Good grief!
You go to the bar, you buy a pint. If you want to, you put your card on the reader. The system will give you a little cashback rebate, the value of which might change dependant on the time. The end.
How has what is required OF YOU become any more complicated?
You don't need to be paying with the smart card, to gain the smart card credits. What I do is pay with cash, but always put my card on the reader. It still credits the 10%. When it's up to enough to buy something, spend it.
Unless they have changed how the system works, they need to be careful with use of the term DISCOUNT.
The existing system (excuse my made up prices) is that if a pint is £4, you would need £4 (in whatever form) to buy it, and then if you've swiped your card, you'd recieve a 40p credit once the...
There is not, and never has been any DISCOUNT.
There is a cash-back scheme where a % of what you pay is creditted back to your card, AFTER the transaction.
I'm (for once) NOT just being pedantic - this may have a bearing on what is, or isn't in breach of any terms.