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2 different prices on the check - cash or credit card

We went to a local Thai tonight and were very surprised to get the check where there was a credit card amount of $42 and a cash amount of $37. So they are charging $5 for running the credit card. We did not notice a sign when we walked in (or when we left) nor on the menu nor were told about it by the servers or hostess. We happened to have enough cash on us.

Although I see why they might do this because there is a cost to the business running credit cards but it raises some questions and I do feel they should have said this somewhere either verbally or clearly in writing. It also made us wonder whether the server gets a better tip if the amount goes on a credit card and what happens if 2 people or couples wanted to split the check and both pay by credit card. Anybody else seen this, is it legal?

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  1. While I am sure they have to provide notice somewhere for it to be legal, it doesn't surprise me. Most small asian places I go are cash only, or do charge for credit card use. Could just write them a letter or something suggesting they should have a sign somewhere so that other people don't run into a problem, but the actual legality of it doesn't bother me, just easier for everyone if they had a sign, everywhere I go normally does.

    1. I'm curious smartie.

      Was the $42 the correct amount? In other words, was $42 the cost of the food (as listed on the menu) plus tax, tip, etc.? And thus, you were getting a discount of $5 by paying in cash?

      If so, then I suppose there's nothing wrong, or illegal, with this. Because this is essentially the restaurant giving you a discount for paying in cash.

      However if the situation were reversed -- you were charged an extra $5 above the listed menu prices for using a credit card -- then I could see certain problems arising if there wasn't advance disclosure or notice of some sort.

      12 Replies
      1. re: ipsedixit

        The first scenario is usually how it has been presented to me. You get a discount for paying cash. (I have read that this practice actually violates the agreement between the merchant and the credit card company.)

        1. re: ipsedixit

          you know what ipse, we were so surprised we didn't really examine the check, the whole thing was hand written and the total was $42 if paying by credit card or $37 if paying cash. We happened to have enough cash but see here's the thing, where was the tax and should we have tipped on $42 or $37? I'm not nit-picking for tipping the extra couple bucks just asking what others think. On a large table of say 12 folks the server could get stiffed.

          1. re: smartie

            I think they way it works is that it is allowed to offer a discount for paying cash but they can't charge more for using a credit card.

            I know that doesn't make sense. The list price has to be the "credit card" price. They can't tack on another fee above the "sticker" price for using credit.

            Seems fair to me because the merchant has to pay a fee for taking the credit payment.

            1. re: kengk

              true but it's not $5 per swipe. It might be $3 or a percentage though somebody with a business will likely know, they are a small business so don't have the power of a large corporation to negotiate fees. Seems to me they are making a profit on the $5 charge. Bet their CPA has fun trying to figure out their taxes!

              1. re: smartie

                To see some examples of how much a business pays for your use of your credit card, go to http://truecostofcredit.com

                1. re: smartie

                  I would not be dismayed to learn that all of the cash receipts don't find their way onto the books.

                  1. re: smartie

                    I see it more as an extra incentive to pay cash the next time you are there. I doubt that they are attempting to make a profit with this difference. The cost of being able to take credit cards plus having a rented credit card terminal reader is pretty usurious - especially for a small restaurant/business (which probably doesn't get a preferred interchange rate with the bank to begin with).

                    1. re: fmed

                      it wasn't good enough to bother going back. I checked their website and there's nothing on it about their ' cash discount'.

                      1. re: smartie

                        Yeah - they won't state anything like that publicly.

                2. re: smartie

                  My 'rthmetic is rusty. That is a 12% difference in price (someone check my math!). Perhaps they were giving you a break in sales tax too? Seeing that this transaction probably won't make its way into their books to begin with ;-) ...

                  1. re: smartie

                    There's a place here in Seattle (machiavelli) that puts a note on the check about an "instant 5% cash discount" with the discounted price on the check. As many times as I've eaten there over the years, I always forget that they'll do that, and it's a pleasant surprise to have the option of paying in cash and getting their already reasonably priced food at a little discount. I tip on the non-discounted price.

                3. I qu├ębec (I don't don't know about the rest of the country), it would be illegal; you cannot have prices different depending on the way the customer pays (cash, debit, credit).

                  Specific to restaurants: Here, all restaurant tickets must be compliant and show the sums (including all taxes).

                  Me think the restaurant is trying to take advantage of a situation; they should be better business minded and take the credit card prices into account to the prices of the meal (like they should be doing for everything else);

                  If they figure that on a whole day, it costs them (let's say) $0.25 per person for CC charges, then they should increase the prices by $0.25.

                  If they do not want to be bothered with the credit card system, they have the right to just ditch it and tell all customers in _advance_ that they only take cash.

                  1 Reply
                  1. re: Maximilien

                    " they should be better business minded and take the credit card prices into account to the prices of the meal (like they should be doing for everything else);"

                    Of course that it is how done "properly". The tax climate here where I live (Vancouver) and probably in Quebec is pretty harsh. I am sure many business people are totally perplexed and exasperated at how much they get dinged. I'm not saying that what they are doing is right, but you can see why they are looking for all the loopholes and grey areas they can find to minimize their tax hit. I don't actually know if the practice is illegal here in BC. I think it is outlined here http://www.bclaws.ca/EPLibraries/bcla... but I don't speak Klingon so I have no idea what I am reading.

                    There was a case here where a point-of-sale software company rigged their cashier terminal software with a special "cash sales" feature that hid some cash transactions from the books. Clearly illegal.

                  2. As a lifelong cash customer, gimme dem cash discounts! Love 'em, love 'em. As it should be. How a restaurant handles its taxes and accounting is none of my damn business. I'm not Joe Friday. I'm Joe hungry and thirsty customer.

                    1 Reply
                    1. re: Veggo

                      Hear, hear. I would love to see more of the cash discount being offered.

                    2. Does anyone know if the CC companies, Amex specifically, charges different merchants different transaction fees based on location? I was subletting an apartment in a less than wealthy neighborhood in NY a couple years ago and tried to charge a $25 purchase at a liquor store. I was told I couldn't use my Amex for less than a $75 charge because they were charging the merchant $2-3 per swipe regardless of the amount of the transaction. That seems highly unlikely to me but I did hear something similar at a UPS store in the same neighborhood and then again at a supermarket and only about Amex.

                      Perhaps this restaurant had been paying more than a small fee per swipe? It doesn't excuse the policy not being posted but I wonder what the the CC companies actually charge the restaurant.


                      5 Replies
                      1. re: JeremyEG

                        Amex charges fees based on:

                        Total Volume of AMEX sales.

                        Average Ticket amount of the AMEX sale

                        How Fast the Merchant wants the money available,

                        When I was in retail in the 80s, Amex charged us 4% if I wanted money next banking day, 3.5% if I got the money in 7 days and 3% if I waited 14 days.

                        Small merchants with small average tickets and low volume pay much more than merchants with high average tickets (jewely store for example) or large chains with large total volume. You can be sure that Target or Walmart will pay much less, even if their average ticket is $16 that a mom and pop with an average ticket of $40

                        1. re: bagelman01

                          A local merchant told me she was charged different rates depending upon whether the card was credit vs debit, corporate or individual, rewards points, cash rebate & even more variants such as transaction dollar amount, if card was swiped or called into --all from the same card service!

                          1. re: Stephanie Wong

                            Stephanie, you cite examples of "transactional friction", which is a third party sucking money from a buyer and seller. The whores of capitalism, hastening its demise.
                            Let's go eat dessert while we can!

                            1. re: Stephanie Wong

                              Yes that's true, at least here in Canada. Debit is cheapest (usually around 10 cents per transaction, no %), basic personal credit cards cost the base %, then corporate cards, reward cards, foreign cards all get extra % added on, and manually entered i.e. "card not present" transactions also get a % tacked on (presumably to pay for higher risk).

                              How much extra is tacked on for reward cards depends on the amount/type of reward, the banks are NOT absorbing the cost of those rewards. In the end, the consumer pays - realistically, the businesses have to pass on the costs or they won't stay in business very long. Generally merchant agreements do not prohibit providing a discount for cash (just charging extra for credit cards), but it is a pain for bookkeeping.

                            2. re: bagelman01

                              My wife worked in banking for years and really knew her stuff, negotiating the lowest rates possible because she knew all the ins and outs. We still paid well north of 2% on transactions plus a fixed swipe fee for each transaction (including checking balances on gift cards).

                              We owned a coffeehouse. Average sale around $4.40. Credit cards were a killer, especially when people used them for a small cup of coffee. Profit margin would be cut in half. We often thought of doing a cash discount, but the programming would've been difficult. We simply put a sign up saying we'd appreciate cash for anything under $5.00. Legally you can't say you won't take a card for small amounts, but many customers, upon seeing the sign, understood that cards were expensive for us to handle.

                              But I've never seen this done in a restaurant. I still see it at gas stations.

                          2. It's an interesting idea for sure. I don't have a problem with it in the form of a cash discount, with the full credit prices being the posted prices. Seeing two separate prices, cash price and credit price like at some gas stations (rarer now but still happens a few places) actually annoys me more for some reason. Going into a restaurant or coffee shop or whatever where they post a price but then say okay, 5% cash discount or 10% (the amount from the OP actually looks like it would be more like a 10% discount, which is kinda crazy, makes me think the credit prices are thus inflated too much), I think that would be fine. For best effect, post prominently on all menus and/or at the register (depending upon type of establishment).

                            Programming...I wouldn't have thought that tricky, although it's true in at least some if not most/all states that sales tax is on the discounted amount. That would make it a little more difficult for sure.

                            As long as the posted prices are not way inflated, it seems like this would coax a little more cash business without a big downside. Well, cash handling, I guess that could be viewed as a downside, easier to steal, etc. The smaller the average sale, the bigger the benefit. Because of the swipe fee the overall credit fees in a place with a small average could easily get up to 5% overall, maybe more, with typical options.

                            I did just look at Costco's deal with Elavon. Swipe fee for normal is 20 cents, but they have a new plan for small transaction customers (under $15 average) that takes only 12 cents per, plus "1.37%" I put that in quotes because we know that's for a non-reward card, and how many people are using cards for small stuff that's not a reward card? The rate for those is still higher. Square is an option though. As long as the card is swiped (not keyed) it's 2.75% flat, for any card including Amex. No additional swipe fee. It integrates with printers and such if you use it with an iPad. (Square for those unfamiliar is an unconventional credit card acceptance service designed as a tiny reader you plug into a smart phone or iPod Touch or iPad, with an app. The reader and app are free. Good for little indie sole proprietors and such, or perhaps for a restaurant running on iPad-based POS, which is entirely possible these days.)

                            2 Replies
                            1. re: CrazyOne

                              I looked into the Costco/Elavon deal for the rare cc use in our mostly account-based mnfg. business. Effectively zero of the historical transactions I looked at would have qualified for the advertised rate. B2B, Rewards, etc...all costs more. We were paying close to 4% on average, but I finally improved it w/ a service called Sterling.

                              I've seen the Square thing (thanks...i didn't know what it was called) at my local organic grocery/cafe on beside the converted rails to trails and at an indie wine shop. I believe you must have to apply for one based on the relative hipness of your business ;-)

                              1. re: danna

                                Interesting. I've wondered about a change for our business too (I'm not directly in charge of that, but I've been here a long time and it's a small biz, pretty much all account-based but some payments end up by credit card). I figure very few cards qualify for the lowest rate these days.

                                It isn't really surprising to see a hipness correlation with Square. ;-) It's just because it's based on smartphones and targeted somewhat towards a small business that could even be very low volume. The people running those are in tune to these types of technologies and not so much in traditional POS and such. Indeed traditional card acceptance might be prohibitively expensive when the transactions are so small. Square's rate is as I mentioned completely flat. The latest thing just this week is they now give away an app called "Register" for POS on iPad. Basically, you can have POS for free if you just buy an iPad, seems like, and 2.75% card acceptance including Amex. Not a bad trick. Disruptive, other servicing companies will hate it a lot I suspect.

                            2. One of our favorite places (Greek diner type of place) has a big handwritten sign at the register--10% discount for cash. It's been there for years, and they give it as a discount, off the menu prices of their handwritten checks.

                              I get that CC fees might be 3% and maybe it's worth a point or two more for them not to have to deal with the hassle of CCs. But 10% seems like putting a big "Kick Me" sign on the seat of your own pants for the IRS. Maybe the INS as well given my suspicions about the legal status of some of the help.

                              1. The Thai restaurant's owners must know something I don't. OR they must be on a VERY short cash flow leash. From my own retail experience I can't see that credit card transaction costing them more than about $1.50. Giving a $5 discount for cash is costing them $3.50 more than they'd be paying their card service provider. They must really need the cash badly to give away the extra 8%. Either that, or see the post above about two sets pf books.

                                1. It doesn't surprise me. Alot of businesses up here prefer dealing with cash or debit and will discount if you use either. Since we get receipts at these businesses and since their bookkeeping isn't any of my beeswax, I take advantage of the cash/debit discount. Usually, the discount is in the range of 5 to 10 percent. My butcher told me that they are being gouged by their credit card dealers and I like the guy and happily pay in cash.

                                  1 Reply
                                  1. re: freia

                                    When I know it's a small indie place and I don't feel like the prices are overly high, I will try to pay cash especially on small transactions. (Small = around $20 or less, and of course this is assuming I have enough cash with me.) It really is a large volume of smaller amounts that kills you with typical card processing. Not everyone is aware of that, and even those who are won't all feel compelled to do it, but it's just a little thing I like to pay attention to.