4 ms·

Points are a way for people who buy with cash, debit cards and cards with lower fees to subsidise the travels of people who use points.

ensignavenger 3y ago
There is nothing stopping stores from offering a discount if you pay in cash or debit. Businesses most often choose not to, so they must feel like they are getting somthing out of the deal.
- vineyardmike 3y ago
  Humorously, there are laws against credit card surcharges but not against cash discounts. Realistically, the price difference is probably not worth the hassle of needing two prices and card sales are probably affordable enough and common enough to not bother. https://www.ca5.uscourts.gov/opinions/pub/15/15-50168-CV0.pdf https://www.ca5.uscourts.gov/opinions/pub/15/15-50168-CV0.pd...
  - kelnos 3y ago
    Strange, I've seen quite a few merchants that do the card surcharge thing, and no one seems to complain.
    - rrrrrrrrrrrryan 3y ago
      The Supreme Court settled it in 2017 actually - surcharges are fine now: https://archive.is/eYB5W https://archive.is/eYB5W They basically said a surcharge for credit is effectively the same thing as a discount for cash, and because of freedom of speech, merchants are free to communicate the difference to their customers either way.
      - sidewndr46 3y ago
        But is a payment processor required to process charges from a vendor stating they have a surcharge?
      - oohffyvfg 3y ago
        only took them a few decades
  - bonton89 3y ago
    I've seen cash stations offer a cash discount. It was always less than my credit card's gas reward and required me to go inside the station to pay.
    - vikingerik 3y ago
      Gas stations do the cash discount for a particular reason - to get you inside the building where you might buy profitable convenience-store items, which you won't if you just stay at the pump. (Though yes, the differential might be less than the kickback from a card rewards program.)
  - kjkjadksj 3y ago
    Ive seen restaurants do as much as 4% off for cash.
- a_subsystem 3y ago
  Several restaurants around me offer a cash 'discount'.
- deleted 3y ago
  [deleted]
- deleted 3y ago
  [deleted]
- mattmaroon 3y ago
  As a small merchant I can tell you: cash sucks to deal with and it costs money too. I went to cashless years ago. The 2.x% I eat in processing is more than made up for in not having to deal with shrinkage (either due to theft or inaccuracy or counterfiet bills), security, having to count money and go to the bank regularly, etc. It's probably different when you're at a much larger scale than I am, but even Wal-Mart (who I was employed by in my late teens) has all sorts of cash-handling procedures to mitigate the risk of money just walking away. Even a their scale, they spend 1% on CC processing, but by the time they added up all of the labor and expenses of cash handling,it might be comparable. And for a small business it's likely more. And then there's the data collection which has value too. People act like accepting cash is free, it is not.
  - xur17 3y ago
    This is why we need a digital cash equivalent. Transferring value shouldn't have to cost 1-3% of the transaction value. It's an absurdly high tax.
    - mattmaroon 3y ago
      It is especially because most of the fraud just gets passed onto the merchants anyway
    - ac29 3y ago
      Debit card transactions in the US are capped to 0.05% + 21c for non-exempt card issuers[0]. The problem is there are a lot of exempt issuers. [0] https://en.wikipedia.org/wiki/Durbin_amendment https://en.wikipedia.org/wiki/Durbin_amendment
  - coldpie 3y ago
    Thanks, this is an interesting opinion to read! I went through a period where I asked most small/local businesses I happened to be shopping at whether they preferred cash or card, as I had both to hand. It was a small sample size, but the vast majority said they didn't care either way, and a handful said they preferred cash. I never experienced card-only or a card-preference. That did surprise me, as I expected at least some to feel as you do.
- deleted 3y ago
  [deleted]
dalyons 3y ago
somewhat true but the reality is far worse - points/rewards are mostly subsidised by the poorer folk who get caught paying the > 25% interest on their carried credit card balance.
- asadotzler 3y ago
  you could just as well say that the mortgage interest payments the bank takes in are subsidizing credit card points, or HELOC origination fees, or account maintenance fees are subsidizing points. you could also say the bank's profits from trading securities, or their lucrative wealth managements services are subsidizing points. but none of that would be accurate. The banks have a range of services and some are big wins and some are marginal and some may even be losses, and of course the wins help balance out the losses, but unless you can show that points disappear if poor folks manage their credit better and pay more reasonable interest rates, it's not reasonable to frame points as being subsidized by the poor.
- pingore 3y ago
  High-end rewards cards are quite profitable on their own, thanks to the annual fee, high volume of interchange fees, and the high probability of successful collection. Low end cards aren’t expensive because they are subsidizing high-end cards; they are expensive because they need to cover the collection costs

ensignavenger 3y ago

There is nothing stopping stores from offering a discount if you pay in cash or debit. Businesses most often choose not to, so they must feel like they are getting somthing out of the deal.

vineyardmike 3y ago
Humorously, there are laws against credit card surcharges but not against cash discounts. Realistically, the price difference is probably not worth the hassle of needing two prices and card sales are probably affordable enough and common enough to not bother. https://www.ca5.uscourts.gov/opinions/pub/15/15-50168-CV0.pdf https://www.ca5.uscourts.gov/opinions/pub/15/15-50168-CV0.pd...
- kelnos 3y ago
  Strange, I've seen quite a few merchants that do the card surcharge thing, and no one seems to complain.
  - rrrrrrrrrrrryan 3y ago
    The Supreme Court settled it in 2017 actually - surcharges are fine now: https://archive.is/eYB5W https://archive.is/eYB5W They basically said a surcharge for credit is effectively the same thing as a discount for cash, and because of freedom of speech, merchants are free to communicate the difference to their customers either way.
    - sidewndr46 3y ago
      But is a payment processor required to process charges from a vendor stating they have a surcharge?
    - oohffyvfg 3y ago
      only took them a few decades
- bonton89 3y ago
  I've seen cash stations offer a cash discount. It was always less than my credit card's gas reward and required me to go inside the station to pay.
  - vikingerik 3y ago
    Gas stations do the cash discount for a particular reason - to get you inside the building where you might buy profitable convenience-store items, which you won't if you just stay at the pump. (Though yes, the differential might be less than the kickback from a card rewards program.)
- kjkjadksj 3y ago
  Ive seen restaurants do as much as 4% off for cash.
a_subsystem 3y ago
Several restaurants around me offer a cash 'discount'.
deleted 3y ago
[deleted]
deleted 3y ago
[deleted]
mattmaroon 3y ago
As a small merchant I can tell you: cash sucks to deal with and it costs money too. I went to cashless years ago. The 2.x% I eat in processing is more than made up for in not having to deal with shrinkage (either due to theft or inaccuracy or counterfiet bills), security, having to count money and go to the bank regularly, etc. It's probably different when you're at a much larger scale than I am, but even Wal-Mart (who I was employed by in my late teens) has all sorts of cash-handling procedures to mitigate the risk of money just walking away. Even a their scale, they spend 1% on CC processing, but by the time they added up all of the labor and expenses of cash handling,it might be comparable. And for a small business it's likely more. And then there's the data collection which has value too. People act like accepting cash is free, it is not.
- xur17 3y ago
  This is why we need a digital cash equivalent. Transferring value shouldn't have to cost 1-3% of the transaction value. It's an absurdly high tax.
  - mattmaroon 3y ago
    It is especially because most of the fraud just gets passed onto the merchants anyway
  - ac29 3y ago
    Debit card transactions in the US are capped to 0.05% + 21c for non-exempt card issuers[0]. The problem is there are a lot of exempt issuers. [0] https://en.wikipedia.org/wiki/Durbin_amendment https://en.wikipedia.org/wiki/Durbin_amendment
- coldpie 3y ago
  Thanks, this is an interesting opinion to read! I went through a period where I asked most small/local businesses I happened to be shopping at whether they preferred cash or card, as I had both to hand. It was a small sample size, but the vast majority said they didn't care either way, and a handful said they preferred cash. I never experienced card-only or a card-preference. That did surprise me, as I expected at least some to feel as you do.
deleted 3y ago
[deleted]

dalyons 3y ago

somewhat true but the reality is far worse - points/rewards are mostly subsidised by the poorer folk who get caught paying the > 25% interest on their carried credit card balance.

asadotzler 3y ago
you could just as well say that the mortgage interest payments the bank takes in are subsidizing credit card points, or HELOC origination fees, or account maintenance fees are subsidizing points. you could also say the bank's profits from trading securities, or their lucrative wealth managements services are subsidizing points. but none of that would be accurate. The banks have a range of services and some are big wins and some are marginal and some may even be losses, and of course the wins help balance out the losses, but unless you can show that points disappear if poor folks manage their credit better and pay more reasonable interest rates, it's not reasonable to frame points as being subsidized by the poor.
pingore 3y ago
High-end rewards cards are quite profitable on their own, thanks to the annual fee, high volume of interchange fees, and the high probability of successful collection. Low end cards aren’t expensive because they are subsidizing high-end cards; they are expensive because they need to cover the collection costs