Double dipping credit card discounts

Dear Thea,

We are considering an announcement to our customers that credit card payments will be exempt from their discount. Some of our customers who have credit terms with us still opt to pay their invoices with credit card. Unfortunately, because we absorb the credit card fees from our third-party vendor, we can’t continue to allow the customer to also take a 2% discount if they opt to pay with a credit card.

We are looking at a couple of options for sharing the news with our customers.

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1.      Notifying our customers that they can still pay by credit card if they chose. However, these payments will be exempt from any discount. Giving them this option, they still get 30 days to pay and can pay by credit card if they choose. If they want the discount they have to pay by check or ACH.

2.     Notify our customers with credit terms that they can only pay by check, not credit card. If they want to pay by credit card, we will convert them to a credit card customer.

I am looking for feedback on how to best tackle and present this change.

Signed, Tired of Being Double Dipped in Dearfield Beach

Dear Double Dipped,

Normally I like double dipping. It works great for ice cream, wine, and the sales rack at Nordstrom, but not when it comes to discount and fees. From your customers’ perspective (and I am not saying it is right) it sounds like a you problem, and not a them problem.

Some argue that credit card fees are the new cost of doing business. Maybe they are. If that is truly the case, then it should be factored into the cost of doing business when the quoting is presented. The fact is that credit cards are not going away and many people and businesses use them as a standard part of business. I almost never carry cash in my wallet and would pay for everything from toilet paper to bananas with my card if I could, which did get me thrown out of a cab or two in Washington D.C., but that is a story for another column. Let’s swing our attention back to how to present this new reality to your customers.

It is all in the presentation. Play with the wording to make is sound as an issue an issue as you possibly can. You are appealing to business people so they may not like it, but chances are they will understand it.

Something to the effect of:

“As of ____ date, accounts paying by credit card will be ineligible for any discount offered. We apologize for any convenience this may cause and by doing so allows us to keep pricing competitive. You may still pay be credit card with no discount.”

Yes, you will get complaints and push back. Customers will threaten to take their business elsewhere, and they may. If they do, most come back. They may also be testing to see how serious you are about this policy. Stick to your guns, because customers can smell weakness. If you waiver, you are basically the weak gazelle at the back of the back. Easy take down.

Focus the conversation on keeping costs down for the customer and not on how much credit card fees and discounts are costing your company. In a nutshell: no one cares about your problems. Keep the focus on how this is helpful and a benefit to your customer.

The real challenges you are going to face are not your customers but your own company. Sales reps will ask for a “mulligan” or free pass for this one very special customer. One customer turns into six and before you know it you have achieved nothing and should have never started down the slippery slope of fees and discounts.

Tracking is another challenge. Which customers are paying by credit card and taking the discount and who is addressing it and at what point? If you have a payment portal the answer may be as simple as some programming to remove the discount if paying by credit card. If the customer is going to the counter, calling your cash app department or local branch, it may be a bit different. Not everyone is comfortable telling a customer they can’t have something. This comes from years of “the customer is always right” training. Truth be told, not all credit people are okay dealing with conflict and resolution.

Turning away a payment is tough. Allowing a one-time pass as customers get used to the new norm is an option. Keep good notes on who has used that free pass because it will be like a replay of Wedding Crashers with freebies all the time.

There is no easy way to “let someone down easy.” Take a gentle approach if you can, but realize the kindest way may be to rip that Band-Aid off in one quick action. It’s painful at first but it is over quickly.

With more than 30 years of credit management experience in the LBM industry, Thea Dudley consults with companies on a wide range of credit and financial management issues. Contact Thea at

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