Will Cash Discounts Change Payment Paradigms?

As rising numbers of retail establishments across the US offer cash discounts, with businesses motivated to avoid card transaction fees, will one more added benefit of using notes and coins lead to changes in payment behaviour?

Writing for The Verge, reporter and Oakland resident Elizabeth Lopatto says up front that she likes cash, and takes particular satisfaction from ‘coming up with exact change’ when making a payment.

Alongside the obvious privacy and budgeting advantages of cash, Lopatto also observes an increasing number of bars, shops and restaurants offering discounts to customers using cash. She equates this with transaction fees levied by card providers, saying ‘the discounts... for cash payments mean that retailers are simply passing that fee on to customers.’ In fact, rather than being a ‘discount’, paying with cash really means not taking on the added expense to a business of paying by card.

While there have been attempts at clamping down on the ever-rising amount charged by credit card providers, such as the bipartisan Credit Card Competition Act, Lopatto notes that so far, there has been little real progress. She wonders if shining a light on these fees, as so-called ‘cash discounts’ do, might make people rethink how they are paying, and whether the benefits outweigh the disadvantages.

She refers to technology as ‘a series of tradeoffs’, saying that there may be times that the convenience of a credit card feels worth making sacrifices in terms of privacy and added cost. ‘Increasingly, though, I wonder if these tradeoffs are visible to others;’ she continues, ‘maybe the price of your brunch has just gone up, and that’s all you really understand.’ In the present economic climate, might these trade-offs ultimately prove a step too far for increasing numbers of people? How aware people will become of these issues, and how deeply they will weigh them, remains to be seen.