7 ms·
As someone who lived two years in Germany a) That's a good joke. From faster to slower: NFC > PIN > signature > cash. b) You should look into the real cost of
by hocuspocus 9y ago
As someone who lived two years in Germany
a) That's a good joke. From faster to slower: NFC > PIN > signature > cash.
b) You should look into the real cost of dealing with cash. EC is stupidly cheap since it's basically the cost of a SEPA direct payment (we're talking 1-2 cents per transaction). Debit card payments can also be pretty cheap in Europe. All those annoying restaurants and small shops that take only cash do it to dodge taxes, not for any other reason.
- killerpopiller 9y agoI also suspect tax avoidance rather than transaction costs
- bluGill 9y agoTransaction costs for cash is probably higher than for credit cards. For cash you have to count and recount that cash at the end of the shift, and then the bank counts are recounts it again. This is a significant amount of labor. By contrast with a card once the initial transaction is done everything is put into the computer electronically and no human has to look at it again. Also cash is subject to theft. In some locations this risk is a significant part of the transaction costs - not just the cash, risk of death in the robbery. Electronic payments are subject to loss, but generally there is a trail to chase when it happens, and the possibility of death is much less.
- kuschku 9y agoNot really. Until 2016, the costs were 30€/mo+0.125% for EC, 160€/mo+4% for VISA and MasterCard, 160€/mo+7.5% for AMEX in Germany. Most German merchants run on margins below 1-2%. Good luck paying 7.5% transaction fee on a margin of 1%. This is why EC was far more widely accepted, although even that was too expensive for small places, such as farmers selling stuff on the market.
- bluGill 9y agoNobody to my knowledge has every measures the costs of cash, it is just something they accept. With credit cards it is easy to measure because you get a number, but with cash it is not, you have to calculate too many different parameters and figure out what applies where.
- germanier 9y agoI'm pretty sure every single German supermarket chain measures that, it's just a requirement to operate at those margins. The Edeka cooperative published in 2012 that their all-in cash handling cost is 0.14%. The 2013 Steinbeis Cost of Cash study[0] estimated a much higher number of 2.7% for merchants. The truth is probably somewhere in between. Such studies have also been used to arrive at the EU interchange cap. [0]: http://www.steinbeis-research.de/images/pdf-documents/CFP_Cost_Of_Cash_Studie_Steinbeis_Deutsch.pdf http://www.steinbeis-research.de/images/pdf-documents/CFP_Co...
- jimmaswell 9y agoThe cash is counted by machines at banks, which I'm pretty sure almost never make an error doing so, and I'm sure it's less often than human counting error.
- _Codemonkeyism 9y agoMargins in many businesses are razor thin in Germany. Which is the reason Walmart and others stopped doing business in Germany. For many businesses 1-2% transaction cost is the difference between success and failure. But yes tax avoidance is a huge problem in restaurants in Germany.
- deftturtle 9y agoHow do they pay their employees if margins are razor thin? They'd have to operate on a huge scale to have enough profit to cover expenses and especially payroll. I would love to see a comparison of the balance sheets between some German and U.S. small businesses. Small businesses don't have the huge scale to live on a razor thin margin, so that's why I'm curious.
- deftturtle 9y agoAlso surveillance avoidance. Cash is awesome for leaving fewer traces.
- _Codemonkeyism 9y agoAs someone who lived 40+ years in Germany ...
- pmoriarty 9y agoSorry, but what is "EC" and "SEPA", and what do they have to do with the real cost of dealing with cash?
- kuschku 9y agoGermany doesn’t use the MasterCard or the VISA network, instead having an entire separate payment network, EC, which uses under the hood wire transfers via SEPA. This is the E in EMV (EC, MasterCard, VISA) which created most of modern payment infrastructure. SEPA is the Single European Payments Area, standardizing how to process fast and cheap payments, all transfers are in Euro, from 2018 on also having a standardized API between banks, wire transfers are free or below 1 cent each, etc.
- pmoriarty 9y agoThank you for explaining those, but I'm still not sure what they have to do with the "real cost of dealing with cash". EC and SEPA seem to be digital payment technologies, and therefore aren't dealing with cash.
- harperlee 9y agoI would think that the means that banks charge for dealing with cash inputs, either directly or indirectly, to cash heavy businesses.
- skrause 9y ago> Germany doesn’t use the MasterCard or the VISA network Well, it is used (almost all major stores and large grocery chains support both Visa and MasterCard), but Girocard is far more widespread.
- kuschku 9y agoOnly since the EU limited the fees. Until 2016, neither ALDI nor LIDL nor REWE nor PENNY nor Edeka nor Coop supported it.