[BeetleB]

> For a 3% discount,

It is fantasy to think they'd get a 3% discount. The goods in stores that take only cash do not tend to be cheaper than those that do.

They know what people are willing to pay and will charge the price. If they see people are willing to pay $99 with a credit card, then they'll be willing to pay that with cash.

[devman0]

I think the issue here is who is paying the fee and where is the fee surfaced. A free market solution would work here, but it requires some regulating to create the transparency required.

Everyone pays their own credit card fee as a line item on the receipt, merchants are required to print it on the receipt. If customers actually had to pay their own fee's on each swipe you'd see a lot less people reaching for the Platinum card and instead for the no frills local bank credit card. You'd also see immense downward market pressure on swipe fees as now card issuers have to compete against each other.

[BeetleB]

Technically the merchant is paying the fee, and he perhaps is passing some or all of it to you.

The reason merchants might not pass it all to you if that they get a lot more sales volume when they support credit cards, so they can still be more profitable while paying for some of those fees.

I know I'm going to get hated for saying this, but the businesses that charge extra for credit card use under $10 are trying to extract as much out of you - they're aiming to get the best of both worlds. The price of their goods are still such that they're assuming you'll pay with a card.

At the end of the day a business has several costs. Rent, cost of shipping, utilities, etc. When these go up so do the costs of goods. Credit card fees are no different in that regard. If they hated it that much they wouldn't support credit card payments. They do support it because then know it'll bring in more revenue than without - and will easily pay for itself and more.

[Panzer04]

The issue is there's a huge disparity in the fees for certain payment methods.

Some cards cost merchants much more than others, but they are contractually forbidden from differentiating their prices based on that. It's anticompetitive. Lots of "buy now pay later" schemes work similarly, when afterpay was (or is) a big thing they charge 7% and forbid the merchant from including that cost in their prices.

If the consumer had to bear the cost of their payment choice, no problem, but the reality is consumers with low fee payments are paying slightly more than they should for everything and those with high fee payments pay less than they should for everything.

[immibis]

The reason merchants don't pass fees onto credit card customers only is that the credit card network prohibits them from doing so. If they were to charge a credit card fee, they'd get banned from processing credit cards at all.

[jnordwick]

> The goods in stores that take only cash do not tend to be cheaper than those that do.

In NYC they most definitely do. A lot of the corner stores will change you less with cash. I'm not sure it is a the card payment or that they are keeping the sale off the books, but something that might cost me $18.50, I'll pay $18 for.

[jtc331]

Yes, cheaper in the same store, but not usually compared to other stores that don’t have cash discounts.

[BeetleB]

When I wrote that comment I knew someone would come out and use New York City as a counterexample.

The reality is except for a few of the really major cities those types of stores are usually more expensive than their larger counterparts in virtually all other cities in the US.

In my city I'm not going to get cheaper groceries by going to the smaller stores. They are more expensive regardless of whether they support credit cards or not. They may be superior and certain other aspects but price is not one of them.

My guess is the opposite may be true only in places where owning a car is expensive or inconvenient.

[crtasm]

Handling cash has its own significant cost, it's not a direct comparison to a low-fee digital payment.

[jakub_g]

In Poland, the default way for computer shops in 2000-2010s was to offer 2% discount when paying in cash. (The prices displayed were assuming cash, so if you paid by card, you'd pay more.)

I didn't see this anywhere else though. It probably made sense for computer shops because most transactions one would do there would be sporadic, big, and planned.

(Since then, the Mastercard/Visa fees went down to 0.2-0.3% due to EU rules, so probably those discounts are less popular now).

[BeetleB]

> I didn't see this anywhere else though.

In the US offering different prices when paying by cash vs card was a violation of the agreement with Visa, as is putting a minimum price threshold for card usage.

It's still fairly widespread though, and occasionally makes the news. Might explain why you didn't see it often.

[jkaplowitz]

I believe the Visa merchant agreement never forbade cash discounts, only credit card surcharges. I'm not sure, but the current rules are different due to a legal settlement.

In the US, not only does Visa now allow cash discounts and minimum price thresholds up to US$10, but they also allow, in most states, credit card surcharges (sometimes subject to specific state-law legal requirements).

Visa still officially disallows minimum price thresholds outside the US and certain related territories like Guam, and credit card surcharges outside the US - but I nevertheless see them plenty often here in Germany in small shops. I think the permission to offer cash discounts is global.

[mrastro]

Do gas stations have a special deal with the card processors then? Basically all of them have a lower cash price.

[drstewart]

>In Poland, the default way for computer shops in 2000-2010s was to offer 2% discount when paying in cash

Yes, being able to illegally evade taxes is an easy way for businesses to lower prices slightly.

[Wytwwww]

And how would that work accounting wise? Would they just claim that a bunch of PCs "fall off" a truck?

I'm not sure subjecting everyone to poorly regulated (even in the EU it's fair from ideal) monopolies/oligopolies that are legally entitled to literally tax every single transaction in the economy (in addition to the complete loss anonymity and all the implications of that) is not a too high price to pay for some reduction in tax fraud...

[com]

“Shrinkage” is the generic term I have heard for stock losses of all kinds in retail and distribution channels.

In many jurisdictions, cash payments can allow the retailer to avoid on-paying sales tax or VAT, as well as mark stock shrinkage as a loss for their own tax purposes.

Countering this would require very careful auditing of electronic toll records and paper receipt processes, which are in most cases trivial to evade if well-prepared.

And you can’t always be sure that the shrinkage - without the cash - is reported to the manager of the retailer by the person on the till, especially if an unofficial handwritten receipt is provided by the cashier.

I recall seeing a situation involving a very large champagne purchase on New Year’s Eve in cash for 25% off and a “till receipt problem”.