If you run an entertainment venue or a strip club, we can help you choose the right cash discount program. According to stats, the strip club’s market size is huge; it accumulated a revenue of $7.4bn in 2022. However, debit and credit card service providers still consider this industry high-risk.
These clubs and other adult entertainment clubs are considered high-risk because of the high closure rate. There is an increased risk of chargebacks and friendly fraud; thus, service providers hesitate to offer merchant services.
Implementing a cash discount program for your gentlemen’s club will be beneficial. Read on if you want to figure out how to use a cash discount program for your business.
What Is a Cash Discount Program?
A cash discount program allows you to reward customers with a discount if they pay in cash. Customers who pay by cash or check get a discount and less than they would pay with their credit cards. Cash discounts help businesses offset the credit card processing fee and keep more cash in hand.
Entertainment clubs have existed in the states for many decades and are here to stay. But since these clubs, including the strip clubs, have high risks associated with them, they have reputational issues.
Though this industry collects over $7 billion in revenue every year, owners of the clubs still face difficulties. Most credit card processors deny credit card processing due to high-risk.
In such a situation, cash discount programs are a good option for your strip club. Though the world is going cashless, for entertainment clubs, cash is king.
Cash discounting helps business owners reduce processing fees by avoiding credit card payments. As a gentlemen’s club owner, you can discount customers who pay by cash.
Example of a Credit Card Payment
A person entered a strip club and used a credit card to pay his entrance fee of $20. However, since he used his credit card for payment, he had to pay $20.8 because 4% are service charges.
Example of Cash Payment
Another person entered a strip club, and the guard asked him to pay the entrance fee of $20. The club had a notice that said ‘4% discount on cash payments’. The guy decided to make payment through cash, so he decided to pay by cash.
This way, he saved $0.80, which the credit card processor would deduct as a processing fee.
Benefits of a Cash Discount Program for Strip Clubs
A cash discount program is easy to set up, and you can easily integrate it into your club services. This program has benefits for the business owners as well as the customers. With credit cards, businesses and customers both have to pay processing fees.
With cash discounting, customers and businesses have an opportunity to save more. Especially if customers use your club frequently, they can save a lot by using a cash discount program. The following are the main benefits of cash discounting for your business.
No Credit Card Processing Fee
The most significant benefit of using a cash discount program is getting rid of the processing fee. As an owner of your club, you can sometimes eliminate the credit card processing fees.
This saves the business from spending more on overhead costs. Most merchant service providers charge a fee for services and payments to credit card associations. Businesses can avoid this processing fee and save a lot.
Faster Cash Flows
With a cash discount program, businesses must make fewer collection efforts. These programs allow businesses to collect cash instantly, which is impossible with credit payments.
When you offer a cash discount to your customers, they will pay by cash immediately. This saves a lot of effort and time because businesses have to track payments in the case of credit payments. In many cases, customers pay before their billing date, and thus it becomes difficult for businesses to track payments.
More Profit Margin and Cash on Hand
It is always good to have enough cash in hand. When customers make cash payments, businesses have more access to cash. You can use this cash to carry out your business operations as a business owner.
Cash on hand will always be helpful if you need cash for drinks at your club or any other items. Besides that, businesses can increase their profit margin by increasing the cash flow every month.
Reduced Risk of Chargebacks and Bad Debts
Credit card processing comes with additional fees besides the service charges. If the payment amount is returned to a credit card or debit card, this can result in a disputed transaction.
A disputed transaction can cause the business owner to wait for the payment for a long time. The risk of chargebacks is only with credit card payments, so if you motivate your customers to make cash payments, you can reduce bad debts and the risk of chargebacks.
Attract Savvy Bargain Hunters
A cash discount program can prove to be a helpful marketing strategy. You can attract bargain hunters by offering incentives to your customers. When you offer your customers a discount on your offerings, they will spend more.
Your customers will return to your club again to take advantage of the discount offer. Customers always enjoy discounts, and a cash discount program can be helpful for your business in this regard.
Challenges of the Strip Clubs Industry
There are many challenges for a strip club owner. First of all, it is considered a high-risk industry by many merchant service providers. As a gentlemen’s club owner, you might face the following challenges.
Sometimes cash flow can be an issue for entertainment clubs. This can result due to poor payment methods or strategies. For instance, your club might face cash collection issues if most customers don’t make payments on their due billing date. This can make it difficult to collect cash and pay your bills on time.
Rising Cost of Services
Many clubs, such as Las Vegas strip clubs, have digitized their services to keep up with the demands of the industry. But implementing digitized services such as advanced credit card processing can be costly for them. There are service charges for merchant accounts, POS charges, and more.
Besides that, the employees at the club also need to be paid. There are beautiful women as dancers, waiters, a lap dance service, and more that you must pay regularly. Also, at your club, you must arrange a bachelor party, VIP room, VIP table, lap dances, and other services that attract customers. All these services can add to the cost of a strip club.
Inflation Facing the Strip Clubs Industry
Due to the rise in inflation, the cost of products and services is increasing. You will notice an increased price of everything with a tax on all items. Because of this, many strip club owners are also increasing the price of their services. For instance, they are increasing the price of their drinks, the bottle service fee, and the entrance charges that their customers have to pay.
Marketing and Strategies
Marketing is essential to any business, entertainment club, or anything else. For strip clubs, it takes a lot of effort for the owners to establish a name in the industry. The owner must spend a lot on marketing techniques, hiring professionals, and marketing agencies. At clubs, promotional discounts and offers also sometimes cut into the profit. In these situations, spending a lot on credit card processing fees can be detrimental. However, implementing these marketing strategies is also important to keep up with the competition with other clubs.
Does Your Strip Club Need a Cash Discount Program?
The real question is whether a cash discount program benefits your gentleman’s club. Before implementing a cash discount program for your gentlemen’s club, you must consider various factors and assess all the possible outcomes. First of all, you must determine whether your business prefers cash payments.
When a business implements a cash discount program, you’ll have to deal with more cash on hand because of the discount offers. Thus, it is important to train employees to handle cash wisely. Plus, if you have regular customers, who come to the private room of your club, you should consider their payment methods. If they are more comfortable using credit cards, you must first develop a strategy to convince them to make cash payments.
Credit card processing can be risky because of bad debt and the risk of chargebacks. And you must also keep in mind that cash payments increase the cash flow as they allow quicker cash payments.
How to Implement a Cash Discount Program?
Cash discount programs are easy to implement. A good cash discount program is beneficial for the business as well as the customers. Customers and businesses can save a lot by avoiding credit card processing fees.
The businesses can keep their profit margins, and the customers can spend more on their desired services. The following are the steps required to implement a cash discount program:
- Discuss your interests with your merchant service provider.
- Establish a discount amount and pricing for your customers who want to pay with cash.
- Get the POS equipment that meets most strip clubs’ requirements. POS seamlessly integrates with the system and automatically implements cash discounts on purchases.
- Use a cash discount signage. Post it on your website and place signs and notices at your club. This will help the customers know that you’re offering a cash payment discount.
- Start saving on cash payments!
What Are the Requirements for a Cash Discount Program for Strip Clubs?
There are many POS (Point of Sale) that support cash discounting. A simple setting allows the POS to adjust the fees associated with cash payments. The system can differentiate between cash and non-cash payments. These systems can print separate receipts for both types of transactions.
The receipt for cash payments shows that the customers have taken advantage of a discount. The equipment used for the cash discounting program eliminates the credit card processing fee and is perfect for strip clubs’ businesses.
There is another critical requirement for implementing a cash discount program. Before using a cash discount program at your club, you must place signs and notices that indicate the cash discount. These notices should indicate the percentage discount cash-paying customers will get.
Are There Any Alternatives to Cash Discount Program?
You can consider alternatives if you don’t want to use a cash discount program but still want to improve your business’s cash flows and retain profits. High credit card processing fees can take a toll on your business operations. Businesses can increase the price of their products and services to reduce their overhead costs.
Another alternative is to use a merchant service provider with low processing costs. This is the easiest alternative to a cash discount program. If you have a service provider who charges a lot for their services, you must shop around and compare other service providers. This way, you’ll be able to cut down on the extra costs of credit card processing fees.
Customer Perception of the Cash Discount Program
After doing a lot of research, it can be stated that cash discounting has no negative effect on customers’ behavior. Various studies show that customers are satisfied with cash payments. Customers are now more aware of their spending and credit card processing fees, and they are looking for ways to save more. Strip club owners shouldn’t worry about their revenue going down by implementing a cash discount program.
Credit card transaction fees can be very annoying, especially if you want your business to earn and retain profits. Finding the best cash discount program is imperative. These programs eliminate 99% or all credit card processing fees while allowing businesses to take advantage of various payment options.
Cash discount programs are gaining popularity, especially in the sin city of Las Vegas, because many of the best strip clubs want to save more to improve their operations. However, before implementing any such program, it is essential to consider all the factors that can affect your business.
We also have a credit card processing resource bank you can check out!
Paul Martinez is the founder of EcomSidekick.com. He is an expert in the areas of finance, real estate, eCommerce, traffic and conversion.
Join him on EcomSidekick.com to learn how to improve your financial life and excel in these areas. Before starting this media site, Paul built from scratch and managed two multi-million dollar companies. One in the real estate sector and one in the eCommerce sector.