A few days after taking our eleven lambs to the butcher shop, I got an interesting phone call from the owner. He’d nearly finished processing them, and said they’d be ready for pickup in two days. The call came fairly late in the evening, after the shop’s closing time, and I could hear plenty of activity in the background. It sounded like they were indeed swamped with work, and I was thankful they’d been able to work our eleven lambs into their schedule.

He then told me what the total price was going to be. The standard charge would be $55 per lamb, or $605 altogether. (I usually put that on a credit card.) However, he continued, if I wanted to pay cash…he would drop the total to $500.

Needless to say, that’s a pretty substantial discount. Some readers may suspect that cash payments are merely a way for a shopkeeper to evade taxes; I can’t speak to that…what I do know is that the guy who runs this shop strikes me as a very honest and upstanding person. And I will say this: credit card companies can charge some fairly steep transaction fees, especially for merchants with relatively lower sales volume. For the savings he was offering, I was perfectly happy to go to the ATM and withdraw what was needed (though, being a hard core Casablanca fan, I must confess that I couldn’t stop thinking about this classic scene the whole time I was doing it — the key clip comes at about 1:15 on the linked video).

Given current economic conditions, and that all of us are looking for ways to save some money, I wonder if we will see “cash discounts” become more widespread. I like using credit cards for the convenience, the “float” on the use of the money, and the rewards benefits. (We pay in full each month, so there are no finance charges.) But if merchants are willing to offer a lower price for the use of cash, so they can avoid the CC fees, I’ll leave the credit card in my wallet and pay with cash.

Is anyone else out there starting to see more “cash discounts” being offered? I’m starting to think it might even be worth asking merchants straight out, especially smaller shops and tradespeople, what kind of discount they would be willing to offer if we pay in cash.

5 thoughts on “Cash

  1. We stopped taking CCs a while ago but if I remember correctly, the fees were between 1% and 3%, something like that.

    There are many reasons a small business owner may prefer cash, some are perfectly fine and some are sketchy. To think about it, most probably are rather sketchy 🙂 but there may be a legitimate reason as well. For example, he himself may be getting a discount if he pays cash to his suppliers.

    As a customer, you can _always_ ask if there is a discount for cash payment. The worst thing that can happen they will say “no” but in a lot of cases they will say yes. Depends on a geographical area though.

    Thanks for your blog – many good points and very interesting thoughts!


  2. I have zero qualms about plastic payment at what I consider to be big corporate stores, but when it comes to small, personable, mom-and-pop stores where ever I am (and especially in my home town), I make it a point to try to always pay in cash. The local hardware store is on a first name basis with my wife and me and have even kept a small “tab” for us when we don't have enough bills and coins to meet the total. We're always back in later in the month for something anyways.


  3. I'm an independent electrician, and a lot of my “brothers” in the trades have a two tier pricing system.
    It could be argued that it's a moral obligation for every citizen to do what he can to wean our government off of their out of control addiction.


  4. It's all about the credit line.

    Part of the fallout from the financial meltdown we care undergoing (and no, it's not over) is the restriction of lines of business credit. The amount of credit available for business has gone down every month since mid-2008. Anything a small businessman can do to keep his expenses off that credit line helps him keep his expenses paid and the banker off his back.

    What will he do if the bank cuts his credit line by 50%? That's happened to a lot of small businesses.

    There is a monetary value to keeping his credit line open,and he's willing to pay some of that to his customers, in order to keep his cash flow current and the expenses off his credit.


  5. But this two-tier practice is sketchy itself, right? I'm pretty sure that the CC companies have policies about charging differently and that an annoyed customer could easily get the shopkeepers in trouble


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