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I'm staying in Cabo San Lucas and have noticed that businesses here tend to either be cash-only or provide big discounts when paying in cash. For example a whale-watching company mentions that:

We accept VISA, MC, USD, Mexican Pesos and Euros cash only. We offer a 15% discount when paying for your entire tour in cash.

Same with a diving company:

Payment Methods: VISA, Mastercard, PayPal & AMEX 10% Discount for Cash (USD, MXN, CAD).

Same with a sightseeing company:

You may pay directly on the day of your trip by MasterCard, VISA, travelers' checks or cash (10% discount for cash payments).

Is this because banks charge so much for card transactions in Mexico? Or does this happen because of tax issues? In the US I wouldn't be surprised if a business offered a 1-5% discount for cash, but 10% or 15% would be highly unusual.

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    In Sweden you don't get any discount when paying in cash, even though we have the highest taxes in the world 🤔 – Mikael Dúi Bolinder Dec 25 '19 at 13:01
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    I thought paying in cash was as unusual as paying in gold bullion and mackerels by now in Sweden? – rackandboneman Dec 25 '19 at 17:05
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    @Mikael: maybe one of the reasons you can sustain the highest taxes in the world, is efficient detection and prosecution of tax fraud? – Steve Jessop Dec 26 '19 at 4:14
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    @phuclv 10% is a big amount (talking for India). Usually, vendors charge around 2.5% extra if paying by card, which is the fees that card providers charge the vendor. – Slartibartfast Dec 26 '19 at 5:36
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    @MikaelDúiBolinder. I've heard of a company that charged an extra fee if you wanted a receipt. – md2perpe Dec 26 '19 at 20:16
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There are a bunch of legit reasons

  • Save Credit Card Service fees (2%-3%)
  • No risk of having to chase or eat a bad payment.
  • Less paperwork

However, I suspect the main reason is the same as in most other places in the world: To put it delicately: Cash allows for "more creative" accounting practices which may or may not be legal and may or may not result in substantially less tax payments.

Even in the US it's not uncommon for a contractor to give you 10% on a full cash payment.

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    @Harper-ReinstateMonica That isn't correct. US taxes are due from many non-US citizens who (for example, and not by way of limitation) live and work in the US. – DavidSupportsMonica Dec 25 '19 at 17:31
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    @Harper-ReinstateMonica wat?!? You think the only entity collecting taxes in the world is the IRS?? Rolf – user000001 Dec 25 '19 at 17:33
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    @Harper-ReinstateMonica your previous comment said that tax evasion was unlikely, not that you don't care about it. – user000001 Dec 25 '19 at 17:53
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    @Harper "The IRS doesn't tax foreigners unless they are US citizens" - Huh? Surely somebody foreign to the US (a foreigner) is not a US citizen, and likewise a US citizen is not a foreigner? – John Dec 26 '19 at 0:10
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    The US also doesn't prosecute muggings that occur in Mexico, but it doesn't necessarily follow that I should accept a 10% discount on a whale-watching tour on the understanding that by doing so I facilitate a mugging. It's up to the questioner whether or not it's a big bag of Not His Business whether he involves himself in local petty crime while on holiday (and I guess whether he considers the tax-avoider or the state to be the mugger in that transaction). But, at least the risk of charge-back or whatever on credit cards gives us plausible grounds to assume it's not necessarily criminality. – Steve Jessop Dec 26 '19 at 4:18

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