There are many reasons to use a card over cash such as safety, cashback, and convenience. But these days, I occasionally find myself paying with cash.
The reason for using cash more often than before is simple – businesses that I occasionally visit now offer significant enough discounts when paid with cash. Almost all of them are foreign-owned niche businesses (think grocery stores, restaurants, etc). At one store paying with cash meant a 10% discount plus no tax payment. On another, paying with cash meant the same price as before and no tax. Some stores seem to incentivize cash transactions by keeping the same price as before for card customers while others are increasing the price for card transactions.
These businesses have been around for a while but they started making these changes/offers in recent times. One of the businesses I go to blames it on “high inflation, increased costs, and higher credit card charges” in their social media. A lot of these are niche stores so I am happy to pay with cash to see them survive (of course discount also helps). I shall not ask questions about how they are managing their books.
Anyway, since I do not like carrying cash, the optimal solution is probably to carry a bit of cash (which I really should be doing anyway) coupled with Schwab/Fidelity debit cards to get cash from any ATM for free.
4 comments
Hmmm, offering a 10% discount and no tax for paying with cash would only financial make sense if the store owner is using cash payments to dodge income taxes ….
That’s the first thing that came to my mind. But it is also plausible that this one is marking up for card transactions.
Yeah sounds like you’re participating in tax evasion. The owner saves ~30% when he doesn’t have to report that as income, that’s the only way this is feasible. If it’s some 2-4% maybe 5% discount, plausible it’s not a dodge.
I don’t know if they are fuzzing their books (they probably are) but that is for someone else to decide. Realistically, it is possible that they are marking up card transactions by increasing the baseline price significantly. I have seen a few stores adopt a flat fee of a dollar for card purchases under $10….in this case, the best-case scenario is a 10% fee for using a card.