What is a cash discount program?
A cash discount program is a pricing model in which a business posts slightly higher card prices and gives a discount to customers who pay cash — passing card-acceptance costs to the payment method that causes them. Programs typically run at 3.50%, 3.75%, or 3.99% on card transactions.
Cash discounting is what makes merchant rewards fundable without new fees: the program rate already exists in the merchant’s pricing, and rewards funding is carved from inside it.
How does the cash discount rate fund rewards?
A fixed slice of the cash-discount rate — measured in basis points — is routed into reward funding as volume settles. The higher the merchant’s program rate, the larger the slice, and the faster they earn: merchants earn 0.10, 0.15, or 0.20 points per dollar of settled card volume, depending on their cash-discount program rate (3.50%, 3.75%, or 3.99%).
| Cash-discount rate | Earn rate | On $75,000/mo | Yearly reward value |
|---|---|---|---|
| 3.50% | 0.10 pts / $1 | 7,500 pts/mo | ≈ $900 |
| 3.75% | 0.15 pts / $1 | 11,250 pts/mo | ≈ $1,350 |
| 3.99% | 0.20 pts / $1 | 15,000 pts/mo | ≈ $1,800 |
One point is worth about one cent in redemption value.
Where does the funding sit before a merchant redeems?
In a dedicated suspension account, funded automatically at settlement. Every redemption is pre-funded by a dedicated suspension account before points are ever earned — the reserve accrues in lockstep with the points themselves, so the liability and its funding can never drift apart.
This ordering — fund first, earn second — is the opposite of most loyalty accounting, and it is what lets the program promise that points never expire.
Does the merchant pay anything new?
No. The merchant’s pricing is whatever their cash-discount program already is; rewards funding comes from inside that structure, not on top of it. There are no enrollment fees, subscriptions, or minimums — the honest description is that the merchant’s existing processing arrangement starts paying them back.