Daily Discount

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What Is A Daily Discount?

A daily discount is a daily rate that credit card processors charge merchants for processing transactions.

Daily Discount Explained

Discount rates are a percentage of each credit or debit card transaction that merchants pay. This rate is typically combined with a flat transaction fee. For example, a merchant might be charged a discount rate of 1.79% plus a transaction fee of $0.25.

Specific discount rates can vary due to factors such as the type of transaction and surcharges the processor adds.

There are two options for how discount rates are charged: daily and monthly.

With daily discounts, processors deduct fees from a merchant’s daily deposit. The merchant receives a net deposit amount minus that day’s fees.

With a monthly discount rate, the merchant receives a gross daily deposit. Their fees are then deducted on that month’s statement.

On the surface, there isn’t much of a difference between the two methods. With either one, the merchant receives their funds and pays the same rate for accepting cards. However, some merchants find that accounting is easier with monthly discount charges.

The reason for this preference is that with a monthly discount, your deposit for each day matches your sales.

With a daily discount, there will be a small difference between your sales and your deposits. The difference is due to the deduction of fees. Your accounting department or bookkeeper will need to reconcile your lower deposit with your sales amount for each day.

If you have a business and you’re not sure which method you have, there are a couple of ways to find out. The first is to check your merchant statement. It may clearly state “Discount Collected Daily” or “Discount Collected Monthly.” Or, you might be able to tell by looking at your deposit amounts.

You can also contact your merchant account provider and ask.

Daily Discount Examples

Let’s compare two similar businesses. Mary’s Flowers is set up with a daily discount rate, while Juan’s Floral Arrangements has a monthly discount.

One Monday in October, Mary and Juan each processed $1,000 in sales. Their fees added up to 3% or $30 for each business. This amount includes a daily discount rate and a flat per-transaction fee.

On Tuesday, Mary receives her deposit for Monday. The deposit is $970, which is her gross sales of $1,000 minus $30 in processing fees.

Juan also receives his deposit on Tuesday. His deposit is $1,000. This is his gross sales amount. He also owes $30, but his fees won’t be deducted until his statement is due.

Each day throughout the month, Mary receives her deposits minus her processing fees. Juan receives his deposits, and no fees are removed.

During the first week of November, Mary and Juan receive their October processing statements. They each owe a variety of monthly fees, such as statement fees and equipment rental fees.

Mary does not owe any discount fees because she paid them throughout the month. Juan owes all of his discount fees now.

Juan’s total sales for the month came to $30,000. He now owes $900 based on his 3% discount rate.

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