A two cent arbitrage - free options (one year later)

A year ago, I was reporting A two cent arbitrage - free options. When the minister in charge (the minister was then Kris Peters, now member of the European Parliament - Kris Peters) of "financial products" and financial regulators (FSMA) is not a quant, you know you are heading for financial troubles.

To make a long story short, since 1 December 2019, in Belgium for each retail transaction, you have a free option. If you pay in cash, the total price is rounded to the nearest 5 cents, if you pay by card, the total price is not rounded (it is a little bit more complex than that but for the sake of a short story, this is good enough).

The arbitrage strategy is easy. If the total price of the purchases is ending by 1, 2, 6 or 7 cents, pay by cash and get a 1 or 2 cents discount. If the total price ends by 3, 4, 7 or 9 cents, pay by card and pay the exact price. In case of 0 or 5, do whatever is most convenient.

With this strategy, on average (if the last figure of prices are equally distributed), you get a 0.6 cent discount on each purchase. Obviously, you can split a large purchase in multiple smaller purchases to maximize you savings.

As advertise one year ago, when the mandatory free option was imposed by the minister, I'm using my free option when convenient. I have used it a couple of times already and today I even kept the receipt.



Thank you Mr Peters, the unintended (for you) consequences of your decisions are worth (many times) 2 cents to me (as expected).

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