Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP Posting-Version: version B 2.10 beta 3/9/83; site sdcrdcf.UUCP Path: utzoo!watmath!clyde!burl!mgnetp!ihnp4!houxm!vax135!cornell!uw-beaver!tektronix!hplabs!sdcrdcf!shaprkg From: shaprkg@sdcrdcf.UUCP (Bob Shapiro) Newsgroups: net.legal Subject: Re: credit vs cash sales Message-ID: <1282@sdcrdcf.UUCP> Date: Thu, 30-Aug-84 14:17:47 EDT Article-I.D.: sdcrdcf.1282 Posted: Thu Aug 30 14:17:47 1984 Date-Received: Sat, 1-Sep-84 14:39:10 EDT References: <3307@decwrl.UUCP> Reply-To: shaprkg@sdcrdcf.UUCP (Bob Shapiro) Organization: System Development Corporation, Santa Monica Lines: 52 Summary: In article ag5@pucc-i (Henry C. Mensch) writes: >The only place where I have seen this phenomenon is in >gas/service stations in various places around the >country. It seems fair for the merchant to offer a cash >discount since (a) he offers the customer a convenience >by taking a bank card draft for payment (I don't believe >that bank cards (VISA, Mastercard) constitute legal tender.) >and (b) the merchant bank usually charges a "small" surcharge >for the processing of bank card drafts. > >As a user of bank cards, I have never experienced the >cash discount/credit markup in a store. > >Oh, well. . . Guess I was lucky . . . . I own a small business and I think I understand a little about the above problem. Yes it is true, the credit card people charge the merchant as a per cent of the transaction. Different credit card companies charge different per cents and volume and type of merchandise also comes into play. The reason a merchant accepts credit cards is that they are guaranteed not to bounce if the merchant handles the credit card correctly. i.e checks the signature, does reasonable check to ascertain that the credit card holder is in fact the owner of the credit card, determines that the card is not on the bad list, and receives an authorization from the credit card company if the credit card amount is above the floor limit set for his business. Compare this against a personal check and you see that the per cent going to the credit card company is payment for that guarantee. The obvious question then is how about cash? Well cash is not as great as one might think to a merchant. First of all the security problems are immense. It does little good to stick up a store and take its checks and credit card slips, but the cash is quite negotiable. Therefore, a business with a lot of cash must have special provisions for storing it safely and also making change. (Witness all of the taxis and gas stations which do not take anything bigger than a $20 bill.) One other nice feature about not using cash is that your employees are less tempted to dip their hands in the till, and there is no problem with making change quickly and accurately. On the other hand (I must sound like Fiddler on the Roof) the merchant has a float problem with credit cards as there is a delay between getting the slip signed from the customer and having the money credited to the business checking account but refunds turn out to be a reverse cash flow problem. Finally, and probably the most important reason for accepting credit cards in a business, is that there is a large number of credit card users out there who take umbrage with the fact that they are charged more than the cash people. They must use the credit card because of record-keeping, cash flow, or whatever and they will not look kindly on a merchant who appears to stick it to them by offering the cash customers a discount. World Air Lines used to charge more for credit card tickets than cash tickets but changed due to the pressure put on them. I know the cash customers think they are getting the shaft, but since it is an overt and open act to placate them, most merchants take the easy way out.