My understanding is that in North America it was the opposite. Since merchants must pay a premium (1% to 4%) to the card company on transactions, there used to be a rule in the merchant agreement that they wouldn’t charge the customer more for using credit. That was ruled as a monopolistic uncompetitive action - credit card companies could not dictate retail prices that way. If something costs the merchant, they should be free to pass that on to the customer.
We used to have a similar problem with debit - fees were set at 25 cents or more (IIRC up to 40 cents) per transaction; hence many merchants had “no debit under $5” (or $10) signs. Then the Canadian parliament got into the act and due to threats of regulation, fees are under control now.
A couple of points brought up in the article that I’ve encountered:
One of our vendors insisted on using Square (2.75% vs ~2.3%) for their payments which we hated because it incurred higher fees than using our CC merchant. Significant when you’re running $100s of thousands of dollars through it. And much higher than payment by check. The vendor loved Squqre
Hand keying or phoning in CC charge was highly discouraged as it incurred higher charges. Even a wrong zip code incurred a higher fee than a completely matched CC charge.
For example, Square’s fees are 2.75% for swipe or tap vs 3.5%+0.15 for keyed in.
There may not be an exact answer, but the fact that most businesses will charge the same price for cash as for credit suggests that the ‘cash handling fee’ is similar to the credit card changes, about 1 - 2 percent.
That’s not quite right. “Cash” discounts have always been allowed by credit card agreements. But they must explicitly be that. That is, the cash price must be lower than the advertised price, and the discount can only apply to cash, not to any other method of payment. Like, you can’t have a “cash debit card and check” discount, since that’s just a credit card surcharge.
Some gas stations have had different cash and credit prices for as long as I can remember here. And they didn’t do it with a separate set of pumps.
I don’t believe that’s changed (although the complexities of credit card merchant agreements and the law are vast, so I could be wrong). The thing that I know has changed is that it used to be against the merchant agreement to have a minimum purchase to use a credit card. This is now explicitly allowed (lots of places did it anyway).
That might be true, but I don’t know if you can draw that conclusion from the lack of a discount.
A few other possible explanations:
Since cash discounts are rare, dealing with customer confusion over it isn’t worth the difference. It doesn’t take many confused customers (or, even worse, irate customers because the person in front of them just got a better price for the thing they’re buying) to erase those gains.
People who use credit cards tend to spend more than people who use cash.
2a. It’s not worth annoying your best-spending customers by showing them they’re paying more.
2b. It’s a bad idea to provide incentives to your best-spending customers to switch to a form of payment that will cause them to spend less.
Where small businesses offer me the option of cash or card, I usually ask them which they would prefer (since it makes no difference to me). Recently, they have all said that it doesn’t really matter to them. Whether that’s because a) they want to appear convenient to me, b) they don’t know/haven’t looked at their numbers that closely, or c) it costs them roughly the same to deposit cash at the bank as they get charged by the card companies for cards, I don’t know, but I suspect it’s c plus convenience for them in not having to go to the bank so often.
That’s what the bank charges for handling cash. It does not include the costs the business faces because of having to deal with cash. These include losses to employee theft/carelessness and counterfeiting, as well as a portion of the compensation for the people who count the cash and deposit it in the bank.