Cash Discounts

My wife and I were a bit South of home the other day and we needed gas for the Beast. This is not unusual - the Beast may get very good mileage for an SUV, but it's still not fantastic mileage (22 MPG, for those of you who were wondering).  We only put Chevron in our car. It's a matter of "I have grown to trust Chevron's quality over the years, and have no desire to gamble with another brand at this point." Shell may be excellent gas. Arco could be phenomenal. But we use Chevron in our car.

The only Chevron station in town only had one price listed on their sign - $3.969 per gallon. Since it's $4.069 at home, we figured that would be a great deal, so we decided to fill up completely.

I swiped our card at the pump, pulled the nozzle off the pump and put it into the car, hit the start button and was about to start pumping when I saw that the pump was displaying a price of $4.069. So I looked at the sign out front, and saw - in small letters, "Cash/Chevron Card Price." 

That's right. Since I was using my Debit Card, I had to pay more. If I hadn't been paying attention, I would have been pretty angry. As it is, I still wasn't happy - that was borderline bait-and-switch.

Now I realize that accepting credit or debit cards costs the merchant money - generally it's a few percentage points off of every transaction, with a minimum cost per transaction. That minimum cost means that merchants sometimes lose money on transactions under about $10.

I understand and accept that.

What most merchants do is spread that cost out so everyone ends up paying a few pennies more per item - cash users give most merchants a bit more profit per transaction than credit/debit card users. I would wager that credit/debit card users spend more money overall, however (depending on the business, of course), which balances things out quite a bit.

To accept Visa or MasterCard or American Express or Discover or - really - any credit card, a merchant has to sign a merchant agreement with that credit card provider. One of the terms of that agreement is that the merchant cannot charge credit card customers more just because they are using credit cards.

To get around this, merchants occasionally offer cash discounts - that is, rather than charging card users more, they charge cash customers less. And by "merchants," I mean, "gas stations." Because no-one else seems to do this.

I don't carry cash. In fact, I have not regularly carried cash on my person since the late nineties. The rise of the Visa Debit Card meant that I could buy nearly anywhere without needing to worry about being robbed. On those rare occasions where cash was needed, I could easily hit a nearby ATM (those things are everywhere).

Not carrying cash, for me, makes me less likely to be robbed (and, if I am robbed, I'm not liable for purchases made with my card). Not carrying cash means I don't have to touch the stuff (it's really filthy stuff). It means that losing my wallet (something I used to do with alarming regularity) isn't as panic-inducing as it used to be.

I'd read about cash discounts years ago. They were generally considered a historical artifact.

Until now.

And I hate them.