Businesses Offer Cash Discounts to Counter Card Fees

‘Want a discount? Pay in cash’ advises a Wall Street Journal article discussing the growing number of US businesses incentivising cash payments to avoid prohibitively expensive card transaction fees.

While the ‘swipe fees’ associated with card payments are generally invisible to consumers, business owners face difficult decisions over how much of them to absorb—taking a hit to their profit margin—and how much to pass on to customers by raising prices.

Speaking to WSJ, Paul Hadfield, Founder of payments company TRNXN, says the number of his client businesses offering cash discounts to offset swipe fees has increased from zero just two years ago to around 80 percent today. While some were initially concerned about alienating customers with a strong preference for card payments, fewer than one percent reported complaints regarding the discounts, and said the majority of those who did complain were upset by swipe fees rather than cash discounts.

WSJ adds that the share of cash purchases coming with a discount rose by 66 percent between 2015 and 2022, according to research by the Federal Reserve Bank of Atlanta. One writer interviewed for the article pointed out that alongside the lure of a lower price, she also feels better paying cash at a local Mexican restaurant, describing it as ‘the right thing.’

A recent Yahoo! Finance article observed a similar trend in Australia, with some businesses going as far as becoming cash-only to protest fees and the shift towards a cashless culture that risks limiting competition and choice in the payment space.