Cash "Discounts" on purchases

[H2ODude]

Hopefully not a new policy that spreads. Just dropped into local specialty butcher shop for a steak (prime filet, maybe this belongs in the "Blow That Dough" thread). Go to check out and there's a nice sign taped on the counter that to encourage customers to pay cash all the prices posted in the store are "cash" discount of 2.99% and if you pay with CC it will be added to the total. The last time I ran into posted prices being "cash discount" was gas stations in GA or SC, although if you looked at the sign closely it did say cash in small print.

What irks me about this is that in time we've gotten to the point where most of us don't carry cash. So few are going to pay for said "discount." Yeah, I know most of us get points or cash back but I think this is just a stealth way of increasing prices. I"m not going back to carrying cash in the amounts to pay for everyday purchases. An indication of the predominance of CC (or DC) is that some stores are trying to do away w cash and then there's a kerfuffle about it being unfair to the poor (who don't have cards). And I know merchants get dinged by the card companies for the service (that then pays for our points).

And, I am being hypocritical because I resented when working for water and sewer dept that the city allowed CC payment of bills. Not a big deal but you had business owners coming in and paying $3000 bills to get points. Any ding to revenue meant an overall increase in rates to balance. I know some government entities charge "convenience fees" for such, have no idea if my former employer does now. They didn't when started because one of the large CC companies had a huge customer service center here; they would have screamed if we did anything against CC's.

Anyway, hopefully this doesn't become some widespread practice to increase the cost to everyone using cards. As for the butcher shop, there's actually a better one only a few miles further.

 

[Sunset]

I thought this was a breach of contract with CC companies, as the butcher charging 2.99% more for CC. ??

I guess if it bothers you enough, you will bring some $50's next time, or shop somewhere else.

Would you get the "discount" if you pay with a debit card ?

 

[OldShooter]

TANSTAAFL. All those points and bennies are paid for ... (wait for it) ... by the merchants! Credit card merchant fees vary depending on how much the CC company is extracting from the merchants to pay for your goodies.

For a small business operating on, say, a 10% net profit the 2-3% credit card fee can be a third of that profit. Really huge. I always pay my wine shop guy by check just to save him the fees.

The change is that until a recent lawsuit was settled, the Visa/MC contracts prohibited merchants from exposing the fees by offering discounts or by upcharging customers. That has now changed. The other thing, of course, is that retail customers are very price conscious, so upcharging for CCs allows the retailer to advertise lower prices to those who are willing to forego the CCs. In either case, the customer is paying the real cost of the purchase. it is neutral for the merchant.

I used to run a business where we had tickets up into the low six figures. My rule was no credit cards over $10,000. I'm pretty sure that was a violation of my merchant agreement, though.

Real world economics, nothing more.

Edit: Re debit cards, I know there was recent litigation because card processors were charging merchants the same price for CCs and for debit cards. I don't know how or if it got settled however. As a former merchant, I would probably not give a different discount for the two types just because of the amount of screwing around that might be necessary to differentiate them. Maybe in a highly automated environment like a grocery store it would be feasible to do this, though.

 

[Teacher Terry]

My groomer, chiropractor and hairdresser do not take any type of cards to keep costs down. Either cash or check. I am fine with that if it keeps costs down.

 

[The Cosmic Avenger]

The change is that until a recent lawsuit was settled, the Visa/MC contracts prohibited merchants from exposing the fees by offering discounts or by upcharging customers. That has now changed. The other thing, of course, is that retail customers are very price conscious, so upcharging for CCs allows the retailer to advertise lower prices to those who are willing to forego the CCs. In either case, the customer is paying the real cost of the purchase. it is neutral for the merchant.

There's a summary here:

http://www.ncsl.org/research/financ...credit-or-debit-card-surcharges-statutes.aspx

 

[lemming]

Popeye's chicken has a cash discount price here in Virginia. I pay cash there anyway so I don't leave a paper trail for the diet police.

 

[athena53]

My groomer, chiropractor and hairdresser do not take any type of cards to keep costs down. Either cash or check. I am fine with that if it keeps costs down.

Yeah, except that I'm always skeptical of businesses that are all or mostly cash. Do they pay taxes on all of it? It's just a lot easier to evade the IRS, avoid paying into SS, etc. My local pro footbal.baseball stadium offers a discount if you pay for parking on-line but if you just show up with your car it's $60. CASH.

Closer to the OT, I once tried to fill my car at a gas station and found that they took only cash or debit cards- a detail not posted on the sign showing the price. Their prices matched the one down the street that DID take credit cards. I thought that was pretty darned deceptive. I left without getting any gas.

 

[H2ODude]

Like, ah, yeah, my original post noted I'm well aware of who pays what for points and all. And if you read it I was on both ends. Anyway.

 

[OldShooter]

Yeah, except that I'm always skeptical of businesses that are all or mostly cash. Do they pay taxes on all of it? It's just a lot easier to evade the IRS, avoid paying into SS, etc. My local pro footbal.baseball stadium offers a discount if you pay for parking on-line but if you just show up with your car it's $60. CASH. ...

Skeptical? Do you work for the IRS? If not, why would you be concerned one way or another?

Edit to be clear: Not trying to argue. Just don't understand.

 

[The Cosmic Avenger]

Well, I think it's a good thing that the cost of using credit isn't invisible to consumers. I didn't really think about it in the early days, but for many years now, I try to use cash for purchases from independent local merchants. Some have offered a discount, especially for larger bills like flooring or plumbing work, but for smaller purchases, I really don't need the dime or quarter that badly. Interestingly, I did have one holdout who finally started accepting credit cards tell me that the increase in business actually more than made up for the fees, though.

 

[GrayHare]

What's not to like? The merchant probably pays more than 3% for cards, so sharing the savings with customers is sweet.

 

[LRDave]

Well, I think it's a good thing that the cost of using credit isn't invisible to consumers. I didn't really think about it in the early days, but for many years now, I try to use cash for purchases from independent local merchants. Some have offered a discount, especially for larger bills like flooring or plumbing work, but for smaller purchases, I really don't need the dime or quarter that badly. Interestingly, I did have one holdout who finally started accepting credit cards tell me that the increase in business actually more than made up for the fees, though.

We are doing this a lot more. Wally World, Kay-Roger, Mc,Ds, et. al., we figure the points are are already built in, so cash-back card it is.

Segue: I can't quite figure out Chik-fil-A. Swipe you must.....no chip reading. The receipt is nearly instantaneous.

 

[CardsFan]

Skeptical? Do you work for the IRS? If not, why would you be concerned one way or another?

Edit to be clear: Not trying to argue. Just don't understand.

I don't know about athena53, but I have a problem with businesses not paying taxes. We all should! If there is a legal way to avoid taxes, that's fine, but just not reporting income is the definition of tax fraud.

Aren't we all subject to taxes to pay for the greater good?

 

[ziggy29]

We are doing this a lot more. Wally World, Kay-Roger, Mc,Ds, et. al., we figure the points are are already built in, so cash-back card it is.

I generally try not to sock small, local businesses with CC fees, but if I'm in a big box retailer I'll pull out the plastic and get the cash back almost every time.

I don't know about athena53, but I have a problem with businesses not paying taxes. We all should! If there is a legal way to avoid taxes, that's fine, but just not reporting income is the definition of tax fraud.

Well, yeah, tax *avoidance* and tax *evasion* are obviously two different things. There's a hotel chain in our area which is seeing several of its locations pursued by local governments for not paying out their hotel taxes. The infuriating thing is that some of these governments are settling for less than they are owed. I wonder -- I just paid almost $3,700 in property taxes. Maybe I should have not paid and hope they would settle for $2,000 later? Nah, that doesn't work for us plebes.

 

[OldShooter]

I don't know about athena53, but I have a problem with businesses not paying taxes. We all should! If there is a legal way to avoid taxes, that's fine, but just not reporting income is the definition of tax fraud.

Aren't we all subject to taxes to pay for the greater good?

What's the point in getting steamed up? If you suspect that a business is not paying taxes do you not do business there? What evidence do you gather and evaluate before making your decision?

I'm a MYOB guy myself. I happily take cash to pay a tour operator when we travel internationally. It's not my business to worry about his relationship with his taxing authorities. And I certainly don't worry about merchants that I buy from in the US. How could I possibly know enough to even have a valid opinion?

 

[audreyh1]

I thought this was a breach of contract with CC companies, as the butcher charging 2.99% more for CC. ??

I guess if it bothers you enough, you will bring some $50's next time, or shop somewhere else.

Would you get the "discount" if you pay with a debit card ?

It’s. Even struck down AFAIK.

 

[ziggy29]

What's the point in getting steamed up? If you suspect that a business is not paying taxes do you not do business there? What evidence do you gather and evaluate before making your decision?

I'm a MYOB guy myself. I happily take cash to pay a tour operator when we travel internationally. It's not my business to worry about his relationship with his taxing authorities. And I certainly don't worry about merchants that I buy from in the US. How could I possibly know enough to even have a valid opinion?

Well, the question is, do you *know* or just have a gut feeling that someone is practicing tax evasion? If you *know*, then their not paying taxes means it's that much more the rest of us have to pay. And while I am OK with paying my fair share of taxes as long as I feel I'm getting something of sufficient value in return, I'm not as OK with paying someone else's share of taxes, too.

 

[CardsFan]

What's the point in getting steamed up? If you suspect that a business is not paying taxes do you not do business there? What evidence do you gather and evaluate before making your decision?

I'm a MYOB guy myself. I happily take cash to pay a tour operator when we travel internationally. It's not my business to worry about his relationship with his taxing authorities. And I certainly don't worry about merchants that I buy from in the US. How could I possibly know enough to even have a valid opinion?

For the record, I know a guy that hid a lot "under the table'. Guess what, his SS was not much when he retired.

Call me anal, but anymore, every tip goes on the CC. If I can pay taxes, you can pay taxes. Sorry, just me.

 

[bolt]

In most of the world everything's negotiable w/cash.
In Singapore a shadow bank* called Apple Pay rules 95% of all transactions.

https://topdocumentaryfilms.com/all-wars-are-bankers-wars/

This threads readers might like the above film. IIRC its about 3hrs.
Good Luck!

 

[JoeWras]

The tax debate reminds me of being in Greece where every merchant really wanted cold, hard cash.

Hey, I want to bring up a reverse point to this. My credit union will give you a really good rate on your savings account only if you use your debit card over 30 times per month.

I find this obnoxious. I don't want a debit card. I don't want to be forced into 1 transaction per day to get this rate.

I suspect this is all about gaining those fees. Lots of money to be made from the merchants.

 

[ziggy29]

The tax debate reminds me of being in Greece where every merchant really wanted cold, hard cash.

Hey, I want to bring up a reverse point to this. My credit union will give you a really good rate on your savings account only if you use your debit card over 30 times per month.

That is a lot. My credit union will give their savings rate (now 1.75%, was 2% a few months ago) on checking if you do a few things, one of them being using their credit or debit card 10 times a month. Since we have about 5 or 6 bills set to autopay with their credit card it's a pretty easy thing to do. But 30 times?? Wow.

 

[Jerry1]

I bit of a tangent, but I recently gave a gift to charity. The gift was $1K. My credit card was charged for about $1,025. I guess some financial entities have figured out how not to have to bear the burden of the credit card fees. Note, I didn’t mind but it was interesting as I had never seen that done before.

 

[jollystomper]

When "computer fairs" were frequent and popular in my area (from the mid-1990s to early 2010s), and a cheaper way to buy components, discounts for cash were common among many of the vendors.

 

[brett]

When we travel in Asia it is not unusual for some vendors to charge extra for credit card transactions..usually 3 percent.

When we travel in parts of Europe we often ask is there is a discount for cash. There usually in smaller hotels, b and b's. Usually ten percent. Others request cash at time of booking.

We pay everything we can by credit card providing there is no upcharge. Insurance, utiliites, dental, etc.

 

[JoeWras]

But 30 times?? Wow.

3.00% APR on the first $10k in the account. I'm not a fan of this. I always said when I retired, I'd do things like write letters or have meetings with board members and express my displeasure. But that's boring.

I bit of a tangent, but I recently gave a gift to charity. The gift was $1K. My credit card was charged for about $1,025. I guess some financial entities have figured out how not to have to bear the burden of the credit card fees.

There VERY LIKELY was some fine print on this, and possibly a small box to opt out of the automatic CC charge.

As a treasurer of a non-profit, I was very aware of this. We chose to not enable those automatic charges, but instead just put in a note to opt in. Frankly, for our small charity, anything we got was gravy, and credit cards were really the only way people would give.