Americans who prefer paying with cash, rather than credit cards, are likely to see a larger amount of discounts coming their way in the near future thanks to new rules that allow for greater flexibility among businesses in this regard. Already, many companies have started putting the new allowances to use.
A settlement between Visa and MasterCard and a number of major retailers and industry groups allowed participants in that agreement to begin allowing consumers to receive discounts of as much as 4 percent when paying with cash, rather than credit or debit, according to a report from the Washington Post. This was already very popular among gas stations, but has now branched out to a larger number of other types of stores as well.
However, the practice is more popular in some states than others, especially because 10 states across the country simply do not allow companies to charge more for credit card use, by law. Other companies may be a little wary of the practice simply because of the large amount of credit and debit purchases they process; even with the added fees they have to pay to processing companies, it might be worth it to continue accepting all transactions at the same price.
“Retailers offer cash discounts because they want to reward customers for taking [transaction] costs out of the system,” Jeff Lenard, a spokesman for the National Association of Convenience Stores, told the newspaper. “But the challenge is, do people even carry cash anymore? It’s uncommon that they do.”
In addition, there may be other headaches as well, because the settlement is with Visa and MasterCard only, meaning that their branded cards would be the only ones to which the higher prices could be applied, the report said. This means American Express and Discover cards must be treated the same way, and that could lead to difficulties in determining how these pricing structures would work. Many major chains, including Target, McDonald’s and Home Depot say they will not apply these surcharges for these reasons.
This settlement has been at the center of controversy more or less since it was agreed to, as many major retail industry participants say that it will allow Visa and MasterCard to once again engage in practices that are unfair to businesses once a period of reduced payment processing fee rates expires.
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