Cash Discounts to Retail Customers: An Alternative to Credit Card Sales

Abstract

This article examines marketing and financial implications of offering a discount to retail customers to encourage cash payment rather than credit card payment. The conditions under which a discount is advantageous to retailers and to their customers are defined. The results of two surveys suggest that cash discounts are feasible under some circumstances. The surveys illustrate how a retailer might determine its own optimal discount policy. Legislation recently passed by the U.S. Congress makes this topic particularly timely.