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While I was paying bill at Chinese restaurant in Toronto, manager told me he discounts 15% my bill if I pay cash, not Mastercard. I told him I didn't see this printed on menu, and he said this is oral special offer. This feels shadey.

  1. Is this legal? If not, report to whom? I don't want police involved. I'm from Hong Kong and don't trust police anywhere!!!

  2. Even if not legal, is this shadey? Should I report to Mastercard and Visa?

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    You ask what you should do, but have not said what outcome you wish to achieve. What's your goal? – Eric Lippert Dec 19 '19 at 8:16
  • As far as I know Canada is no different from many other western countries: a discount for cash payment (and any other reason) and simply paying in cash is absolutely legal as long as it it above board : that is the merchant still records the sale at the cash register, gives you a proper receipt and makes the required tax declarations. It is not legal to pay and accept payments under-the-table in cash to avoid sales and other taxes. - As for reporting your suspicions that the waiter proposed an illegal transaction: I suspect it is not mandatory to report them to Canada Revenue Agency (CRA) – HermanB Dec 19 '19 at 10:15
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    @HermanB: The messy history on this in the US means I wouldn't dare assume that the rules are consistent across western countries. At various times, there have been laws in some states allowing or disallowing price differences for cash vs. card, terms in the card agreements disallowing such differences, and lawsuits over all of it. At this point, I have no idea whether the US allows it completely, allows it within certain limits, disallows it entirely, or maybe even has varying rules depending on State. – Brian Dec 19 '19 at 15:05
  • Businesses which deal with cash is a tax evasion risk flag and they tend to get audited by CRA more frequently than average. You might want to consider that his discounting of cash is because he is not reporting all of his business income in his restaurant's income tax return. – C'est Moi Dec 20 '19 at 8:08
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    @EricLippert i want credit card holders and cash payers treated equally. i was wondering if these merchants be reported. – Pamela Lee Dec 21 '19 at 10:11
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Note that under the Code of Conduct for the Credit and Debit Card Industry in Canada, merchants may choose to offer discounts for different payment methods, but they are not required to do so.

https://www.canada.ca/en/financial-consumer-agency/services/merchants/credit-fees-merchant.html

15% is a rather large discount. It's quite a bit more than the interchange.

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    At 15%, a cynical person may wonder whether "paying cash" is to avoid not just the merchant's fee charged by the card company (2+%), but also sales tax (13%?) and corporate tax (10% with small business deduction?). – TripeHound Dec 19 '19 at 7:53
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    @TripeHound: Having such an offer only be available orally makes my alarms go off even louder than yours. It's also possible that such an offer is indicative of employee theft. – Brian Dec 19 '19 at 15:08
  • @Brian Might you fish that detail out by offering to pay by check, implying that checks are "as good as" cash with regards to fees? – Michael Mar 29 at 17:44
  • @Michael: No. Merchants often have legitimate reasons to reject checks. – Brian Mar 30 at 12:37
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This came up in the 1980s in America with gas stations. Based on Federal and state law and credit card merchant agreements:

  • It is not legal to charge additional surcharge for use of a credit card. However
  • It is legal to discount for cash or a particular payment method.

So for instance it's legal for Target to offer 5% off when you use the Target credit card; it would not be legal to charge a 5% surcharge for using Visa/Mastercard. A gas station can charge 10 cents a gallon cheaper for cash.

So the restaurant's offer of a discount is totally acceptable.

It may be a bad business practice, but that's technically not your problem. The offerer may be an employee who has kept your order "off the books" and plans to embezzle your entire payment. The business may be having cash flow problems and needs cash today, and can't wait for the merchant clearinghouse. They may have messed up their relationship with the clearinghouse so their credit card payments are being frozen or delayed (e.g. they might have had a PCI-DSS breach). All of that being not your problem.

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