Charging more money for delayed payment and less for immediate payment

Sales: Charging more money for delayed payment and less for immediate payment:[1]

When doing a sale, it is Rabbinically forbidden for the Jewish seller to offer a Jewish buyer a payment option in which immediate payment is less than the amount of a delayed payment.[2] This applies even if the delayed payment option is the true market price of the product while the immediate payment option is a decrease of the products market price.[3] [For example, a seller may not tell the buyer during the negotiations of the sale “If you pay me now, I will give it to you for ten dollars, while if you pay me later I will give it to you for 12 dollars.” Likewise, he may not say “If you pay me now, I will give it to you for less than the sale price, while if you pay me later then you will have to pay the regular sale price.”] This prohibition applies even if the seller does not explicitly mention the compared difference in price to the buyer, but simply tells him a price for delayed payment that is higher than the regular market price.[4] This prohibition applies even if the sale item will only be received by the buyer at a later date.[5] [This prohibition applies whether one is offered to pay the entire payment at a later date for a greater price, or only part of the payment at a later date for a greater price. This prohibition only applies if one will be making the sale at this time, for either immediate or delayed payment. One may however tell a buyer that today the price for the item is such and such and tomorrow the price will be more, and he can choose to buy it today or tomorrow.]

After the sale:[6] It is Biblically forbidden to give the above offer after the sale already took place, as doing so is considered Biblical interest. For example, if the buyer and seller agreed on an immediate payment price, and the buyer acquired the product, the seller may not tell the buyer “I’ll make you a new offer. If you pay me now, I will give it to you for ten dollars, while if you pay me later I will give it to you for 12 dollars.”

Selling for lower than market value without mentioning payment plans:[7] It is permitted for a seller to offer a price that is lower than market value for an item, without mentioning a difference in price between immediate and delayed payment, so long as the person will acquire the item right away, or the seller already owns it and simply has to send it to him. If however the seller does not yet own the item, and will ship it to him at a later date, then it is forbidden to sell it for lower than market value.[8] Furthermore, it is even forbidden to pay the regular price upfront if one will not receive the merchandise right away, unless the seller already has the item, or the item is available in other stores for a set market price, or it does not have a market price due to it being a custom order.[9] [Thus, a seller may offer an item at a discount to a buyer so long as he does not go into the payment options. This matter will IY”H be expanded on in a further Halacha.]

 

Summary:

It is forbidden for a Jewish seller to offer a Jewish buyer a payment option in which immediate payment is less than the amount of a delayed payment. It is however permitted for a seller to sell an item he currently owns for lower than market value, without mentioning a difference in price between immediate and delayed payment. It is also permitted for the seller to tell the buyer that if he purchases the item at a later date it will cost more, irrelevent of immediate or delayed payment.

Q&A

If the seller transgressed and made the above offer to the buyer, may the buyer nevertheless purchase the product?[10]
It is forbidden for the buyer to purchase the product for the delayed payment option, as by doing so he is performing Ribis, which is forbidden on both the lender and borrower. However, he may still take the immediate payment option, as he is not actually giving any interest to the seller, as he paid the entire lower price immediately.[11] This applies even if the immediate payment option is less than the market value, so long as he Halachically acquires the product at the time of the sale.[12] [If, however, one does not acquire the object at the time of the sale, and it will only be sent to him at a later date, as is common when making orders, then it is forbidden to pay the lower price.[13]]

May a seller tell a potential buyer that if he purchases the item later it will cost more?
Yes. The above prohibition only applies if one will be making the sale at this time, for either immediate or delayed payment. One may however tell a buyer that today the price for the item is $10 [irrelevent of immediate or delayed payment] and tomorrow the price will be $12 [irrelevent of immediate or delayed payment], and he can choose to buy it today or tomorrow. Accordingly, stores advertise discounts for a specific period of time.

May one charge more money for a non-cash payment such as a check, bank transfer or credit card payment and the like?[14]
Yes. One may charge more money for non-cash payments if the additional price is to compensate for the work and fees that the seller must go through in order to receive the payment. The amount that the seller may charge extra for the non-cash payment must be commensurate to the fees he will entail, and it is to be explicitly mentioned to the buyer. Thus, for example, if one’s bank charges a fee for the check, or bank transfer, one may tell the buyer that he can either pay the regular price in a cash payment or pay through check or bank transfer with the additional bank fee that will be charged. It is however forbidden for the seller to say that he is charging him more due to delayed payment, even if in truth the seller has extra fees to pay due to this delay.

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[1] Admur Hilchos Ribis 18; Michaber 173/1; Mishneh Baba Metzia 65a; See Bris Pinchas chapter 10

[2] The reason: This is forbidden due to Avak Ribis as the moment that the buyer acquires the item he becomes liable to pay and in essence now owes the money to the seller. This applies irrelevant of the price of the object, whether it is expensive or cheap, so long as no stipulation was made on the acquisition of the sale. Accordingly, if the seller asks to receive a larger payment when being paid at a later date as compensation for allowing this delay, it appears like he is taking interest on the delay of payment, of the debt which was incurred at the time of the sale. This is in contrast to renting an item, in which the payment is only liable at the conclusion of the rental. [Admur ibid]

[3] Admur ibid; implication of Gemara ibid; Ramban Milchamos 36b

[4] Admur ibid

[5] Admur Ribis 24; Rama 173/7

[6] Admur ibid and 4

[7] Admur Ribis 23-24; Michaber and Rama 173/7; Bris Pinchas chapter 9

[8] Admur ibid; Michaber ibid; Heard from Rabbi Pinchas Vind, author of Bris Pinchas.

The reason: As the money given is considered like a loan to the seller, which is only giving him the product later on, and the product is worth more money, and his considered like paying interest. [Admur Ribis 23] If however he already has the item, then it is considered as if it was already acquired now through the money transfer. [Taz 173/10]

[9] Michaber chapter 175; Shach 173/17; Bris Pinchas chapter 8

[10] See Mishpat Ribis 20/1; Bris Pinchas chapters 8-10

[11] See Michaber 173/3; Mishpat Ribis 20/1; Bris Pinchas 10/9

[12] See Admur Ribis 23 and Michaber 173/7 that if the seller has the item then he may purchase it for a lower price.

[13] See Admur Ribis 24; Rama 173/7

[14] Beis Efraim Y.D. 41; Mayim Rabim 38; Mishpat Ribis 20/8; Bris Yehuda 22 footnote 6

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