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Cash Discounts Multiply

Paying by plastic may no longer be a shopper’s best — or cheapest — choice.


Merchants are offering more discounts to consumers who pay with cash, and adding more strings to those who want to pay with plastic, reports The Wall Street Journal. Notably, Walgreens Co. recently cut the amount of cash back consumers can receive on a debit card purchase from $40 to $20. Other stores are refusing to process credit or debit transactions that fall below the $10 threshold allowed under recent legislation.

Retailers scored a victory a few weeks ago when the Senate voted to cap at 12 cents the fee a store pays each time in accepts a debit card. Now, merchants are taking advantage of the provisions in that law and other legislation to price fairly based on the fees they pay to process a transaction, says Rachel Wolf, a spokeswoman for Merchant Payments Coalition, an industry group. “Consumers will start to see this summer that they can actually save money by using those less expensive payment methods,” she says. The minimums protect small businesses from paying big fees on small transactions.

The new policies also provide a protective stance against banks’ next move. Issuers have already begun a push to convince consumers to use credit cards or prepaid cards instead of a debit card, says Dennis Moroney, a research director for Tower Group. Those payment methods still trigger often-crippling fees of 1% to 2% of each transaction, which merchants would like to limit, he says.

Consumers who can afford to pay in full upfront may benefit by shifting to cash, which can yield discounts even bigger than the few bucks a merchant pays in fees to the bank. Healthcare price comparison site reports that cash discounts for medical procedures can top 50%. Discounts are most common at gas stations, but merchants as varied as liquor stores, jewelers, and bed and breakfasts offer them, too.


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About Pay Dirt

  • Pay Dirt examines the millions of consumer decisions Americans make every day: What to buy, how much to pay, whether to rave or complain. Lead written by Quentin Fottrell, the blog examines these interactions, providing readers with news, insight and tips on shopping, spending, customer service, and companies that do right – and wrong – by their customers. Send items, questions and comments to or tweet @SMPayDirt.