Depends on where you shop, but some places will give you cash discounts of 3-5%, which is more than most CC rewards pay. Admittedly it's not as widespread.
It was more complicated, I believe. The marked and advertised price had to be what credit card users would pay, but they could have a cash discount at the register or checkout.
Starting in early 2013, as a result of a settlement of a class action by merchants, they no longer have to charge credit card users the advertised and marked price. They can advertise and mark the cash price, and charge a credit card surcharge of up 4% or the processing fees for that transaction (whichever is smaller).
They used to - it used to be enough for a merchant to lose 'rights' to process credit cards - but the federal regulations of a couple years ago put a stop to it.
Some states previously used to also restrict the ability of merchant agreements to do that, though usually only in specific industries. E.g. in Texas, liquor stores (but nobody else) have been able to offer cash discounts for ages. Now anyone can.
Not saying that's untrue, but when you think of it, it's pretty amazing that card companies can legally do this. Testament to the efficacy of K Street I suppose.
From what I remember, you can charge a single flat fee for using a credit card, but no percentages. At the time, I thought that 'sliding scale' flat fees (e.g. < $100 is $0.15, > $100 is $1.50) were too close to percentages per the agreement.
