Home » A Quick Guide to Non-cash Adjustments for Merchants 

With more customers opting for credit and debit cards over cash, merchants are looking into different ways to offset processing costs. That’s where non-cash adjustments come in — they help businesses manage these expenses without cutting into profits.

This article will break down everything you need to know about non-cash adjustments. We’ll explore what they are, how they differ from similar practices like surcharging, and the types of non-cash adjustments you can implement. 

Plus, we’ll walk you through the legal, technological, and practical requirements for setting up a non-cash adjustment program in your place of business.

Let’s get right into it.

What is a non-cash adjustment fee?

A non-cash adjustment fee is a charge businesses apply to transactions where the customer pays with a credit or debit card instead of cash. Essentially, it’s a way for merchants to recoup some or all of the processing fees associated with card payments.

Non-cash adjustments are used in a variety of industries. It’s a more common practice in sectors where profit margins are thin or where cash transactions are less common. Examples include:

• Restaurants and cafes: Many eateries apply non-cash adjustment fees to card payments to manage the high volume of small transactions.
• Retail stores: Small shops and boutiques often use non-cash adjustments to keep costs low while offering customers the convenience of card payments.
• Service-based businesses: Hair salons, auto repair shops, and other service providers frequently apply non-cash adjustment fees, especially for high-ticket services.
• Gas stations: Some gas stations charge a higher price per gallon for card payments compared to cash, which is a form of non-cash adjustment.

Let’s say you own a small coffee shop. You decide to implement a non-cash adjustment fee of 3% on all card transactions. If a customer orders a $5 coffee and pays with a card, they’ll be charged $5.15 instead of $5. The extra $0.15, often shown on the bill as a service fee, helps cover the processing fee that your shop would otherwise have to pay to the card issuer.

Non-cash adjustments vs. cash discounting vs surcharging

When it comes to managing the costs of credit card processing, businesses have a few options: non-cash adjustments, cash discounting (a.k.a. dual pricing), and surcharging. While all of these programs have the same goal, how they get there is a little different.

Cash discounting works in the opposite way to non-cash adjustments. Instead of adding a fee to card payments, businesses offer a discount to customers who pay with cash. For example, if a product is listed at $10, a customer paying with cash might get it for $9.70. 

With a merchant surcharge program, a fee is explicitly added to the transaction when a customer chooses to pay with a credit card. For instance, if a customer buys a $50 item and the surcharge is 2%, the final cost when paying with a credit card would be $51.

Non-cash adjustments, on the other hand, involve applying a small increase to the total price for any payment made with a method other than cash, without labeling it as a surcharge.

Types of non-cash adjustments

Non-cash adjustments are fairly customizable. Depending on your goals and the nature of your transactions, you might choose from several types of non-cash adjustments:

• Percentage-based: A specific percentage fee (e.g., 3%) is added to all card transactions. This is the most common approach.
• Dollar-based: A fixed dollar amount (e.g., $1.20) is added to each card transaction, regardless of the total amount. It’s straightforward and works well for businesses with lower average transaction values.
• Combination of fixed and percentage-based: Involves adding both a flat fee and a percentage (e.g., $1.00 plus 1.5%) to each card payment. It provides flexibility by effectively covering costs for both small and large transactions.
• Discounts on particular items: While uncommon, non-cash adjustments can be applied selectively to specific items or categories. For example, a restaurant might only apply the adjustment to alcohol purchases, or a retail store might focus on luxury items. This targeted approach allows businesses to manage higher processing costs on specific products without affecting all transactions.

Requirements for implementing the NCA program

Implementing a non-cash adjustment (NCA) program is fairly straightforward. However, there are some things to keep in mind to ensure the program runs smoothly and complies with regulations.

1. Legal and regulatory requirements

The rules governing non-cash adjustments can vary significantly depending on your location. Pay special attention to:

• State laws: Some states have specific regulations that restrict or prohibit non-cash adjustments, surcharging, or similar practices. Be sure to check whether your state allows non-cash adjustments and under what conditions.
• Disclosure requirements: Merchants must clearly disclose the non-cash adjustment to customers before they make a purchase. This disclosure should include the amount or percentage of the adjustment and should be visible at the point of sale.
• Card network rules: Credit card networks like Visa and Mastercard have their own rules regarding non-cash adjustments and surcharges. These rules often include caps on the fees you can charge and specific wording requirements for disclosures.
• Contractual obligations: Review your agreements with payment processors to ensure that adding a non-cash adjustment does not violate any terms. Some contracts may have restrictions or additional requirements for implementing these fees.

In general, we recommend that you get in touch with your payment processor before implementing any type of zero-fee merchant processing program. If you need expert advice, reach out to SecureGlobalPay for a free consultation.

2. Necessary technology and software

Implementing an NCA program requires the right technology and software to ensure that the fees are applied correctly and seamlessly. Here’s what you’ll need to get started:

• Updated POS systems: Your point-of-sale system must be capable of automatically calculating and applying non-cash adjustment fees to eligible transactions. Modern POS systems typically have this feature built-in, but older systems may require an upgrade or specific software integration.
• Payment processing software: Your payment processor needs to support non-cash adjustments. Not all processors offer this feature, so you’ll need to look for one that does. The software should also be able to differentiate between debit and credit cards if you decide to implement different fee structures for each.
• Receipt customization: The ability to customize receipts is important so that the non-cash adjustment fee is clearly itemized and communicated to customers. Your POS or processing software should allow you to modify receipts to include details of the fee.
• Integration with online sales platforms: If you run an online store, ensure your e-commerce platform or payment gateway can support non-cash adjustments. This includes the ability to display the fee at checkout and automatically include it in the transaction total.

3. Staff training and customer communication

Your staff should have a solid understanding of what a non-cash adjustment is, why it’s being implemented, and how it benefits the business. This will help them confidently explain the program to customers and handle potential inquiries.

Lastly, consider educating your customers about the NCA program. Highlight that this fee helps keep overall prices low — while still being able to continue accepting card payments.

Implement zero-fee credit card processing with SecureGlobalPay

For merchants looking to reduce or eliminate the costs associated with credit card processing, partnering with a provider like SecureGlobalPay can be a game-changer. We offer solutions that enable businesses to implement non-cash adjustments, cash discount programs, and other strategies to manage payment processing fees.

Why choose SecureGlobalPay?

• Everything you need to get started: SecureGlobalPay offers a complete package, including a merchant account, payment gateway, and even free POS hardware and software. This all-in-one solution ensures that you have everything you need to implement zero-fee processing programs quickly and efficiently.
• Ease of implementation: We offer all of the necessary technology and ensure seamless integration with your existing operations. This means you can start saving on processing fees without any major disruptions to your business.
• Compliance support: We will help you decide which no-fee processing program is best for your business and make sure that it complies with all relevant legal and regulatory requirements.
• Customer service: We take special pride in our customer service. Whether you’re a small business or a large enterprise, our team of industry veterans is here to assist you every step of the way.

How to get started?

Reach out to our team at partners@secureglobalpay.net to discuss your needs. Alternatively, jumpstart the process by filling out our online application form below.

We will work with you to design a customized plan that aligns with your business goals and helps you reduce or eliminate the costs of card transactions.

By partnering with SecureGlobalPay, you can finally take control of your payment processing expenses. It’s a smart move for any merchant looking to maximize profitability in today’s competitive market.