Business Halacha: Ribbis Intricacies


interestQ: Can I offer 2/10 net-30 terms, i.e., full payment is due within 30 days, with a 2% discount for payment within 10 days?

A: This arrangement seems parallel to the two-tier pricing for cash/credit discussed last week, since there is a lower price for prompt payment and a higher price for payment in 30 days. Thus, according to many authorities this payment arrangement is considered a rabbinic form of ribbis, and allowed only by means of a heter iska. If there is no heter iska, the customer should be careful to pay the lower price within the 10 days.

It is permissible, though, to provide the 2% discount if the sale is first concluded with a single price set with net-30 terms alone. After the goods are already handed over (or the transaction is consummated with a kinyan), the invoice may be sent allowing a 2% discount for early payment. (Y.D. 173:3)

Some authorities permit 2/10 net-30 terms on the basis of the Chochmas Adam (mentioned last week), since the net-30 price presumably reflects the true market price, or for other reasons. In the wholesale market, where the common practice is usually to allow a grace period for payment, there is additional basis to allow discounts for immediate cash payment. (Bris Yehuda 22:8)

In practice, it is often difficult for a business to avoid the common 2/10 net-30 pricing. Since the prohibition of ribbis through commercial transactions is of Rabbinic nature, it is possible to rely on the lenient opinions in case of need or if the customer is a corporation and there is no personal liability for payment. However, it is highly advisable for the business to draft an all-purpose heter iska. (See also Rabbi Reisman, The Laws of Ribbis 6:20-22)

Authored by Rabbi Meir Orlian

These articles are for learning purposes only and cannot be used for final halachic decision. The Business Halacha email is a project of Business Halacha Institute ( and is under the auspices of Rav Chaim Kohn.

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