Daily Vs. Monthly Discount Cost

Daily Monthly Discount

Knowing the difference between daily discount and monthly discount of credit card processing charges can save your business a ton of time and money.

Monthly and daily discount refer to when a credit card processor deducts fees from your business checking account. There's a big difference between the two, so give careful thought to which method is best for your business.


Monthly and daily discount refer to when a credit card processor deducts fees from your business checking account. There's a big difference between the two, so give careful thought to which method is best for your business.

With monthly discount, processing fees are deducted in one lump sum. With daily discount, fees are charged throughout the month as well as at the end of the month.

Which discount method is best? Well, that's for you to decide. However, we can tell you that most businesses prefer monthly discount because it's easier to reconcile and it creates a more positive cash flow.

We allow processors to use either discount method here at CardFellow, but all processors offer monthly discount as the first option and only switch their quote to daily discount if a business specifically requests that they do so.

It's important to note that discount method is independent of pricing model. Any pricing model, such as Interchange pass through and tiered pricing, can utilize either monthly or daily discount.

Monthly Discount

With monthly discount, a processor tallies all charges for a month and deducts fees in one lump sum at the beginning of the following month.

Under such an arrangement, the processor pays interchange fees throughout the month on behalf of the merchant in what amounts to a micro loan of sorts. This is because interchange fees are paid by a business's processing bank (acquirer) to a cardholder's issuing bank when a transaction is settled.

By fronting the money to pay interchange fees, the processor makes it possible for the merchant to receive gross deposits from sales throughout the month.

Easier to Reconcile, Better Cash Flow

Monthly discount makes reconciling processing charges easier since fees are deducted all at once, and it creates a more positive cash flow by allowing for the receipt of gross deposits from sales.

Daily Discount

With daily discount, a processor deducts the qualified rate or interchange plus markup throughout the month and then deducts all other fees at the end of the month.

Merchants being billed via daily discount receive net deposits from sales because their processor's rate is deducted from batch totals at settlement. The result is the merchant receives deposits from sales less the processor's rate.

For example, a business with a qualified rate of 1.69% that settles a batch for $100 will receive a deposit of $98.31 ($100 – $1.69).

Only the qualified rate or interchange markup is charged prior to deposit. Any other fees such as mid-qualified rates, non-qualified rates, transaction fees, and monthly fees are deducted in one lump sum at the being of the following month.

Harder to Reconcile, Hurts Cash Flow

Having fees deducted throughout the month and at the end of the month makes daily discount difficult to reconcile. Receiving deposits in net rather than gross hurts cash flow.

Disguises Total Cost of Processing

Daily discount disguises the total cost of processing by breaking total charges into "discount paid" and "discount due" subtotals. In order to realize how much a business paid in credit card processing fees, charges assessed throughout the month must be added to charges assessed at the end of the month.

Statements often misleadingly make it appear that total charges are only those that were deducted at the end of the month.

Here's a credit card processing statement that we analyzed here at CardFellow that makes it look like a merchant paid much less than they actually did for processing. By the way, we saved this merchant 51% on fees in less than five minutes.

How to Tell Which Discount Method You Have

If you're reviewing credit card processing quotes here at CardFellow, simply scroll down to "Account Details" under the "Processor's Charges" section of any quote detail page. We require processors to fully disclose all quotes, including the discount method.

It's pretty easy to tell which discount method your current processor is utilizing because you will be receiving net deposits from sales instead of gross. Additionally, you can look at your processing statement to determine the discount method.

If you see phrases on your statement such as "Less Discount Paid" or "Discount Paid" you are being assessed charges via daily discount. Check out the statement above for an example.

Another statement indicator of daily discount is batches being shown as gross and net. Statements will have a column indicating total sales (gross), and then they'll have another column showing what was actually deposited (net).

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