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Boston merchants are using cash discounts to lower processing fees
Posted by: Curtis Stevens on December 14th, 2009

The Boston Globe reported that a local Japanese restaurant in Boston has started a modest revoke against Visa/MC.  They are offering cash discounts for consumers that pay with cash.  Such as, on Sundays, maki rolls go for 55% off for cash paying customers.   Diane, the owner of the restaurant hopes this inspires more customers to use cash instead of credit and lower their overall credit card processing bill. Diane doesn’t understand why they must give all that money to the credit card companies. She pointed out that during a down economy, the card issuers haven’t lowered their rates, in fact they have increased some. She is in fact correct on this. However, there is a cost to accepting cash as well. It works fine for small business owners that can oversea the business on a daily bases, but for businesses that are company or franchise owned, cash has a big cost as well. You have theft, loss on miscounting, risk of robbery, etc. Think of it this way, you have a store you own in another stay. You have a manager running that store for you. Now, you have that drawer full of cash that must be managed, handled, accounted for on a daily bases. Credit cards makes everything electronic and eliminates many of the issues cash creates. The downside is there is a cost to it. However, if V/MC would stop increasing Interchange completely during these harder times and maybe reduce it some, I think it would make everyone feel a little happier.



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