Q: Can businesses list one price for immediate cash payment and a higher price for credit or payment in installments?

A: This two-tiered pricing is considered a form of rabbinically prohibited ribbis. Payment for an item is due upon consummation of the sale, and therefore the price charged for immediate cash payment is viewed halachically as the “true price.” Therefore, if the vendor charges more for credit or payment in installments, he is considered as charging interest for the delay in payment (Y. D. 173:1). In the absence of a heter iska, a customer faced with two-tiered pricing should pay the lower, immediate cash price (Bris Yehuda 22:7-8).

Some authorities maintain that if the credit price clearly reflects the true price, and the cash price is a discount from the true price, it is allowed (see Chochmas Adam 139:5).

It is permissible to quote a single price factoring in the credit or payment in installments if the price discrepancy is not evident. For example, one may offer an item for 12 installments of $99, even if the item might have been sold otherwise for less, provided that the item does not have a clearly defined value. After the sale is concluded, it is also possible to offer a discount for immediate cash payment (Y.D. 173:3; Rabbi Reisman, The Laws of Ribbis, 6:5-14).