Don’t Discount Surcharging

How Your Cash Discount App Should Respond to Credit Surcharge Programs

Clover has a love/hate relationship with credit surcharges. It’s one of our most-requested feature requests. Yet even in US states where credit surcharging is legal, there are many restrictions in place around it. In the past, Clover has addressed that tension by only allowing cash discount apps on Clover App Market. These apps allow merchants to incentivize cash without dinging cardholders.

While 3rd party credit surcharge apps are forbidden on Clover App Market, we will now allow credit surcharge as part of the native payment processing experience. In the same way that we control all credit transactions handled by the Clover POS, we also control whether those transactions include a credit surcharge. Translation: Clover controls which merchants are enabled for credit surcharging — along with how much is surcharged.

What does this mean for you? If any of the following are true for your app, you will need to know which merchants have surcharging enabled (and you may need to know which transactions have had a surcharge applied).

• Your POS is integrated with Clover for payments
• Your app uses Clover Ecommerce API to process online transactions
• You have a cash discount app on Clover App Market

That last bullet, cash discount app, is key. If a merchant has surcharging enabled, they cannot also provide a cash discount.

That makes sense when you think about it. If you add a discount of 3.5% to cash transactions and your merchant also surcharges for credit, they’re no longer offering a discount of 3.5%.

Say your merchant has an item that costs $100. If you offer a cash discount at 3.5%, a customer paying in cash will only spend $96.50. But if the merchant also happens to have credit surcharge enabled, that customer will pay $103.50 when they swipe their Visa card.

Now the cash discount isn’t actually taking $3.50 off, even if it looks that way from the base price. It’s now taking $7 off of the surcharged price. Looking at these numbers, the merchant is now offering a discount of about 6.8%.

Yikes.

At the point where there’s more than a 4% swing between credit and cash transactions, it may be time for the merchant to rethink their base price.

But that isn’t really something you, the developer can decide. Let’s shift this back towards things you can control.

Avoiding Double Discounting

To avoid over-discounting on every cash transaction, your app will need to check whether a merchant has surcharging enabled. This information is added at boarding. A merchant can be re-boarded with surcharging at any time, which means you’ll need to check regularly. If you’re a cash discount app, we recommend calling the endpoint below daily.

https://apisandbox.dev.clover.com/v3/merchants/<<merchant_uuid>>/ecomm_payment_configs

The corresponding JSON will look something like the following code snippet.

{
     "apple_pay":{
          "supported":false
     },
     "gpay":{
          "supported":true,
          "auth_methods":[
              "PAN_ONLY",
              "CRYPTOGRAM_3DS"
          ]
},
     "surcharging":{
          "supported":true,
          "rate":0.035
     },
     "soft_descriptors": {
          "supported": true
     },
     "purchase_card":{
          "supported":true
     }
}

As a cash discount app, you probably only need the surcharging object. This object includes both a boolean informing you whether the merchant supports surcharging and a decimal value specifying the rate being used. Note that rate is set to "0.035". This decimal value corresponds to a 3.5% surcharge enabled for the merchant. As the feature matures, merchants may be able to adjust surcharge rate percentages.

If you find a merchant with surcharging enabled, you will need to stop applying cash discounts through your app; we recommend that you inform the merchant about why this functionality is no longer available.

One final note: Clover webhooks do not incorporate changes to payment configurations, which means you will need to call this endpoint in the REST API.

Questions? Concerns? Please reach out to us at developer-relations@devrel.clover.com.