3 ms·

I also suspect tax avoidance rather than transaction costs

bluGill 9y ago
Transaction 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 ago
  Not 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 ago
    Nobody 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 ago
      I'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 ago
  The 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 ago
Margins 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 ago
  How 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 ago
Also surveillance avoidance. Cash is awesome for leaving fewer traces.

Transaction 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 ago
Not 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 ago
  Nobody 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 ago
    I'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 ago
The 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 ago

Margins 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 ago
How 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 ago

Also surveillance avoidance. Cash is awesome for leaving fewer traces.