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In the US those terms no longer apply. Merchants can offer 2 different prices (and many already do) for payment with card vs. cash.

by athenot 10y ago

eru 10y ago
Also doesn't apply in Australia. Aldi charges extra for paying with cards.
- SyneRyder 10y ago
  And some Australian retailers charge extra for specific cards with higher fees (eg JB Hi-Fi stores have a surcharge for using AmEx or Diners Club cards, which typically charge the merchant more than Visa or Mastercard do). I was going to link to The Good Guys and their "Pay Cash Pay Less" marketing, but it appears they scrapped their cash discount after finding customers increasingly prefer to use electronic payments: http://www.smh.com.au/business/the-good-guys-scraps-cash-discounts-as-consumers-go-digital-20150716-gidha2.html http://www.smh.com.au/business/the-good-guys-scraps-cash-dis...
  - dTal 10y ago
    >scrapped their cash discount after finding customers increasingly prefer to use electronic payments That's a weird reason. Surely that's the whole point of the discount? If customers preferred paying cash, then no discount would be required.
    - ma2rten 10y ago
      I think s/he means they preferred to pay cash despite the discount.
      - SyneRyder 10y ago
        No, customers prefer to pay electronically. The linked article points out that cash sales in Australia have crashed from 70% to just 47% and is on a fast decline. I think the point of removing the cash discount is they can use the 'extra' 3% margin earned on those remaining cash sales to subsidize lowering their price via credit card to be more competitive. Their business is based on offering the lowest prices, but the cheapest price was cash only. The discount for cash no longer lures customers to come to their stores, so there's no incentive for the store to continue passing on the discount to the customer.
        ma2rten 10y ago
        No, customers prefer to pay electronically. That's what I meant.
ced 10y ago
I'm curious, how do they frame it? Is it a discount for paying with cash? If it's allowed, why doesn't every merchant offer it?
- athenot 10y ago
  Cash is not free for the merchant: there's a cost associated with handling it. Also, some merchants cater to a demographic that likes to use cards a lot and is sensitive to convenience; and making that distinction may cost the merchant in terms of customer appreciation.
  - dogma1138 10y ago
    Cash isn't free for people either the vast majority of banks either charge you withdrawal fees or bake them into your flat account fees. If you are a large business then cash handling companies that securely transfer, count, and deposit / clear it for you charge the same and even more than many credit card companies. Cash is only "cheaper" for really small businesses that handle the count and the deposit themselves. And even then there are some fees because banks can also charge a deposit fee when you bring in unsorted cash.
    - mseebach 10y ago
      I think, for small businesses, the problem is that the setup cost and fixed operating costs are amortised over too few transactions to be negligibly cheap - and that's before considering the slightly higher actual transaction fees for such businesses. Square, iZettle and I think PayPal and a few other are doing things in this area, leveraging smartphones, but it's still early days.
      - CydeWeys 10y ago
        The Square POS terminals using tablets (it is iPads?) that rotate for you to sign are nice. I especially like how they'll automatically email you a receipt, which is great for reimbursements or filing taxes because it means I don't need to scan anything. I've never been impressed with anything using a cell phone though. It's too clunky of an experience. I get that it might be useful for farmer's market and other very small retail situations, but when I'm going into a retail store, a real POS terminal is better.
joshfraser 10y ago
When did this change? I know a lot of smaller stores do it, but I always thought they were breaking the rules.
- athenot 10y ago
  I don't know the details of the fight between the merchants and the credit card companies but this is what eventually came out of it. Since Jan. 27, 2013, merchants have had the ability to assess a surcharge on customers who pay with credit. However, if they choose to take this step, there are a lot of rules that must be followed, including: - Notifying consumers that they’re being charged for using credit, both at the register and on the receipt. On the receipt, the merchant is required to state the exact dollar amount you paid in credit card surcharges. - Charging customers only what they’re paying to the credit card payment networks in swipe fees (again, this is usually around 1%-3.5% of the cost of the transaction). In other words, merchants are allowed to pass on the fee to the customer, but aren’t allowed to make a profit on credit card surcharges. - Staying on the right side of state laws. As of August 2014, nine states prohibit retailers from passing credit card surcharges onto consumers. They are: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, Oklahoma and Texas. - Limiting surcharges to credit card transactions. If you pay with debit, the retailer isn’t allowed assess the fee. This includes debit transactions where you sign for your purchase as opposed to entering a PIN. Only credit card users can be hit with a surcharge. Source: https://www.nerdwallet.com/blog/credit-cards/credit-card-charged-more-gas-station/ https://www.nerdwallet.com/blog/credit-cards/credit-card-cha...
  - tossaway1 10y ago
    > As of August 2014, nine states prohibit retailers from passing credit card surcharges onto consumers. In Massachusetts at least there's a loophole for gas stations. In fact that's always been the case... http://www.mass.gov/ago/consumer-resources/consumer-information/retail-rights/information-about-gas-prices.html http://www.mass.gov/ago/consumer-resources/consumer-informat...
  - ced 10y ago
    Thank you for taking the time to find a good answer. > Staying on the right side of state laws. As of August 2014, nine states prohibit retailers from passing credit card surcharges onto consumers. They are: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, Oklahoma and Texas. Do you know the rationale for these laws?

In the US those terms no longer apply. Merchants can offer 2 different prices (and many already do) for payment with card vs. cash.

by athenot 10y ago

In the US those terms no longer apply. Merchants can offer 2 different prices (and many already do) for payment with card vs. cash.

eru 10y ago

Also doesn't apply in Australia. Aldi charges extra for paying with cards.

SyneRyder 10y ago
And some Australian retailers charge extra for specific cards with higher fees (eg JB Hi-Fi stores have a surcharge for using AmEx or Diners Club cards, which typically charge the merchant more than Visa or Mastercard do). I was going to link to The Good Guys and their "Pay Cash Pay Less" marketing, but it appears they scrapped their cash discount after finding customers increasingly prefer to use electronic payments: http://www.smh.com.au/business/the-good-guys-scraps-cash-discounts-as-consumers-go-digital-20150716-gidha2.html http://www.smh.com.au/business/the-good-guys-scraps-cash-dis...
- dTal 10y ago
  >scrapped their cash discount after finding customers increasingly prefer to use electronic payments That's a weird reason. Surely that's the whole point of the discount? If customers preferred paying cash, then no discount would be required.
  - ma2rten 10y ago
    I think s/he means they preferred to pay cash despite the discount.
    - SyneRyder 10y ago
      No, customers prefer to pay electronically. The linked article points out that cash sales in Australia have crashed from 70% to just 47% and is on a fast decline. I think the point of removing the cash discount is they can use the 'extra' 3% margin earned on those remaining cash sales to subsidize lowering their price via credit card to be more competitive. Their business is based on offering the lowest prices, but the cheapest price was cash only. The discount for cash no longer lures customers to come to their stores, so there's no incentive for the store to continue passing on the discount to the customer.
      - ma2rten 10y ago
        No, customers prefer to pay electronically. That's what I meant.

ced 10y ago

I'm curious, how do they frame it? Is it a discount for paying with cash? If it's allowed, why doesn't every merchant offer it?

athenot 10y ago
Cash is not free for the merchant: there's a cost associated with handling it. Also, some merchants cater to a demographic that likes to use cards a lot and is sensitive to convenience; and making that distinction may cost the merchant in terms of customer appreciation.
- dogma1138 10y ago
  Cash isn't free for people either the vast majority of banks either charge you withdrawal fees or bake them into your flat account fees. If you are a large business then cash handling companies that securely transfer, count, and deposit / clear it for you charge the same and even more than many credit card companies. Cash is only "cheaper" for really small businesses that handle the count and the deposit themselves. And even then there are some fees because banks can also charge a deposit fee when you bring in unsorted cash.
  - mseebach 10y ago
    I think, for small businesses, the problem is that the setup cost and fixed operating costs are amortised over too few transactions to be negligibly cheap - and that's before considering the slightly higher actual transaction fees for such businesses. Square, iZettle and I think PayPal and a few other are doing things in this area, leveraging smartphones, but it's still early days.
    - CydeWeys 10y ago
      The Square POS terminals using tablets (it is iPads?) that rotate for you to sign are nice. I especially like how they'll automatically email you a receipt, which is great for reimbursements or filing taxes because it means I don't need to scan anything. I've never been impressed with anything using a cell phone though. It's too clunky of an experience. I get that it might be useful for farmer's market and other very small retail situations, but when I'm going into a retail store, a real POS terminal is better.

joshfraser 10y ago

When did this change? I know a lot of smaller stores do it, but I always thought they were breaking the rules.

athenot 10y ago
I don't know the details of the fight between the merchants and the credit card companies but this is what eventually came out of it. Since Jan. 27, 2013, merchants have had the ability to assess a surcharge on customers who pay with credit. However, if they choose to take this step, there are a lot of rules that must be followed, including: - Notifying consumers that they’re being charged for using credit, both at the register and on the receipt. On the receipt, the merchant is required to state the exact dollar amount you paid in credit card surcharges. - Charging customers only what they’re paying to the credit card payment networks in swipe fees (again, this is usually around 1%-3.5% of the cost of the transaction). In other words, merchants are allowed to pass on the fee to the customer, but aren’t allowed to make a profit on credit card surcharges. - Staying on the right side of state laws. As of August 2014, nine states prohibit retailers from passing credit card surcharges onto consumers. They are: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, Oklahoma and Texas. - Limiting surcharges to credit card transactions. If you pay with debit, the retailer isn’t allowed assess the fee. This includes debit transactions where you sign for your purchase as opposed to entering a PIN. Only credit card users can be hit with a surcharge. Source: https://www.nerdwallet.com/blog/credit-cards/credit-card-charged-more-gas-station/ https://www.nerdwallet.com/blog/credit-cards/credit-card-cha...
- tossaway1 10y ago
  > As of August 2014, nine states prohibit retailers from passing credit card surcharges onto consumers. In Massachusetts at least there's a loophole for gas stations. In fact that's always been the case... http://www.mass.gov/ago/consumer-resources/consumer-information/retail-rights/information-about-gas-prices.html http://www.mass.gov/ago/consumer-resources/consumer-informat...
- ced 10y ago
  Thank you for taking the time to find a good answer. > Staying on the right side of state laws. As of August 2014, nine states prohibit retailers from passing credit card surcharges onto consumers. They are: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, Oklahoma and Texas. Do you know the rationale for these laws?