Cash Discounting versus Conventional Processing
Cash Discounting is a new way to accept credit card payments
Conventional processing is understood as the merchant accepting the interchange cost on behalf of their credit card paying merchants. This is the system that has been in place since credit cards were first introduced, and has up until now, been the only available option for merchants who wish to accept payments via credit cards.
This system worked well when credit card transactions made up a small fraction of the total revenue brought in to the business - most payments were cash or ACH/bank wires. Now, credit cards make up 80+% of retail transactions, sticking the merchant in a frustrating place - raise prices to compensate for the increased overhead coming from credit card transactions, or only raise prices on the transactions that cost the merchant money to transact.
This is the idea of cash discounting - it is a recognition that most consumers use credit card, and that there is a cost associated with that service; this service causes the merchant to accept less payment to their bottom line from the transactions they accept credit card for.
Cash discounting reworks this scheme, so that the merchant is passing that fee off to the consumer who is choosing to pay with card - thereby avoiding that interchange fee to their bottom line, and thus saving their business sometimes thousands in money that is staying within the company.