What cash discounts tell us about payment defaults

Last night, when I was settling up at the dive bar, I began thinking once again about the tradeoffs of technology. I was thinking about it because I paid in cash.

Post-pandemic, it seems that more people than ever are using credit cards for payments; they are now the vast majority of transactions, according to a report from Capital One. Not that my life is representative — I am a freak — but this bears out among my friends as well. I am frequently the only person carrying cash.

Some of this is just that I like cash; it inherently makes it easier for me to budget because I can’t spend money I don’t have. I also enjoy that it doesn’t sign me up for stores’ email lists. And — I did tell you I was a freak, didn’t I? — there is very little in my life that is more satisfying than coming up with exact change. But lately I’ve noticed a trend in Oakland, at least, where a lot of retail establishments are offering discounts for cash payments.

This makes sense. Sure, there are benefits to letting customers pay with cards: they are likely to spend more (the Capital One report says three times as much), you can track them, it doesn’t require a cashier to make change (which can mean faster transactions); it is easier to ask for a tip, though it’s not guaranteed your server will get all of it. But there is also a transaction fee associated with the card; the discounts I’m seeing at bars, shops, and restaurants for cash payments mean that retailers are simply passing that fee on to customers.

This is something that has drawn attention from lawmakers, though no new legislation has yet passed. The so-called “Credit Card Competition Act” is aimed at reducing Visa and Mastercard’s chokehold on the credit card market. It doesn’t seem to have gathered much steam, though.

I think a lot about what our society’s default modes are, because those things are “normal” and thus invisible. The consumer default is paying with cards, and the store’s default is passing that charge on. So I’m not actually getting a discount — I’m dodging a fee. Of course, phrasing it this way might be off-putting!

I’m not against credit cards. They’re convenient, especially for big purchases or when I’m buying something online. But I also tend to think of technology as a series of tradeoffs. When it comes to credit cards, I am sometimes willing to pay extra for convenience.

Increasingly, though, I wonder if these tradeoffs are visible to others; maybe the price of your brunch has just gone up, and that’s all you really understand. These tradeoffs occur all over: the existence of Google, Facebook, and Amazon are about trading your privacy for convenience, after all. But default modes aren’t limited to the internet, just like technology isn’t limited to gadgets.

Anyway, I’m cheap. I don’t mind a slight inconvenience to avoid a fee, so I’ll be carrying cash for the foreseeable future. I just wonder how many other people feel the same way — or have thought about it at all.