What cash discounts tell us about payment defaults

Last night, as I wrapped up my time at the dive bar, thoughts about the tradeoffs of technology flooded my mind. Coincidentally, my payment method for the evening was cash.

According to a report from Capital One, credit cards have become the dominant form of payment post-pandemic. While this may be true for most people, I find myself to be an exception. Carrying cash allows me to budget effectively and avoid being tempted to spend beyond my means. It also shelters me from unwanted email subscriptions that often come with card usage. Furthermore, as an oddball, I derive immense satisfaction from paying with exact change. However, a recent trend in Oakland has caught my attention. Retail establishments in the area are offering discounts for cash payments.

This strategy makes sense. While accepting card payments comes with its advantages, such as increased spending and faster transactions, there are associated transaction fees. The discounts offered in Oakland indicate that retailers are passing these fees onto customers.

There have been discussions among lawmakers regarding this issue, but no legislation has been passed. The proposed “Credit Card Competition Act” aims to address Visa and Mastercard’s dominance in the credit card market, but its progress seems limited.

Considering our society’s default modes is crucial as they often go unnoticed due to their normalcy. The default for consumers is to pay with cards, while the default for stores is to pass on the associated charges. Therefore, the so-called “discounts” I receive for cash payments are actually fee dodges. Of course, presenting it in this manner might be off-putting to some.

I am not entirely against credit cards, as they offer convenience, especially for significant purchases and online shopping. However, I view technology as a series of tradeoffs, and sometimes I am willing to pay a bit extra for convenience when it comes to credit cards.

However, I have begun to question whether these tradeoffs are apparent to others, as they may simply see an increase in brunch prices without understanding the underlying reasons. Such tradeoffs exist not only in the realm of the internet but also in various aspects of technology.

In any case, I am inherently thrifty and find it worth enduring minor inconveniences to avoid fees. Therefore, I plan to continue carrying cash for the foreseeable future. I wonder how many others share the same sentiment or have even contemplated these tradeoffs.