Consumers who are looking to avoid credit card debt may choose to use alternative payment methods when making a purchase, and now many small businesses will also offer them discounts for doing so.
A growing number of businesses across the country, particularly independently owned enterprises, are now encouraging consumers to pay with cash with small discounts, according to a report from the Pittsburgh Tribune-Review. This is because most small businesses operate on small profit margins, and avoiding the interchange fees credit networks charge for processing credit and debit transactions can be quite costly.
The most recent statistics from the Federal Reserve Board show that interchange fees alone cost U.S. businesses $35 billion a year, the report said. These fees, which average about 2 percent of a total purchase, can add up quickly, especially for smaller companies.
The Federal Reserve is also attempting to enact a new regulation that will limit the amount credit networks can charge for processing a debit purchase. If passed, the rule would institute a limit of 12 cents per transaction.