Cash Discount

[Dauphin]

Since credit card fees are never this high IIRC, I thought it was at least partly a means for them to underreport income if tax authorities are not vigilent ( I know that auditors often do a check by auditing credit card transactions which they 'know" will on average be a certain proportion of fast food sales-- whether they go further and assess how much cash income should be reported when restaurants offer discounts which may impact their proportion of credit sales, I do not know)

I'd think that it would be reflected by declared margins too. If they didn't also underreport purchases their margins would be off.

[MrFun]

If a store offers me a cash discount, then I'll be more likely to come back and continue to be a patron.

I'll make sure never to offer this then, should I ever own a business.

[rah]

I'm sure waitresses would prefer people to pay in cash so they can hedge a bit more about reporting income to the IRS when it comes to tips.

[Flubber]

I'm sure waitresses would prefer people to pay in cash so they can hedge a bit more about reporting income to the IRS when it comes to tips.

I'm sure that many do this but my understanding is that revenue Canada here will go strong at anyone if they review them and their cash tips does not equal a certain percentage (just as they sometimes go after servers who don't sho tip income at all)

[Flubber]

I'd think that it would be reflected by declared margins too. If they didn't also underreport purchases their margins would be off.

I am sure a tax underreporter might have all sorts of things they might need to be careful of if they choose to go down that road-- Hell a careful auditor could nail them if they used 20,000 disposable cartons and only showed revenues from 14000 takeout meals.


I don't know why they give such a discount but since they have the equipment for credit or debit transactions can anyone else come up with reasosn for such discounts? 10% off for cash versus credit seems pretty high at a mid price restaurant if the credit card service fee was 2.5%.

[b etor]

Is it common in states other than Michigan for gas to be 5 to 10 cents cheaper when paying with cash rather than credit? I've never seen it in PA, but it seems to be the norm in Flint, Troy, and Detroit.

[OzzyKP]

I don't know about gas stations charging different rates, but there are some stations around here that just don't accept credit cards at all, and they always have cheaper prices.

[Sir Og]

I think this is a sign of America becoming a poor country.
As countries get poorer the grey sector of the economy grows as well as cash transactions.

[MikeH]

If credit card charges 3%, you should expect to be able to get at least 3% off for cash (or debit card, which have much lower fees).

Also, 3% on the retail price is huge for the retailer, if not for the customer. That is much a much higher percentage of the retailer's profit on that item. If a retailer is making 25% of the sale price as profit, after all costs, paying 3% of retail price reflects losing 12% of their profit on that sale. The tighter their margins, the more important that 3% is.

[Zoetstofzoetje]

Imagine how bad it must be in computer hardware. Just remember that cash costs money too - merchants pay for coin rolls, and for depositing cash.

[The Mad Monk]

Cards are run through the machines all day. The cards were touched by people just like the money was touched. Invalid response!

The amount of touching is greatly reduced, especially if the card is never actually touched by the cashier. Also, cash can be passed from person to person to person before mingling in any number of cash drawers, so overall exposure is increased relative to cards.

[The Mad Monk]

For me, it's more about ID theft than it is "paper trail."
The fewer organizations and individuals who have access to my CC info, the better.

Consider the fact that no organization, no matter how high tech or important (governments, banks, Sony, and many more), seems immune to having that info hacked. Now consider the slack-jawed idiot behind the counter at your local retailer . Whether it's due to hackers or stupidity is irrelevant. Those CC digits have value.

...and you're liable for all of $50 of that.

[MikeH]

Building up your immune system FTW.

[The Mad Monk]

As far as I know, cash discounts are illegal in the US. That's why you very rarely see them. Why the credit card industry should have their business model enshrined in law is another matter altogether, of course.

If it's illegal, there are a lot of gas stations breaking the law.

[Ben Kenobi]

I'll make sure never to offer this then, should I ever own a business.

And there's the difference between you and I. As a professional I'll work with anyone who requests my services.