6 ms·

That 3% is also baked into the price of goods at this point, so youre paying it even when using cash. However, some people think the credit card companies are

by basch 7y ago

That 3% is also baked into the price of goods at this point, so youre paying it even when using cash. However, some people think the credit card companies are inflating the price of goods with rewards, without taking into account how expensive cash is to deal with. To count, to detect counterfeiting, to lock up, to trust employees, to move. Processing cash isnt cheap, and can involve considerable risk, including increased IRS scrutiny. Handling money is a cost, like rent and electricity, built into everything we do. Credit card networks are much more efficient than existing alternatives.

nordsieck 7y ago
> That 3% is also baked into the price of goods at this point, so youre paying it even when using cash. Every once in a while, I'll run into places that do a cash discount, usually smaller businesses. It's super common at gas stations - even big chains.
- basch 7y ago
  I have to feel its misguided in some cases. Credit card transaction fees hit the hardest on small purchases, as they take a larger percent. A business thats lots of tiny transactions might come out slightly ahead with cash, but now youre losing customers, and maybe not book keeping accurately enough to be legally compliant. I have noticed gas stations are more prone to this (along with very small business), although it happens on occasion at restaurants as well. I figure, with 3% restaurant rewards, I break even at 3% restaurant charge and or using cash.
  - nordsieck 7y ago
    > A business thats lots of tiny transactions might come out slightly ahead with cash, but now youre losing customers Why would businesses that offers a cash discount (which means they also accept credit/debit) lose customers?
    - ac29 7y ago
      I think they meant a business that only takes cash.
    - smileysteve 7y ago
      Because card paying members may choose to shop the store where they don't feel like they're losing. Ie; gas station 1 has a 3c cash discount. Gas station 2 has no discount, but you don't feel like you're not getting the discount. Gas station 3 can even compete by having a 1c credit discount.
  - tlb 7y ago
    Keep in mind that accepting cash isn't zero-cost. You need drop safes, daily pickups by secure courier, and you're at risk of robbery (especially for places open at night, like gas stations.) Depending on circumstances, it can cost more than 3%.
    - basch 7y ago
      those are all things I put in my first comment above.
  - AlchemistCamp 7y ago
    For me, even when buying things like new computers, it will cost 3%-5% more if I use a card. The dominance of cards is mostly American or, at the very least, location-dependent.
    - basch 7y ago
      where as I feel I pay 2-5% less when using a card. Target and Amazon are both 5% off using the right card, vs 2% on a generic cash back card. Gas is 4% off on the costco card.
  - lotsofpulp 7y ago
    The real savings are in not reporting the income for taxes, and even payroll taxes / insurance if you get to pay someone with cash with the cash you're given, and worth much more than saving a few % off credit card fees.
  - aledalgrande 7y ago
    Actually a lot of cash only businesses are probably dodging taxes.
- dhosek 7y ago
  > Every once in a while, I'll run into places that do a cash discount, usually smaller businesses. It's super common at gas stations - even big chains. That's generally prohibited by the credit card merchant agreement. Gas stations are one of the rare exceptions.
  - nordsieck 7y ago
    > That's generally prohibited by the credit card merchant agreement. That is not true. > Cash Discount programs are legal in all 50 states per the Durbin Amendment (part of the 2010 Dodd-Frank Law), which states that businesses are permitted to offer a discount to customers as an incentive for paying with cash. https://www.quantumelectronicpayments.com/implement-legal-and-compliant-cash-discount-program/ https://www.quantumelectronicpayments.com/implement-legal-an...
    - larkost 7y ago
      You are missing the point. The credit cards companies have mandated that the "regular" (that is the main advertised) price is the one you pay by credit card. They don't object to having cash-discount prices, but they want to make sure that people do not perceive that credit card purchases are more expensive. It is all about perception.
      - deleted 7y ago
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      - deleted 7y ago
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  - AjithAntony 7y ago
    Cash discounting is fine in all states. Surcharges are typically prohibited. Gas stations may be exceptional in that some will publicly advertise the dual pricing where allowable.
    - exclusiv 7y ago
- rahimnathwani 7y ago
  At gas stations, the cash price is shown on the signage to lure in customers. They can advertise a lower price (the cash price) than the actual price they charge (as people almost always pay by card, especially when they pay at the pump). I don't think they expect or want customers to pay by cash.
- rswail 7y ago
  That's a US thing. In a lot of countries, CC transactions have a surcharge. They also have independent debit networks (not Visa Debit or Cirrus, which uses the Visa/MC Networks) that offer substantially lower merchant fees (often a fixed fee per transaction of equivalent of 0.1-0.5%).
imglorp 7y ago
> Credit card networks are much more efficient than existing alternatives. That, plus user transaction data is hugely valuable as its own product: tracking users and their spending habits and selling the signal. Cash takes away from that revenue stream.
csdreamer7 7y ago
There is also chargeback fraud and merchant equipment and maintenance. The owner of a chain of gas stations in Florida sued Visa for refusing to certify his new chip installation when chip transfers were coming around. Without being able to take chip cards he would be liable for every fraudulent card swipe where as liability for chip transactions are with Visa under their new rules. But otherwise you are right. Plus register employees need cash bonds I believe for insurance.
konschubert 7y ago
Basically, the credit card networks are bribing customers to become complicit in extorting a sales tax from merchants.
- bduerst 7y ago
  Or sharing kickbacks to consumers to increase their buying power, which isn't extortion or illegal.
- basch 7y ago
  If their processing service is cheaper and better than cash services (Brinks etc), then the 2% cash back is more like paying customers for the aggregate data collection. Visa gets paid to replace cash processing, and pays out for consumers providing shopping data.
- lotsofpulp 7y ago
  It also has the effect of forcing accurate payment of taxes due to an an indisputable record being created of sales: https://www.youtube.com/watch?v=_Gsz7Gu6agA https://www.youtube.com/watch?v=_Gsz7Gu6agA

by basch 7y ago

nordsieck 7y ago

> That 3% is also baked into the price of goods at this point, so youre paying it even when using cash. Every once in a while, I'll run into places that do a cash discount, usually smaller businesses. It's super common at gas stations - even big chains.

basch 7y ago
I have to feel its misguided in some cases. Credit card transaction fees hit the hardest on small purchases, as they take a larger percent. A business thats lots of tiny transactions might come out slightly ahead with cash, but now youre losing customers, and maybe not book keeping accurately enough to be legally compliant. I have noticed gas stations are more prone to this (along with very small business), although it happens on occasion at restaurants as well. I figure, with 3% restaurant rewards, I break even at 3% restaurant charge and or using cash.
- nordsieck 7y ago
  > A business thats lots of tiny transactions might come out slightly ahead with cash, but now youre losing customers Why would businesses that offers a cash discount (which means they also accept credit/debit) lose customers?
  - ac29 7y ago
    I think they meant a business that only takes cash.
  - smileysteve 7y ago
    Because card paying members may choose to shop the store where they don't feel like they're losing. Ie; gas station 1 has a 3c cash discount. Gas station 2 has no discount, but you don't feel like you're not getting the discount. Gas station 3 can even compete by having a 1c credit discount.
- tlb 7y ago
  Keep in mind that accepting cash isn't zero-cost. You need drop safes, daily pickups by secure courier, and you're at risk of robbery (especially for places open at night, like gas stations.) Depending on circumstances, it can cost more than 3%.
  - basch 7y ago
    those are all things I put in my first comment above.
- AlchemistCamp 7y ago
  For me, even when buying things like new computers, it will cost 3%-5% more if I use a card. The dominance of cards is mostly American or, at the very least, location-dependent.
  - basch 7y ago
    where as I feel I pay 2-5% less when using a card. Target and Amazon are both 5% off using the right card, vs 2% on a generic cash back card. Gas is 4% off on the costco card.
- lotsofpulp 7y ago
  The real savings are in not reporting the income for taxes, and even payroll taxes / insurance if you get to pay someone with cash with the cash you're given, and worth much more than saving a few % off credit card fees.
- aledalgrande 7y ago
  Actually a lot of cash only businesses are probably dodging taxes.
dhosek 7y ago
> Every once in a while, I'll run into places that do a cash discount, usually smaller businesses. It's super common at gas stations - even big chains. That's generally prohibited by the credit card merchant agreement. Gas stations are one of the rare exceptions.
- nordsieck 7y ago
  > That's generally prohibited by the credit card merchant agreement. That is not true. > Cash Discount programs are legal in all 50 states per the Durbin Amendment (part of the 2010 Dodd-Frank Law), which states that businesses are permitted to offer a discount to customers as an incentive for paying with cash. https://www.quantumelectronicpayments.com/implement-legal-and-compliant-cash-discount-program/ https://www.quantumelectronicpayments.com/implement-legal-an...
  - larkost 7y ago
    You are missing the point. The credit cards companies have mandated that the "regular" (that is the main advertised) price is the one you pay by credit card. They don't object to having cash-discount prices, but they want to make sure that people do not perceive that credit card purchases are more expensive. It is all about perception.
    - deleted 7y ago
      [deleted]
    - deleted 7y ago
      [deleted]
- AjithAntony 7y ago
  Cash discounting is fine in all states. Surcharges are typically prohibited. Gas stations may be exceptional in that some will publicly advertise the dual pricing where allowable.
  - exclusiv 7y ago
rahimnathwani 7y ago
At gas stations, the cash price is shown on the signage to lure in customers. They can advertise a lower price (the cash price) than the actual price they charge (as people almost always pay by card, especially when they pay at the pump). I don't think they expect or want customers to pay by cash.
rswail 7y ago
That's a US thing. In a lot of countries, CC transactions have a surcharge. They also have independent debit networks (not Visa Debit or Cirrus, which uses the Visa/MC Networks) that offer substantially lower merchant fees (often a fixed fee per transaction of equivalent of 0.1-0.5%).

imglorp 7y ago

> Credit card networks are much more efficient than existing alternatives. That, plus user transaction data is hugely valuable as its own product: tracking users and their spending habits and selling the signal. Cash takes away from that revenue stream.

csdreamer7 7y ago

There is also chargeback fraud and merchant equipment and maintenance. The owner of a chain of gas stations in Florida sued Visa for refusing to certify his new chip installation when chip transfers were coming around. Without being able to take chip cards he would be liable for every fraudulent card swipe where as liability for chip transactions are with Visa under their new rules. But otherwise you are right. Plus register employees need cash bonds I believe for insurance.

konschubert 7y ago

Basically, the credit card networks are bribing customers to become complicit in extorting a sales tax from merchants.

bduerst 7y ago
Or sharing kickbacks to consumers to increase their buying power, which isn't extortion or illegal.
basch 7y ago
If their processing service is cheaper and better than cash services (Brinks etc), then the 2% cash back is more like paying customers for the aggregate data collection. Visa gets paid to replace cash processing, and pays out for consumers providing shopping data.
lotsofpulp 7y ago
It also has the effect of forcing accurate payment of taxes due to an an indisputable record being created of sales: https://www.youtube.com/watch?v=_Gsz7Gu6agA https://www.youtube.com/watch?v=_Gsz7Gu6agA