Cash discounting is the legal cousin of surcharging. Instead of adding a fee to credit card transactions, you raise your posted prices by the equivalent percentage and offer a discount to customers who pay with cash. The math is identical for the merchant; the framing is different — and the legal structure is cleaner because no fee is being 'added' to the card transaction.
Unlike surcharging, cash discounting is legal in all 50 states for both credit and debit cards. The rules: prices on signs, menus, and shelves must include the highest price (the card price), and the cash discount must be clearly disclosed.
For low-ticket retail and quick-service food, cash discounting is often the smoother path because customers see the discount as a 'win' rather than seeing a surcharge as a 'penalty'.