The latter is allowed now - after the backs of the credit card processors were broken.

They fought tooth and nail against cash discounts OR credit surcharges and they finally lost. In some areas it's rampant that you get a pretty substantial discount - often 4 or 5%, better than cash-back - and many places post "cash prices".

You can get even more if you're willing to ride the hassle of the gift card train.

The credit card companies know people spend more if they use credit cards, and they turn around and sell that to the merchants.