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Cash discounting, however, isn't about encouraging
Insider’sreport consumers to pay with cash. It's about saving merchants
money on card processing costs without cutting into the
on payments residual streams of ISOs and merchant level salespeople
(MLSs) by getting consumers to shoulder some of those
costs.
With continuing financial pressures brought on by the
pandemic, "It's almost like a perfect storm to push cash
discounting forward," Austin Mac Nab, managing partner
A new payments at VizyPay, said in a recent interview. Better than 70 percent
of new deals submitted by VizyPay sales reps are now for
cash discounting, he said. A smaller, but notable share, 10
landscape percent, are implementing surcharging programs, where
allowed by law. Altogether, about 20 to 25 percent of all

By Patti Murphy VizyPay merchants are on cash discounting or surcharging
programs, Mac Nab added.
ProScribes Inc. Consumers take to POS loans

s we close the books on a momentous year, it's While much of the evidence to date suggests consumers
a good time to think about how the events of don't mind paying a little extra when paying with plastic
2020—most notably the COVID-19 pandem- (or online and mobile payments tied to card accounts),
A ic—have changed the payments landscaped. they also are looking for ways to stretch their spending
The new norms of quarantining and social distancing dollars. This has given rise to renewed interest in buy now
brought on by the pandemic are forcing many consum- pay later (BNPL) and other alternatives to credit card debt.
ers and merchants to rethink their preferences for legacy
payments, like cash, and to find new ways to stretch their A recent consumer survey by Ascent, a service of Motley
dollars. Fool, found one-third of respondents have used a BNPL

Cash usage falls, as cash discounting rises service at least once.
The transition away from cash, led largely by younger BNPL is a 21st century iteration of layaway plans, with
consumers, was already underway before the pandemic one important distinction: consumers take possession of
hit. The Federal Reserve, which regularly surveys purchases immediately, and parse out payments, typically
consumer payment preferences, reported that consumers from their checking accounts, over a four- to six-week
used cash for 26 percent of purchases in 2019, down from period. BNPL consumer finance schemes have been
31 percent in 2017. A preponderance of those payments popular in recent years with younger consumers who
represented small-dollar purchases (under $10). often lack the kind of credit card limits needed for major
purchases, like furniture, auto repair and electronics. But
The Fed has yet to report on 2020 consumer payment it's catching on with older consumers.
preferences, but I'm willing to bet that cash usage
continued to fall this year. The pubic has been getting Afterpay, a fintech specializing in BNPL, reported that
mixed messages about whether the coronavirus can be BNPL transactions at its retailing clients jumped 87
spread through cash. Several reports in the early days of percent from January through November, while debit
the pandemic suggested there was no risk, but a study card payments posted an 18 percent increase and credit
out of Australia in October found that the coronavirus card payments fell 11 percent. Afterpay works like a
can survive on common surfaces such as money and virtual card; consumers purchase a mobile app and
phone screens for up to a month in room temperature select it at checkout, then pay off their balances over four
environments. installments.

A consumer survey by the fintech Rapyd revealed that more Other BNPL providers assess interest rates which, on an
than half (54 percent) are concerned about handling paper annualized basis, are similar to those assessed credit card
money. The consultancy Accenture has said it expects 2.7 purchases. Most schemes charge merchants a one-time fee
trillion transactions worth $48 trillion will shift from cash of two to three percent of the transaction. Several BNPL
to cards and digital payments over the next decade. Not firms work with ISOs and MLSs to set up merchants on
surprisingly, Capgemini reported that "mobile payments, their programs, including Surv Financial and Flexxbuy.
digital wallets, QR payments and contactless cards are set
to drive the future as customers move away from cash."
Patti Murphy is senior editor at The Green Sheet and co-host of the
To the casual observer, then, it may seem ironic that cash Merchant Sales Podcast. Follow her on Twitter @GS_PayMaven.
discounting schemes are gaining steam.

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