However, some people think the credit card companies are inflating the price of goods with rewards, without taking into account how expensive cash is to deal with. To count, to detect counterfeiting, to lock up, to trust employees, to move. Processing cash isnt cheap, and can involve considerable risk, including increased IRS scrutiny.
Handling money is a cost, like rent and electricity, built into everything we do. Credit card networks are much more efficient than existing alternatives.
Every once in a while, I'll run into places that do a cash discount, usually smaller businesses. It's super common at gas stations - even big chains.
I have noticed gas stations are more prone to this (along with very small business), although it happens on occasion at restaurants as well. I figure, with 3% restaurant rewards, I break even at 3% restaurant charge and or using cash.
Why would businesses that offers a cash discount (which means they also accept credit/debit) lose customers?
Ie; gas station 1 has a 3c cash discount. Gas station 2 has no discount, but you don't feel like you're not getting the discount. Gas station 3 can even compete by having a 1c credit discount.
The dominance of cards is mostly American or, at the very least, location-dependent.
I don't think they expect or want customers to pay by cash.
That's generally prohibited by the credit card merchant agreement. Gas stations are one of the rare exceptions.
That is not true.
> Cash Discount programs are legal in all 50 states per the Durbin Amendment (part of the 2010 Dodd-Frank Law), which states that businesses are permitted to offer a discount to customers as an incentive for paying with cash.
If you had to carry cash for small purchases that would remove the convenience of cards.
Buying a single pack of gum on a rewards credit card might lose the merchant money. They’ll make up for it in aggregate, but that transaction has a negative return. I understand the desire to limit how frequently they sell at a loss.
Credit card agreements used to require parity with cash and no minimums (as Visa and MasterCard had to create new buying habits). But recent laws have placed restrictions on those restrictions.
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 permits businesses to impose a minimum purchase amount of up to $10 for credit card use, but the minimum must be the same for all credit card issuers and payment card networks.
That, plus user transaction data is hugely valuable as its own product: tracking users and their spending habits and selling the signal. Cash takes away from that revenue stream.
But otherwise you are right. Plus register employees need cash bonds I believe for insurance.
In this example the fees capped were for outsiders who are buying things in the EEA. e.g. an American buying something from an Italian vineyard or an Australian buying some authentic British tableware (for now).
The EU also forbids hidden fees for most types of transaction. It wants the advertised price to match the price paid by consumers‡. If I have 25 EUR in my pocket and you advertise a product for 25 EUR I should be able to get that product. Whereas in the US if you see a product advertised for $25 you know they'll want maybe $30 or more as they add fees, taxes and charges on top of the supposed price. As a consequence this means the fee for a card ends up built in to most online prices in Europe, even if you actually transact in some other way that reduces or eliminates the fee for the seller. So ensuring the fee is low makes good sense here too.
‡ British supermarkets (used to?) use a trick to reduce taxes here - they charge you a fee for their backend card processing, but they subtract that fee from your checkout price. The cost to you doesn't change, and you'd never notice unless you read the small print, but they've successfully argued that this service fee should be taxed differently than your purchases, saving them money. Since it doesn't affect the headline price versus price paid the EU doesn't care.
See rules on surcharging: https://usa.visa.com/dam/VCOM/global/support-legal/documents...
And minimum transaction amounts (minimum can't exceed $10):