5 ms·

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?

by ced 10y ago

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.
  - morgante 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. I haven't found that to be true at all. Are you speaking about a non-US context? In the US you can almost universally go to your bank ATM and withdraw cash without a fee. There's also no fees for having a checking account.
    - jdeibele 10y ago
      Poster you replied to is talking about deposits, not withdrawals. Banks treat cash very carefully. If you bring in a stack of cash that they have to count once to see how much it is and then again to verify it's going to take time and they might charge you for that.
      - morgante 10y ago
        > Poster you replied to is talking about deposits, not withdrawals. They literally said "withdrawal fees." I don't know of any bank which charges you to deposit cash. I occasionally drop off large stacks of cash and have them count it—there's never been an issue.
        saryant 10y ago
        Many (most?) business checking accounts charge for large cash deposits.
        dogma1138 10y ago
        Banks that don't charge those fees directly bake them into other fees. Maintaining ATM's and counting and transporting cash costs money, cash isn't free I don't know about US banks specifically.
        morgante 10y ago
        > Banks that don't charge those fees directly bake them into other fees. What other fees? I've literally never paid a fee to my bank for anything. And it's a major bank (Chase).
  - prklmn 10y ago
    Many business owners prefer cash so they can avoid paying taxes and directly insert the cash into their pocket. Its nearly impossible to trace whereas there is a paper trail left when a credit card is charged.
    - ptaipale 10y ago
      However, that's tax fraud and carries a risk of significant penalties. But there are other reasons for preferring cash. For instance, a bank or authorities cannot quite as easily shut down your business if it runs on cash money, compared to having everything in bank which can be confiscated instantly, on-line.
- ced 10y ago
  Do you know where debit cards stand? I have a cost for using debit, but does the merchant pay a significant one too?
  - jdeibele 10y ago
    0.05% plus $0.21 in Interchange fees for most people https://www.cardpaymentoptions.com/fee-sweep/debit-fees-explained/ https://www.cardpaymentoptions.com/fee-sweep/debit-fees-expl...
rubyfan 10y ago
I see it mostly at smaller gas stations these days and it usually looks like "Regular" and "Paying with Cash" price. Frankly I wish more places would offer a cash discount. The rewards program schemes have always bothered me.
- athenot 10y ago
  Some (most?) gas stations make more money on the convenience store than on the gas itself. So setting up a scheme to encourage the customer to come in the store is in their interest. They make it super easy to toss in a side item with the gas purchase.
  - rubyfan 10y ago
    Good context. Lottery tickets, tobacco products, monster energy drinks, coffee, soda, 5 hour energy, protein bars and beef jerky are evidently where the money is made.
  - ams6110 10y ago
    This is true. Gasoline is sold with almost no profit. It's one example of a perfect competitive market converging on zero profit (at least for the retailer). Gasoline is a commodity, it's all the same and everwhere it's sold there are usually several competing retailers and prices are highly visible from the street.
    - rubyfan 10y ago
      Yeah interesting, I wonder if there's anything remotely similar in the real world.
      - analog31 10y ago
        I suspect it's quite common. Gas is an ideal loss leader -- the price on the sign, and your need for gas, gets you into the station. But now you're there, and you're less sensitive to the price of a Coke or bag of jerky. But there are a lot of markets where price competition drives down the margins for the "main" product, so that the retailers make up their profits on smaller stuff. I've read that a store selling electric guitars or bicycles makes relatively little profit on those items, but instead, makes their nut on accessories, things that wear out, service, lessons, etc.
ozi 10y ago
Specs Liquor in Houston (a pretty large operation) offers a flat 5% discount off your total for not using a credit card. Everything in the store has a "cash price" and a "regular price."

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?

by 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.
- morgante 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. I haven't found that to be true at all. Are you speaking about a non-US context? In the US you can almost universally go to your bank ATM and withdraw cash without a fee. There's also no fees for having a checking account.
  - jdeibele 10y ago
    Poster you replied to is talking about deposits, not withdrawals. Banks treat cash very carefully. If you bring in a stack of cash that they have to count once to see how much it is and then again to verify it's going to take time and they might charge you for that.
    - morgante 10y ago
      > Poster you replied to is talking about deposits, not withdrawals. They literally said "withdrawal fees." I don't know of any bank which charges you to deposit cash. I occasionally drop off large stacks of cash and have them count it—there's never been an issue.
      - saryant 10y ago
        Many (most?) business checking accounts charge for large cash deposits.
      - dogma1138 10y ago
        Banks that don't charge those fees directly bake them into other fees. Maintaining ATM's and counting and transporting cash costs money, cash isn't free I don't know about US banks specifically.
        morgante 10y ago
        > Banks that don't charge those fees directly bake them into other fees. What other fees? I've literally never paid a fee to my bank for anything. And it's a major bank (Chase).
- prklmn 10y ago
  Many business owners prefer cash so they can avoid paying taxes and directly insert the cash into their pocket. Its nearly impossible to trace whereas there is a paper trail left when a credit card is charged.
  - ptaipale 10y ago
    However, that's tax fraud and carries a risk of significant penalties. But there are other reasons for preferring cash. For instance, a bank or authorities cannot quite as easily shut down your business if it runs on cash money, compared to having everything in bank which can be confiscated instantly, on-line.
ced 10y ago
Do you know where debit cards stand? I have a cost for using debit, but does the merchant pay a significant one too?
- jdeibele 10y ago
  0.05% plus $0.21 in Interchange fees for most people https://www.cardpaymentoptions.com/fee-sweep/debit-fees-explained/ https://www.cardpaymentoptions.com/fee-sweep/debit-fees-expl...

rubyfan 10y ago

I see it mostly at smaller gas stations these days and it usually looks like "Regular" and "Paying with Cash" price. Frankly I wish more places would offer a cash discount. The rewards program schemes have always bothered me.

athenot 10y ago
Some (most?) gas stations make more money on the convenience store than on the gas itself. So setting up a scheme to encourage the customer to come in the store is in their interest. They make it super easy to toss in a side item with the gas purchase.
- rubyfan 10y ago
  Good context. Lottery tickets, tobacco products, monster energy drinks, coffee, soda, 5 hour energy, protein bars and beef jerky are evidently where the money is made.
- ams6110 10y ago
  This is true. Gasoline is sold with almost no profit. It's one example of a perfect competitive market converging on zero profit (at least for the retailer). Gasoline is a commodity, it's all the same and everwhere it's sold there are usually several competing retailers and prices are highly visible from the street.
  - rubyfan 10y ago
    Yeah interesting, I wonder if there's anything remotely similar in the real world.
    - analog31 10y ago
      I suspect it's quite common. Gas is an ideal loss leader -- the price on the sign, and your need for gas, gets you into the station. But now you're there, and you're less sensitive to the price of a Coke or bag of jerky. But there are a lot of markets where price competition drives down the margins for the "main" product, so that the retailers make up their profits on smaller stuff. I've read that a store selling electric guitars or bicycles makes relatively little profit on those items, but instead, makes their nut on accessories, things that wear out, service, lessons, etc.

ozi 10y ago

Specs Liquor in Houston (a pretty large operation) offers a flat 5% discount off your total for not using a credit card. Everything in the store has a "cash price" and a "regular price."