And if you don't use a card, the business takes 2c from your left pocket and keeps it.
It's a great trick though, people really buy into the whole points/cashback thing and don't realise they're being paid with their own money
Nowadays though, many sellers are offering at least 3% or higher discounts for not using credit card. My mobile network provider, home ISP, daycare and kids activities, insurance, taxes, healthcare, tradespeople, and even Target offers a 5% discount if you do not use a credit card.
It’s basically only travel, restaurants, and non Target retail that earns credit card rewards. Although sign up bonuses make it worth paying the additional credit card fees sometimes.
Merchants rarely offer cash discounts in the US.
Even if the merchant pays the sticker price for card acceptance, it's usually just below 3%, unless international cards are involved. Add to that the fact that cash transactions in restaurants are often accounted for in "more tax efficient ways", and it feels even more icky.
The counterfactual isn't getting or not getting 2% cash back, it's the merchant paying or not paying ~3% in fees, a part of which you get back from your issuing bank as a kickback to keep participating in and advocating for this scheme.
Of course this would require regulatory action. Absent that, the status quo represents the stable equilibrium.
Admittedly that is overstating it a bit because not everyone uses a rewards card. In reality the 2% cashback is 1% your own money being given back to you and 1% money from people paying in cash being transferred to you (normally regressively as someone else pointed out).
If you get a discount for paying cash, then it really is just your own money
Next time you have an independent contractor do some work, after they give a price, ask them if they will accept 90% or even less if you pay cash.
My barber has a sign with a cash price, a Zelle/Venmo price, and a credit card price.
I'm not disputing they exist, just that it's exceedingly rare and not the norm.
> My barber has a sign with a cash price, a Zelle/Venmo price, and a credit card price.
I'm half joking and half serious, is he intentionally trying to confuse customers? Why do Zelle/Venmo have their own prices, and what price do I pay if I just want to pay with the debit card on my phone?
Think contractors. They also do it all the time. When I did a remodel a couple of years back, he asked for cash. It was a small amount so I did not think much until my accountant told me I will need receipts if I wanted them added to my house's capital /cost. I asked the contractor and he stalled me for weeks while also saying I will need to pay more for receipts, until one day I forgot chasing (and am thinking of it now) and just let it go I guess.
He is sharing some of the savings from tax evasion with the customer.
I do not know if he can accept electronic payments from a debit card on the phone. I presume Zelle/Venmo is simpler than figuring out a system to separate debit cards and credit cards.
>just that it's exceedingly rare
Discounts for non credit card payment methods (such as ACH/debit card/Zelle/Venmo/paper cash) seem more and more common to me. Bigger businesses likely won't engage in tax evasion allowing for bigger discounts for paper cash, but fewer and fewer of my expenses are worth paying with a credit card.
I've also seen it more common as a credit card surcharge (at the bottom of a menu) than a cash discount.
What annoys me is debit card fees are supposed to be capped in the U.S. But for unclear reasons many payment processors don't honor this, even large processors like PayPal and Square. Merchants tell me the debit card fee is same as a credit card.
My local government charges a 2.9% fee for use of credit or debit card as well.
> It's a great trick though, people really buy into the whole points/cashback thing and don't realise they're being paid with their own money
Even better, they become poorly-paid lobbyists for the entire scheme, since it successfully makes them feel like they're getting "luxury" items/services for free by "gaming the banks", when they're really just participating in a loyalty scheme exactly as designed.
Sure, it's possible to eke out a net cash profit here and there, but all in all, it's just a great counterexample to homo economicus.