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Merchants can give cash discounts; many do. And there are also expenses to handling cash that credit cards eliminate: for instance, such as the need to securely transport large amounts of cash to and from a bank, the need to count the cash, and the extra labor of cashiers making change—a skill that many cashiers are simply borderline incapable of these days anyway.

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I was about to say "hey, in most US states what you're saying is illegal" and realized I was letting that myth live in my head as if it were true.

So, to be clear for anyone else with the same problem I had:

Merchants in all US states can legally give cash discounts.

In Connecticut and Massachusetts, it's illegal to add a surcharge for credit purchases.

Yes, but it's not a pure dilemma between American Express and cash. There are other ways to pay without cash and without American Express.

I see a few explicit discounts (or surcharges) for different payment methods here and there, but mostly the system works by segregation: the cheaper suppliers with lower margins don't tend to accept the more expensive payment providers.

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