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Comment by JKCalhoun | Hacker News Reader

Are they bound by contract not to offer a discount for casher buyers?

I ask because when I was in Germany (and, granted, this was a few decades ago) you got some percent off the price if you paid cash. Merchants there seemed pretty credit-card averse.

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They used to be but the law was changed to make it illegal for the card companies to demand that they don’t offer a cash discount (or charge more for credit). Smaller businesses are doing that more and more since the pandemic to try to hold to their prices as long as they can.

Big companies do a similar thing by offering you a store card. Costco likely makes more money from you when you pay with your Costco card than if you pay cash, because they get the interchange fee very very low and have to pay to handle cash. Rumor was AMEX was eating the interchange fee AND paying them … because they more than made it up by the customers who made the card Top Card.

In the EU, the opposite of this happened: the EU directive PSD2 made it illegal for merchants to apply surcharges on purchases using consumer credit and debit cards from early 2018.

I thought this was a UK govt being stupid thing. So it was the EU to blame!

Given what this article says, it sounds as though not only are cash buyers cross-subsidising card buyers, but non-rewards card buyers are cross subsidising rewards card buyers.

So much for free markets.

I'm told cash is actually more troublesome for merchants than electronic means, especially as more transactions become cashless. They have to pay for keeping change, physical security, transport of takings, bank cash processing fees, etc. Given the EU/UK caps electronic interchange fees to something reasonable, it may even be card buyers are cross-subsidizing cash buyers in some businesses.

That's still a thing in Canada and the US in various places, generally "mom and pop" run business.

Credit card fees for small orgs are like 1-2% so for a small biz that could pinch. Cash also lets you, uh, "fudge" your numbers for tax purposes.

There's a good sushi place near me that gives a 10% discount for cash. I'm fascinated by this.

(I still use a card because life is short)

That may just be good old-fashioned tax evasion.

(If you pay cash, the business owner can just pocket the money without ever recording the transaction. For digital payments, this is much harder to do undetected.)

Unrecorded cash payment makes it much easier to pay undocumented staff

It's tax evasion.

First comment I see that addresses this. This is a big part of accepting and paying cash. Tax evation. From both sides.

Where I live there's a mom and pop (well, mom and daughter) shop that sells relatively expensive clothes. They stopped accepting Amex because fees were too high, yet they basically apply a 5-10% discount by default if you spend enough...

Yeah I often see small print on the fuel cost per gallon as "cash price" .. I assume this happens mostly on low-margin products.

They used to but got sued over it, and in 2012 settled it partially by ending the practice: https://www.barclaydamon.com/alerts/What-the-Credit-Card-Set...

All the CC contracts I have ever seen only prevented you from discriminating against a particular card/brand if you took credit cards. You could offer a cash discount as a policy, but you couldn't charge AMEX holders an extra 1%, as an example.

They can do it now. In the past you had to offer same prices, although you could negotiate.

It’s usually motivated more by mom and pops skimming taxes than 3% credit card fees. If you do any kind of volume, there isn’t a ton of savings as cash management ain’t free.

The electronic equivalent is people who take personal Venmo at retail.

It's pretty expensive to take cash. First, you have to keep a float of money for change. Then you have to secure the cash until you deposit it in the bank. Then sink some time into counting and depositing it, before being charged by your bank for depositing cash. That must very quickly add up to a percentage point or 2.

The issue is that these costs of handling cash are largely fixed - marginally, if your store takes $100 in cash, your cash-handling expenses and effort stay the same, but if you take $100 by card, your fees directly increase. You avoid the expenses of handling cash only if you don't take cash at all.

Where I live it'd used to be possible to get a discount if you paid cash but it was deemed discriminatory against card holders and so it was banned. It's the same price regardless of payment method.

It removes the incentive for clients to use cash if a card option is available, makes them more used to paying by card, and hence decreases the competitiveness of merchants that don't offer card at all - until cards become so wide spread that many merchants don't even accept cash at all, like where I live.

A bit hostile towards merchants, but very nice for consumers imo.

> A bit hostile towards merchants, but very nice for consumers imo.

It's nice for consumers who prefer to pay by card. It's hostile towards consumers who prefer to pay in cash.

Call me close minded but i see cash as an archaic, strictly inferior way of managing money. But to each their own.

I spend primarily on credit cards but I still think it’s important to preserve the ability to transact without the government knowing. Privacy is best preserved when data is not created at all, rather than when data is protected by law.

Which is the reason the cut is now capped and card acceptance is higher, even for credit cards (0.3% for cc, 0.2% for dc). Though low-margin businesses like grocery store still don't accept them (credit cards) due to the marginally higher fees in some countries.

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