Cash or Credit Card?

[Rail Paul]

Customers become unhappy if they feel they are overpaying for something. But they feel good if they feel they are underpaying and getting a deal. If a maitre accepts $100 cash from me and marks that dinner as a "comp" for a restaurant reviewer, he just pocketed $80 (tip for the waitstaff).

If the meal simply disappeared off the books, his cost of goods sold stayed the same while revenues dropped by $100. If you're the owner, you don't want your staff doing this. If YOU are the owner, and it's your pocket, that's a good thing.

Folks believe they have a right to free credit. Credit isn't free, somebody pays the cost. I'd just prefer it isn't me. If the house is willing to give me 6% (NJ sales tax) off for paying cash, I'll do it every time.

[Lreda]

Hmmmmmm

As Artie Johnson said on Laugh In. " Very interesting"

[WHT]

I don't get it.  If it's true that cash discounts are legit, why isn't this more widespread?  Why didn't all the establishments that were charging a surcharge on credit cards before the practice was outlawed, simply offer a cash discount instead?  I'm not referring to bargaining with a merchant about paying for tires or whatever with cash and getting x amount off, but a written stated policy, like 5% off for cash.  I have never seen this anywhere except gas stations, though not any more.  Certainly not in restaurants.  I must be missing something aside from a few brain cells.

Gas is a thin margin sale and because of that the extra incentive boosts the margin. Some places look at it as a part of doing business and eat the cost. It also tends to complicate the bookkeeping. Too many places are not automated enough to offer the option. Some places won’t for loss prevention reasons. Having designed enough POS systems I have heard a lot of reasons pro and con.

[WHT]

Folks believe they have a right to free credit. Credit isn't free, somebody pays the cost. I'd just prefer it isn't me.  If the house is willing to give me 6% (NJ sales tax) off for paying cash, I'll do it every time.

I forget the reason but in NJ you could not advertise a deal like that. Not that offers like that don’t happen. But here in IL You can. Though what should the Tax department care if you still pay your quarterlies.

You see that a lot out here in furniture ads, “pay cash or use the house charge and pay before X days and we will discount the sale to an amount equal to your sales tax.” Another strange on I have noticed is in some areas you can list prices as tax included. Others you can’t or they have other restrictions.

[Al_Dente]

By federal law you cannot charge more for using a credit card. Nor can you set a minimum purchase. You can offer a discount for cash! Funny, yes. Logical? No.

Hmmmm... not so sure about that. I can't find any documentation, but I thought cash discounts were also illegal. Wouldn't everyone use such a loophole if that were the case?

What always confused me is why gas stations can get away with charging less for cash. I wonder if the law regulates industries differently, or if states are the ones actually govern such things.

I will have to go digging for the papers. You can discount for cash. You can't surcharge for credit Was the thrust of it. Remember in law wording is everything.

I work for a company that provides credit card services to restaurants and hotels. There may well be laws by state, but I don't believe there are any federal laws on the books about this.

The real issue stems from the Visa/Mastercard association. They do not allow their merchants to discount for cash, charge a premium for cc's, or have a minimum charge for cc's. If you're reported to them, they will have your credit card processing account revoked.

I used this knowledge only once when a cab driver tried to tell me my fare had to be at least $25 for me to use my card. Funny thing was, I was coming back to my hotel from a seminar on Visa/Mastercard regulations.

[WHT]

I work for a company that provides credit card services to restaurants and hotels. There may well be laws by state, but I don't believe there are any federal laws on the books about this.

It is one of those obscure things as I mentioned. I will post the actual statute when I find it. If memory serves it was part of a set of banking changes back in 1978, a forerunner of The Fair Credit Act. One of those things like the limit on how much loose change a merchant or debtor had to accept. $25.00 incase anyone wanted to know.

[glenn]

The real issue stems from the Visa/Mastercard association. They do not allow their merchants to discount for cash, charge a premium for cc's, or have a minimum charge for cc's. If you're reported to them, they will have your credit card processing account revoked.

Ok, that makes sense, especially knowing how dictatorial V/MC is.

[juuceman]

I don't get it.  If it's true that cash discounts are legit, why isn't this more widespread?  Why didn't all the establishments that were charging a surcharge on credit cards before the practice was outlawed, simply offer a cash discount instead?  I'm not referring to bargaining with a merchant about paying for tires or whatever with cash and getting x amount off, but a written stated policy, like 5% off for cash.  I have never seen this anywhere except gas stations, though not any more.  Certainly not in restaurants.  I must be missing something aside from a few brain cells.

check out newspaper sales ads from a lot of electronic stores in nyc.. at the very bottom, in the tiny little print after their id#, you'll find a notation that all prices reflect a 3% cash discount..