The Laws of Interest part 4 Interest in Business vol.3 no.4
One who sells an item on credit above its normal fixed price transgresses Rabbinic interest. Since the buyer is obligated to pay now but the seller allows him time to pay, his monetary obligation is viewed as a loan and the higher price is considered interest. An item without a fixed price can be sold for a higher than normal price on credit as long as he does not specify that he would charge less if paid up front. However if the seller does indicate that he would accept less money to be paid now, he can no longer sell it at the higher price.
According to most opinions even when the seller is willing to sell on credit at the normal price, but offers a cheaper price if the buyer pays him now, he may not take the higher price. However if the normal buying practice is to pay at a later time, there are those that allow the seller to offer a cheaper price if the buyer will pay him early. Since there is no monetary obligation on the buyer at present the buyer is not viewed as a borrower.
After the buyer acquires the item the seller is permitted to offer a cheaper price for payment up front. However according to many opinions this only applies if the buyer himself is a merchant who will sell these goods.
The above prohibitions apply when the buyer obtains legal possession of the goods and will suffer any loss incurred to the goods. However if the seller retains responsibility for the goods it is permitted to charge a higher price for delayed payment. It is also permissible if they sell on condition that if the buyer can not resell the goods for a profit he may return them to the seller.
If the buyer and seller agree on a deal which infringes on the interest laws the sale is still binding. However the seller must accept the lower price. According to some opinions the seller can renege on the deal.
Just as it is prohibited to sell an item above its normal price because the buyer delays payment, it is also prohibited for the seller to lower the price for early payment. For example, it is prohibited for the seller to sell an item for delivery at a later time below the normal price if the buyer pays him early. An item without a fixed price can be sold this way as long as it is not explicitly expressed why he is selling it at a lower price. It is also allowed if the seller has all the goods in his possession at the time of the agreement.
This issue dedicated to the memory of Devorah Felstein of blessed memory.
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