the restaurant reduced its monthly processing fees by nearly $2,000. This move helped the business recover during the slower off-season and reinvest in kitchen upgrades.

To assess whether your pricing model is optimized for your customer base, a free statement review can identify areas where you’re losing money to unnecessary fees.

Case Study 3: Mixed Payment Options with FluidPay

The Business: A Mobile Auto Detailer in Atlanta, GA

This business operated on-the-go, using mobile POS paired with FluidPay to accept payments. The owner alternated between surcharge and cash discount settings depending on the event or client type.

At local car shows where customers paid quickly via card, he used a surcharge model. At home visits, he offered a discount for cash, which helped with tips and referrals.

FluidPay allowed him to toggle between modes, apply compliant fees, and generate receipts on the spot. This hybrid method gave him flexibility and reduced his annual fees by 45%.

Event-based businesses benefit from this level of agility, especially when mobile payments are a key part of their operations.

Which Model Works Best?

Surcharge Pros and Cons

Surcharging works well in professional service settings where card usage is the norm. However, some states restrict surcharges or require disclosures. Also, debit cards cannot legally have surcharges under current Visa/Mastercard rules.

Cash Discount Pros and Cons

Cash discounts are generally seen more favorably by customers. They encourage cash use, which means faster access to funds. However, they can create confusion if pricing is not clearly communicated.

Both models require proper signage, compliant receipts, and trained staff to avoid pushback or chargebacks. Merchants must ensure their POS systems support these adjustments in a transparent and legal way.

If you’re unsure how your POS setup handles fee offsetting or compliance, you can reach out through the Payment Genie Pro contact page to get tailored support.

Why Real-World Testing Matters

Each POS system—whether Clover, Square, or FluidPay—offers unique tools and limitations. Choosing between surcharge vs. cash discount depends on your business type, customer habits, and local regulations. Real-world case studies help highlight how these strategies work beyond theory.

What works for a fast-paced food truck may not suit a boutique salon. Understanding both models allows you to build a smarter payment strategy and protect your margins while staying compliant.

At Payment Genie Pro, we help merchants choose, configure, and monitor their surcharge or cash discount programs across different POS platforms. Our mission is to ensure your business saves on fees without risking reputation or customer satisfaction. Whether you’re just getting started or ready to fine-tune your setup, our team is here to guide every step.