Domestic Encyclopædia (1802)/Discount

DISCOUNT, in commerce, a term employed by traders, merchants, and bankers; especially by the two former, when they purchase commodities on the usual time of credit, and on condition that the seller allow the buyer a certain discount at the rate of so much per cent. per annum, for the time during which credit is generally given; provided the buyer pay ready money for such commodities, instead of taking the usual time of credit.

Traders and merchants, also, who frequently take promissory notes for money due and payable to them or to their order at a certain date, and who sometimes have occasion for the money before the time elapses, procure these notes to be discounted by bankers before the time of payment, so that the latter deduct the interest which will become due by the time such notes are payable. Bills or Exchange are discounted by bankers on similar terms; which indeed constitute a considerable article of the profits of banking.—See Interest.