Cash Discounts Come Back as Small Businesses Tire of Swipe Fees

In Central Brooklyn, notices are appearing near the registers of a growing number of small businesses. “Dear Loyal Customers,” many of them begin, before announcing a “discount”: The displayed prices reflect a reduction for those paying with cash. Prices for credit and debit card sales are 4% higher.

As the economy marches away from cash—a trend hastened by the growth of digital alternatives and, more recently, by sanitary concerns over Covid-19—and electronic transaction fees take bigger bites out of retailers’ sales, a small but increasing number of businesses are nudging their customers in the other direction. That’s in defiance of a hostile legal landscape and what’s always been assumed to be Consumer Psychology 101—don’t punish shoppers for their payment choice. Along a mile or so stretch of Nostrand Avenue in Brooklyn, for example, at least five businesses give preferential treatment to cash buyers. Several are getting help from, of all places, the payment industry itself.