Cash Discount Or Credit Card Rewards: Which Do You Prefer?

The Canadian Federation of Independent Business (CFIB) believes that credit cards cost consumers and small businesses more in the long run.  Since the credit card companies charge 2-3% every time a credit card is swiped, merchants mark up their prices and everyone pays more.

Clearly something is wrong with this practice and the federal competition bureau is investigating whether or not to allow merchants to refuse higher cost “premium” Visa and MasterCard credit cards, or allow merchants to tack on a surcharge to credit card transactions.

Related: What’s more important than earning rewards?

Surcharging is currently prohibited in Canada, but retailers are able to offer a discount to consumers who pay by cash or cheque.

Cash discount

I came across this sign in a Canmore, AB restaurant.  It’s a refreshing contrast from the signs that CFIB provides for small merchants to display that try to encourage (or shame) customers to use debit or cash.

Let’s be clear – I’m a huge fan of credit card rewards because I prefer to use the method of payment that gives me something back.  Using a rewards credit card is like getting a discount on every purchase.

I carefully research the best rewards cards so that I know how to earn the most back on every transaction, from groceries and gas, to travel and other merchandise.

But if more retailers offered a cash discount, I would absolutely take advantage of it.  The 3% discount that the restaurant offered is as good (or better) than most rewards cards on the market, so it makes perfect sense for consumers to take that deal.

Surcharging is not consumer friendly.  Displaying signs that make customers feel bad because they forgot to bring cash is not consumer friendly.  Offering a cash discount – even as low as 1 or 2 percent – becomes a true win-win for consumers and retailers in the battle against the evil credit card companies.

What’s your take: Do you prefer to get a cash discount or earn credit card rewards?


  1. bill on October 8, 2014 at 6:54 am

    Retailers can offer the 3% off for paying with cash but what’s to prevent them from jacking up the price to cover their cost. Sounds sinister but capitalism breeds greed.

  2. Anne Gagne on October 8, 2014 at 3:47 pm

    Merchants increase their prices to cover the credit card charges that so yes, we the consumer end up paying. However I do not believe that most merchants will actually give you the cash back or lower prices if you pay cash, I think that it will just go in their pockets as extra profit and that I, the consumer, will end up with no discount at all. Also, for example, credit card reward programs often act like travel savings accounts for trips. Accumulating points/money that you would not normally put aside.

  3. Robert on October 9, 2014 at 8:32 am

    This is very rare in Canada. My convenience store charges for debit card use. Outside of that not sure I have seen it anywhere. I just pay it since I appreciate the store and they are not getting rich on it.

    As a consumer I’d like a choice. Surcharge, discount, whatever. Offer me the choice

    I am not worried about what the merchant does behind the scenes. At checkout I have already accepted the price.

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