David Kluskiewicz

Connecticut recently repealed a statute that prevented gas stations from offering discounts to patrons who pay cash. The excitement lasted only briefly as we witnessed a handful of stations posting 10 and 11 cent per gallon discounts, presumably because they could avoid the credit card fees imposed on every card-based transaction. Unwilling to lose business, most stations immediately offered a slightly lower equilibrium price, “cash or credit”.

In spite of the short-lived discount, this little price adjustment begs the question: “How much of the price we pay for goods is compensating for the credit purchases of everyone?” Shouldn’t my grocery store give me a discount for using greenbacks? Is every merchant that takes credit cards factoring in this expense? While I’m sure a number of people need to use revolving credit to purchase a load of groceries now and then, the majority of folks I observe use a debit card. It’s convenient and safer than carrying around bills. But, is it worth an extra $3 fee to MasterCard on $100 of groceries. Probably not. Time to start asking.