Surcharging vs. Cash Discounting: Which One is Right for Your Liquor Store?

Are Credit Card Fees Eating Into Your Profits?

Running a liquor store isn’t cheap, and credit card fees certainly don’t help. Every time a customer swipes their card, a percentage of that sale disappears into processing fees—cutting into your hard-ea rned profits.

Most store owners accept this as just another cost of doing business, but is there a way to take back control? The good news is yes—many liquor stores are turning to surcharging or cash discounting to fight back against rising credit card fees.

Both strategies allow store owners to offset their processing fees, but they work differently, and each has its pros, cons, and legal considerations.

So, which one is right for your store? Let’s break it down in a way that actually makes sense.

What is Surcharging?

Surcharging shifts credit card fees back onto the customer. Instead of absorbing those fees yourself, you pass them along by adding a small charge (usually up to 3%) to every credit card purchase.

This strategy is becoming more common, especially as business owners look for ways to maintain profitability without increasing prices on all customers.

How Does It Work?

Let’s say a customer buys a bottle of wine for $20 and pays with a credit card.

• • At checkout, they see a small surcharge (let’s say 3%), bringing their total to $20.60.

• • That extra $0.60 helps cover your card processing fees, meaning you keep more of your revenue.

It’s a fair trade-off: Customers get the convenience of using their credit card, and you don’t have to eat the cost.

Can You Legally Surcharge?

Not everywhere! Four states prohibit surcharging altogether:

🚫 California (CA)
🚫 Massachusetts (MA)
🚫 Connecticut (CT)
🚫 Maine (ME)

If your store is in one of these states, surcharging isn’t an option. However, if you operate in a state where surcharging is legal, you still need to follow strict rules to stay compliant.

Rules for Surcharging (If Legal in Your State)

1. 1. Surcharges Only Apply to Credit Cards – You cannot add a surcharge to debit card transactions.

1. 1. You Must Notify Customers – Clear signage is required at the entrance and checkout area.

1. 1. Surcharge Limits – You can’t charge more than your actual processing costs (capped at 3%).

1. Card Networks Require Registration – Visa and Mastercard require businesses to register before implementing a surcharge.

What is Cash Discounting?

Cash discounting is the opposite of surcharging—instead of adding a fee for credit card use, you offer a discount to customers who pay with cash.

How Does It Work?

• • You price everything in your store assuming the customer will pay with a card.

• • If they choose to pay with cash, they get a small discount (typically 3-4%).

• • No extra charges—just a perk for using cash!

For example, if that $20 bottle of wine is priced for card payments, a customer paying with cash might get it for $19.40 instead.

Is Cash Discounting Legal?

Yes! Unlike surcharging, cash discounting is legal in all 50 states. However, the key is making sure customers clearly understand that the listed prices assume card payments and that cash payments come with a discount.

Does Your Liquor Store Type Matter?

Yes! The type of liquor store you run can make a huge difference in whether surcharging or cash discounting will work for you.

• • Single-location, discount, or convenience-style liquor stores
    
    

     

    • • Surcharging can work well because customers are used to seeing small fees at gas stations and convenience stores.
    • • Price-conscious shoppers are less likely to change their buying habits over a 3% fee.

• • High-end or specialty liquor stores
    
    

     

    • • Surcharging might frustrate premium customers, who expect seamless transactions.
    • • Cash discounting might be the better move here—it feels like a reward rather than a penalty.

• Large multi-location or chain liquor stores (5+ locations)
  
  

   

  • • Surcharging may need to be implemented in all locations to maintain consistent brand.
  • May add additional operational complexity to your pricing strategy.

How to Implement Surcharging or Cash Discounting in Your Store

Step 1: Choose the Right Payment Processor

Not all payment processors support surcharging or cash discounting, and some may not ensure compliance. Work with a provider that specializes in legally compliant programs.

Step 2: Set Up Clear Signage

Regardless of which option you choose, transparency is key. Your customers should know:

• • If there’s a surcharge for credit card payments.

• • That all listed prices assume card payments (for cash discounting).

• • The exact amount of any surcharge or discount.

Make sure signs are visible at the entrance, at checkout, and on receipts.

Step 3: Train Your Staff

Your employees need to be able to explain the policy clearly. Train them to answer:

• • Why the store has implemented surcharging or cash discounting.

• • How customers can avoid extra fees (by using cash or debit).

• • Where customers can see the posted policies.

Step 4: Monitor Customer Reactions

• • Are customers paying with more cash?

• • Are they complaining about surcharges?

• • Are your sales being affected?

If you see a negative reaction, tweak your approach or improve how you communicate the change.

Surcharging vs. Cash Discounting: A Quick Comparison

Final Thoughts: Which One Should You Choose?

• • If your customers are price-sensitive and used to fees, surcharging could work.

• • If you want to keep customer experience smooth and legal compliance easy, cash discounting is the way to go.

One thing’s for sure: You shouldn’t absorb high processing fees if you don’t have to. Whether you go with surcharging or cash discounting, choosing the right payment processor can make all the difference.

Take Action Today

Want to set up a legally compliant surcharging or cash discounting program? WinePOS can help! Reach out to [email protected] today to learn more or book a demo.