flan wrote:I've negotiated much better deals offering to pay cash-- well in excess of the credit card discount rate. My assumption was that they were going to commit tax fraud, and electronic payments of any type have too big a record for that.
I would agree it's more likely because of tax issue, though processing fees do factor in. A few restaurants I have been have 10% discount if the customer pays by cash.
Accodring to some documents I have read, Visa's interchange reimbursement fee
for restaurant is no more than 2.40%+$0.10. It is almost impossible to find an acquirer that charges something like 10% discount rate. Even if they are afraid of CREDIT card fees, if they just use PIN DEBIT they should only pay a small amount of plain fee--they don't, and just swipe a debit card as credit. It doesn't make sense if they give THAT much discount if it's just about the credit card fees. Cash transactions are very likely not to be reported to IRS, so it's quite easy for the merchant to avoid paying taxes.