Cash discounts have always been permitted in merchant agreements.
What was forbidden until a couple of years ago was credit surcharges however that restriction was removed in 2013. Unless forbidden by state law they're allowed everywhere in the US.
It has been legal in the USA since Oct 2011 for all merchants to offer discounts for cash and debit card use.
https://www.ftc.gov/business-guidance/resources/new-rules-el...
A generous interpretation is that this is rewarding the customer for not making the merchant pay credit card fees.
A less generous interpretation is that this is to facilitate tax evasion.
The truth is probably a mix of both.
I have friends with small businesses that basically admitted to the latter.
Let's assume 3% merchant fee, they get 3% of each charge, so $30 a month, for $360 in a year. Most cards max at 30% interest, which would be $300 a year (technically less because you're paying it off each time). Even with the 3% once, that's $330.
The banks aren't dumb. The interest they make is gravy.
Note that this complaining over fees is a privileged position, we are trying to slash visas margin, but if it didn't exist we would be BEGGING someone to come and run it this smoothly.
I disagree, if they didn't exist and the need existed it would be fairly easy to get a company going to facilitate payments.
China for one has settled on mobile app payments via QR codes for almost everything these days, credit cards are almost nonexistent.
Other countries have strongly leveraged the ability for instant communication to do many more things.
It's absolutely common practice. A few luxury businesses can get away with outsized margins, but everyone else in the physical goods business is working at 60-70% gross margins (so MSRP is usually ~3x cost). Grocery stores are outliers with absolutely razor thin margins.
In twenty years in e-commerce, I've never not seen prices updated to keep margins in a narrow band.
But no company will long run at a loss.
I was a college student, traveling, and generally carried low balances. I was very thankful that Chase handled it the way they did.
They’ve also likely made far more than that in overdraft and monthly fees from my chronically low-balance accounts which often didn't have direct deposit going into them so I’d have monthly fees for the sin of simply “having less than $5,000 and no direct deposits that month”.
Amex has accidental damage coverage for 30 days after purchase, and they fully reimbursed me for the $300 repair. Very happy about that.
Meaning if you have a card that charges the merchant high fees and gives their customers lots of rewards, the business has to either eat that cost or not take that card. They can't charge you more for AmEx.
This is simply wrong. If it was true, then merchants would not care about credit card fees!
>Compared to cash, credit card transactions generally come with lower hidden fees for businesses. Here's a breakdown:
>Credit Card Processing Fees: There are fees associated with credit card transactions, typically a percentage of the sale amount paid by the business to the credit card processor. However, these fees are often lower than the cumulative hidden costs of handling cash.
>Faster Transactions: Credit card transactions are quicker than cash transactions, reducing checkout lines and improving customer experience. This translates to lower labor costs for the business.
>Reduced Risk: The risk of theft and loss is significantly lower with credit cards. Chargebacks (when a customer disputes a credit card transaction) can be an issue, but these are typically manageable compared to stolen cash.
>Improved Sales Tracking: Credit card transactions provide a clear digital record of sales, simplifying bookkeeping and reconciliation for the business.
>Potential for Increased Sales: Offering credit cards allows customers to make larger purchases they might not have enough cash for, potentially increasing sales for the business.
Of course what is not accounted for is tax avoidance which cash can make easier for a merchant.