Hacker News Reader

Comment by lotsofpulp | Hacker News Reader

> The money extracted by the credit card companies and Visa causes merchants to raise prices for everyone regardless of whether they have a rewards card or use a credit card at all.

There has been nothing stopping US merchants from offering cash and/or debit card payers a discount since Oct 2011.

https://www.ftc.gov/business-guidance/resources/new-rules-el...

Most merchants are betting that people paying with credit cards are willing to buy sufficiently more or buy at sufficiently higher prices such that credit card transaction costs are more than offset.

That is the only reason why a cash/debit card discount would not be advertised.

Edit to respond to below:

I don’t buy that. Merchants of all types already engage in myriad types of discounts and promotions to price discriminate customers all the time.

A simple sign saying “x% discount for paying cash/debit” is of negligible complexity.

View on HN

Does accepting cash really save a business that much money? I've heard arguments in the past that it ends up being a negligible difference once you account for all costs of processing cash (someone has to take it to the bank, it can get stolen in a robbery, employees can skim, you have to count it, you need a safe, you need cash deliveries, etc).

I have no numbers, so it could be totally off-base, but it feels not-impossible that it costs a percentage or two to process all your cash anyway, so the difference between cash & credit cards isn't actually that big. It's just that the interchange fees show up as one big chunk whereas the cash processing is lots of little bites, or even accounting for things that didn't happen (like skimming).

I guess this only applies if you're legitimately reporting all your cash take, if the business itself is skimming for tax reasons then the savings on cash would be substantial.

>It's just that the interchange fees show up as one big chunk whereas the cash processing is lots of little bites, or even accounting for things that didn't happen (like skimming).

Not just skimming, but lost business for cash-only establishments is huge. The amount probably varies by type of business, but I sometimes go to a bar that's cash-only and I've seen so many people walk in, try to order, and walk out and never come back once they find out it's cash-only. Even groups of 15-20 people. That's a significant cost (in lost revenue) even if it doesn't directly show up as a line item.

Even I admit to choosing a different place from time to time I think "I could go to the cash only bar, but then I'd have to go to the ATM first or I could just go to the other place that doesn't require an extra trip to the ATM. I should probably just go to the ATM so I could have some cash on me anyways, but traffic is heavy or it's cold/rainy/dark/late."

I own a cash only bar.

I bought an ATM and don't charge a fee to use it. It's right next to the bar.

We still get some walkouts, but not very often. We have a strong reputation.

yes there is. that's an enormous added pricing and communication complexity for businesses. which we know has a high cost because of all the businesses who have decided it would be higher than just stomaching the credit card fees.

Would a 1 percent cash or debit discount be an enormous burden? Some merchants already programmed their terminals to prod debit customers into entering their PIN rather than charging it as credit, so would offering a discount really be that much harder?

One answer is: It's just annoying. I normally use a credit card. Yes, I can use my debit card and enter a PIN. If it's a discount specifically for cash, I may not have any on me and don't want the change anyway. In any case, it's adding mental overhead to just paying.

(It's usually more like 3% delta which I almost get in cashback anyway but still annoying.)

I don't disagree with your point; I do want to point out, though, that whether it's "the merchants have to raise their prices" or "the merchants benefit too and are complicit", the end result is still that it's still the poor who lose.

Reply on news.ycombinator.com