Wessays ™: 1269 The Cash Discount Scam

Monday, December 23, 2013

1269 The Cash Discount Scam

The Target hacking is making all of us run for our credit card statements. Some of us are actually checking our credit score, even those of us who claim we do but don’t.

Forty million compromised cards. Admit it… you’re scared.

A friend reminds that the financial press was all aglow some few years ago with stories of discounts for cash. Ever see a sign like that in a merchant’s window? He hasn’t. And it’s tough to find anyone who has.

Some background: The credit card issuers eat from both ends of the trough. If you have an outstanding balance, you pay loan shark rates to rent their money. If you’re a seller, you pay a percentage of each sale as a transaction fee.

In some places, it’s legal to pad the price to make up for the fee. And some merchants have long charged cash customers less for gasoline. But a discount it isn’t.

You sell stuff, you figure all kinds of expenses into your cost of operation. It’s kind of like padding the price to cover the cost of your electric bill. It’s just not an expense most of us figure consciously.

A store sells fruit. But it also has a few boxes on the sidewalk in front. Do you expect a discount outdoors because the guy pays no rent on his part of the sidewalk? Or makes change out of a cigar box so… no electric bill for the register?

At least one card company is experimenting thus: You use our card, you charge your customer “x” percent more. So you can claim you’re giving a discount for cash. Sort of. It’s like getting an itemized bill for a candy bar:

1 Hershey Double Whammy Deluxe with Almonds $2.99

Sales tax @ 7.5% $0.22

Credit card fee @ 1.9% $0.06

Total $3.27

Get in there and demand your cash discount!

You can expand this idea and make price stickers like those on cars:

1 Hershey Double Whammy Deluxe with Almonds $2.99

Sales tax @ 7.5% $0.22

Credit card fee @ 1.9% $0.06

Premium paper-backed aluminum foil under-wrapping (included)

Upgraded brown anti-melt over-wrap (included)

Attractive silver toned lettering (included)

EZ open glue (included)

Price tag printing fee @ $0.47

Good neighbor printing fee discount @ - ($0.47)

Total $3.27

Try buying a really big ticket item for cash. You bring a suitcase full of $100s, 50s and 20s to the right car dealer, they’ll call the cops and they’ll haul you off because the only people who have that kind of cash are bank robbers and drug dealers.

Actually, it might be worth a try when buying a moderate price item. Ask the clerk at Best Buy or Sears to forego the credit card fee if you buy that big-screen TV for cash. You never know.

(Thanks for the idea to RTB who didn’t get skunked at Target.)

Shameless self promotion. My commentaries have returned to the air. Listen each weekday morning at about 7:20 am and 3:20 pm.