Cash Discount Programs for Newspapers and Publishers: How They Work

One strategy publishers can consider is a cash discount program.

While the name may sound more appropriate for a retail store than a subscription business, cash discount programs can also work in an online, recurring payment environment. Instead of requiring subscribers to pay with physical cash, publishers can offer a discount when subscribers choose an eligible payment method, such as ACH.

For publishers evaluating ways to reduce the payment processing costs associated with subscriptions, cash discount provides another option while allowing subscribers to choose the payment method that works best for them.

Here’s what newspapers and publishers should understand when evaluating cash discount for recurring subscription payments.

What Is a Cash Discount Program for Publishers?

A cash discount program gives subscribers a lower price when they use an eligible cash-equivalent payment method, such as ACH or check, instead of paying by credit or debit card.

For an online subscription business, ACH can be particularly important because subscribers are not standing at a physical checkout counter with cash in hand.

For example, a publisher could establish its standard subscription price and offer a discount to subscribers who choose an eligible payment method such as ACH. Subscribers who prefer to continue paying by card can still do so at the standard price.

Cash Discount gives publishers another way to manage the cost of accepting subscription payments without eliminating the convenience of card payments.

For a more general introduction to how these programs work, read Understanding Cash Discount Programs.

Why Cash Discount Is Different for Newspapers and Publishers

Cash discount is often discussed in the context of restaurants, retail locations and other businesses where customers make individual purchases.

Newspapers and publishers have a fundamentally different payment model.

Publishers may manage:

• Monthly and annual subscriptions
• Print subscriptions
• Digital subscriptions
• Print and digital bundles
• Automatic subscription renewals
• Card-on-file payments
• ACH payments
• Payments accepted online, by phone or through the mail
• Large volumes of recurring subscriber transactions

That recurring relationship changes the cash discount conversation.

For a retail business, cash discount may influence a single purchase. For a publisher, the subscriber’s selected payment method can potentially affect an ongoing series of subscription payments.

As a result, publishers should evaluate cash discount as part of a broader subscription payment strategy rather than simply as a checkout feature.

How Does Cash Discount Work With Recurring Subscription Payments?

A cash discount program can be incorporated into the recurring payment process so that the appropriate price is applied according to the subscriber’s selected payment method.

A simplified subscriber journey might look like this:

1. The publisher establishes its standard subscription price.
2. The subscriber selects a payment method.
3. An eligible cash-equivalent payment method, such as ACH, receives the applicable discount.
4. A subscriber choosing a card pays the standard subscription price.
5. The subscription continues according to its established billing schedule.

For subscription businesses, automation is particularly important. A program that requires manual intervention every billing cycle could create additional administrative complexity.

For publishers managing thousands of subscribers and recurring transactions, the ability to integrate cash discount into the billing process can make the strategy more practical at scale.

Where Does ACH Fit Into a Publisher’s Cash Discount Strategy?

ACH can be an important component of an online cash discount program.

ACH allows payments to be made directly from a customer’s bank account rather than through the credit card networks.

That creates an opportunity to give subscribers a choice:

Pay the standard subscription price using a card

or

Receive a discount by selecting an eligible payment method such as ACH.

Instead of simply asking subscribers to change the way they pay, a cash discount gives them a financial reason to consider another payment method.

For publishers, the potential benefit goes beyond the initial transaction.

When a subscriber enrolls in recurring ACH payments, future subscription payments can continue using the same payment method unless the subscriber changes the arrangement.

That means the overall payment mix across the subscriber base can become an important factor when evaluating whether a cash discount program makes financial sense.

How Can Cash Discount Help Publishers Manage Payment Processing Costs?

Every card transaction has an associated acceptance cost. Across a large base of recurring subscribers, those individual costs accumulate.

Cash discount approaches the issue differently than strategies such as negotiating processing rates or optimizing interchange.

Cash discount doesn’t lower the underlying interchange rate on a credit card transaction. Instead, it changes how a business structures its pricing and can encourage subscribers to select alternative eligible payment methods.

In other words, publishers should think about cash discount as a way to potentially reduce the amount of card-processing costs the business absorbs, rather than as a method of lowering interchange itself.

For a publisher processing thousands of recurring transactions, even relatively small differences in payment costs can become more meaningful at scale.

That makes it important to understand not only your current processing costs, but also how your subscribers currently pay.

Is Cash Discount the Same as Surcharging?

No. Although cash discount and surcharging are both strategies businesses may consider when trying to manage credit card processing costs, they use different pricing approaches.

With a cash discount program, a business establishes its standard price and offers a discount when a customer pays with an eligible payment method, such as ACH.

With surcharging, an additional fee is applied to eligible credit card transactions.

This distinction can be particularly important for publishers because subscribers may be enrolled in automatic payments that continue month after month or year after year. Publishers should understand how either approach could affect recurring billing, subscriber communications and the overall customer experience before making a change.

Surcharging is subject to card-brand requirements as well as applicable laws and regulations. For example, Visa has specific requirements governing surcharge disclosures, eligible cards and merchant notification. Publishers considering surcharging should review applicable requirements with their payment provider and legal counsel before implementation.

Which approach is more appropriate depends on factors such as:

• Subscriber payment preferences
• Credit card and ACH payment mix
• Recurring billing processes
• Customer communication requirements
• Subscription pricing
• Subscriber experience and retention considerations
• Business objectives

If you’re evaluating both approaches, see Cash Discount vs. Surcharge: What’s the Difference and How to Use Them for a more detailed comparison.

Cash Discount Can Preserve Subscriber Payment Choice

Publishers understandably need to think about more than payment processing costs.

Subscriber experience and retention matter.

A payment strategy that saves money but creates unnecessary friction may not be the right strategy.

One benefit of a cash discount approach is that the subscriber retains payment choice.

A subscriber who prefers the convenience or benefits of paying with a credit card can continue to do so at the standard price. Another subscriber may prefer the savings associated with an eligible payment method such as ACH.

Instead of forcing the entire subscriber base into one payment method, publishers can provide options.

The goal should be to evaluate opportunities to reduce payment costs without unnecessarily creating friction in the subscriber relationship.

What About Existing Subscribers and Automatic Renewals?

Introducing a new pricing structure into an established subscription program requires more thought than implementing it for a one-time purchase.

Before implementing cash discount, publishers should consider questions such as:

• How will existing subscribers be affected?
• How will the program work with automatic renewals?
• When and how should subscribers be notified?
• Where should payment choices and pricing be displayed?
• How should online checkout and account-management pages explain the options?
• What should customer service representatives tell subscribers?
• How will phone and mail payments be handled?
• How can subscribers change their preferred payment method?

These aren’t simply technical questions.

They can involve subscription operations, marketing, customer service, finance and retention.

For that reason, publishers should develop a clear implementation and communication plan before changing subscription pricing or payment policies.

Subscriber Communication Is Critical

Subscribers should be able to easily understand the available prices and payment choices before completing a transaction.

For newspapers and publishers, that communication may need to extend across several subscriber touchpoints:

• Subscription order pages
• Renewal pages
• Subscriber account portals
• Payment-method update screens
• Renewal notices
• Customer service interactions
• Phone orders
• Mail-in subscription forms
• Confirmation communications

The terminology used should also remain consistent.

If an online order page describes an ACH discount one way while a subscriber renewal notice describes it differently, unnecessary confusion can result.

Clear communication isn’t just about explaining pricing. It helps subscribers understand what their options are and how the payment method they select affects what they pay.

Cash Discount Should Be Evaluated as Part of Your Overall Payment Strategy

Cash discount isn’t necessarily the right answer for every publisher.

Before implementing a program, examine your existing payment data and subscription environment.

How much subscription volume is currently paid by card?

The larger the volume going through card networks, the more important it may be to understand what those transactions are costing your organization.

What percentage of subscribers already use ACH?

Your existing payment mix can provide a starting point for estimating how a cash discount program could affect costs.

Could more subscribers realistically move to ACH?

Offering a discount may provide an incentive, but publishers should consider the preferences and behavior of their own subscriber base.

What are you currently paying to process subscription payments?

Look beyond the headline processing rate. Understanding current processing costs can establish a baseline against which alternative strategies can be evaluated.

How will subscribers react?

Consider customer service inquiries, retention and the overall subscriber experience alongside potential savings.

Can your payment platform automate the program?

For publishers processing recurring payments at scale, automation is particularly important.

Answers to these questions can help determine whether cash discount should be part of your payment strategy and provide a basis for estimating its potential financial impact.

Cash Discount Isn’t the Only Way to Reduce Subscription Payment Costs

Cash discount should be evaluated within the context of your broader payment strategy.

Depending on a publisher’s transaction profile, possible cost-management strategies could include:

• Moving more recurring payments to ACH
• Reviewing merchant processing pricing
• Evaluating cost-plus or interchange-plus pricing
• Optimizing transactions for more favorable interchange qualification
• Evaluating applicable card programs
• Considering surcharging
• Using cash discount to reduce the portion of card-acceptance costs absorbed by the business

These strategies aren’t necessarily mutually exclusive.

The right approach depends on factors such as subscriber volume, card mix, payment methods, transaction characteristics, current processing arrangement and business objectives.

Publishers should analyze their own transaction and processing data rather than assume one payment strategy will provide the best result.

Is a Cash Discount Program Right for Your Publication?

The real question isn’t simply whether cash discount can work for publishers.

It’s whether the program makes financial and operational sense for your publication and your subscribers.

A publisher with substantial recurring card volume may have a very different opportunity than one with a large percentage of subscribers already paying through ACH. Subscriber payment preferences, average subscription value, billing frequency and current processing costs can also affect the business case.

Before making a change, quantify the opportunity.

Payway offers a complimentary cost analysis to help publishers evaluate their current payment processing expenses and identify opportunities to reduce costs.

The analysis can help you better understand what you’re paying today and whether a strategy such as Cash Discount could make sense for your subscription business.

Want to explore the program in greater detail first? Download The Complete Guide to Payway’s Cash Discount Program to learn more about Cash Discount for online and recurring payments.

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