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The question isn't why germans pay cash. the question is, why would you do it any other way?? I'll tell you why. In other countries we allow credit card comp

The question isn't why germans pay cash. the question is, why would you do it any other way?? I'll tell you why. In other countries we allow credit card companies to tax the masses. By creating regulations that prevent merchants from charging a different price for cash vs credit, you effectively force everyone to pay 2.5% extra for every purchase. That 2.5% goes straight to the credit card companies, even if you pay cash! So, you have no choice but to use a credit card, so you can recover 1.5% on the 2.5% tax your paying.

IanCal 9y ago
Capped at 0.2% now aren't they?
- mtmail 9y ago
  Yes, thanks to the European Union starting 2016. "The new regulation will cap interchange fees at 0.2% of the transaction value for Visa and MasterCard consumer debit cards and at 0.3% for Visa and MasterCard consumer credit cards effective as of December 2015." https://www.adyen.com/blog/eu-interchange-fees-cap https://www.adyen.com/blog/eu-interchange-fees-cap That put a lot of credit card schemes (get fly miles or points or cashback for each purchase) in trouble and they had to change their offers. My credit card company wrote back then I can now only earn status miles with their silver card now, at 99 Euro/year cost.
deleted 9y ago
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golergka 9y ago
> By creating regulations that prevent merchants from charging a different price for cash vs credit, you effectively force everyone to pay 2.5% extra for every purchase. Force? Merchants are free to sell things for cash only. But they won't - because consumers want to pay in credit cards, and a shop that only accepts cash will lose customers.
omni 9y ago
> That 2.5% goes straight to the credit card companies, even if you pay cash! You're going to have to explain how this makes any sense at all
- Pxtl 9y ago
  CC company charges 2.5% of overhead on all CC-based purchases. Vendor agreement prohibits passing that markup over to customers, so instead the vendor must pass that cost onto everybody. The net effect is that cash payers are subsidizing the credit card companies. To encourage this arrangement, the CC companies offer a kickback to the people who use the card, like 1% in cash back or "points" or whatever. This creates a game-theory problem where the customer is encouraged to always pay with their card, because otherwise they're wasting a percent or two. In countries where vendor agreements prohibiting passing the fee onto consumers is illegal, stores are able to ensure that cash payers are not subsidizing card payers... But consumers may rebel at the extra fee for paying with card and choose to take their business somewhere else altogether.
  - briandear 9y ago
    Actually in France where I have a tiny hotel, our fee is 1.5%. High volume merchants can negotiate even lower rates. There is also a savings for us by encouraging credit cards. Cash is a pain in the ass in France because you have to go to a bank to deposit it and we are 30 minutes from the nearest bank. Then there is security. If our guests paid us all in cash, I now have the very real problem of having thousands of euros in cash unless I want to waste an hour of my time going to a bank all the time. Then also in France, there is a law preventing cash purchases over €1000. There is also a guest security issue – why would you want guests to be carrying hundreds of euros in cash when they travel? For businesses, cash handling costs money too. There is a time cost, there is a security cost as well. Rarely does an employee skim money from the credit cards, but in shops it happens all the time.
empath75 9y ago
It's a transfer of wealth from people who are struggling to pay their cards off every month to people who have rewards cards and pay their balances every month.
sliverstorm 9y ago
Credit card users subsidize cash users, because they pay tax to the government that runs the cash system they don't use! The credit card fee overhead might be too high, but every form of payment system has overhead to operate & maintain, and there's nothing fundamentally wrong with that.
briandear 9y ago
Stores that accept credit cards sell more than those that don’t. I have been to plenty of cash only places were the prices are exactly the same or higher than credit accepting places. Additionally cash increase the potential for tax evasion, which means that increases the price of government for those who are legitimate.

IanCal 9y ago

Capped at 0.2% now aren't they?

mtmail 9y ago
Yes, thanks to the European Union starting 2016. "The new regulation will cap interchange fees at 0.2% of the transaction value for Visa and MasterCard consumer debit cards and at 0.3% for Visa and MasterCard consumer credit cards effective as of December 2015." https://www.adyen.com/blog/eu-interchange-fees-cap https://www.adyen.com/blog/eu-interchange-fees-cap That put a lot of credit card schemes (get fly miles or points or cashback for each purchase) in trouble and they had to change their offers. My credit card company wrote back then I can now only earn status miles with their silver card now, at 99 Euro/year cost.

deleted 9y ago

[deleted]

golergka 9y ago

> By creating regulations that prevent merchants from charging a different price for cash vs credit, you effectively force everyone to pay 2.5% extra for every purchase. Force? Merchants are free to sell things for cash only. But they won't - because consumers want to pay in credit cards, and a shop that only accepts cash will lose customers.

omni 9y ago

> That 2.5% goes straight to the credit card companies, even if you pay cash! You're going to have to explain how this makes any sense at all

Pxtl 9y ago
CC company charges 2.5% of overhead on all CC-based purchases. Vendor agreement prohibits passing that markup over to customers, so instead the vendor must pass that cost onto everybody. The net effect is that cash payers are subsidizing the credit card companies. To encourage this arrangement, the CC companies offer a kickback to the people who use the card, like 1% in cash back or "points" or whatever. This creates a game-theory problem where the customer is encouraged to always pay with their card, because otherwise they're wasting a percent or two. In countries where vendor agreements prohibiting passing the fee onto consumers is illegal, stores are able to ensure that cash payers are not subsidizing card payers... But consumers may rebel at the extra fee for paying with card and choose to take their business somewhere else altogether.
- briandear 9y ago
  Actually in France where I have a tiny hotel, our fee is 1.5%. High volume merchants can negotiate even lower rates. There is also a savings for us by encouraging credit cards. Cash is a pain in the ass in France because you have to go to a bank to deposit it and we are 30 minutes from the nearest bank. Then there is security. If our guests paid us all in cash, I now have the very real problem of having thousands of euros in cash unless I want to waste an hour of my time going to a bank all the time. Then also in France, there is a law preventing cash purchases over €1000. There is also a guest security issue – why would you want guests to be carrying hundreds of euros in cash when they travel? For businesses, cash handling costs money too. There is a time cost, there is a security cost as well. Rarely does an employee skim money from the credit cards, but in shops it happens all the time.

empath75 9y ago

It's a transfer of wealth from people who are struggling to pay their cards off every month to people who have rewards cards and pay their balances every month.

sliverstorm 9y ago

Credit card users subsidize cash users, because they pay tax to the government that runs the cash system they don't use! The credit card fee overhead might be too high, but every form of payment system has overhead to operate & maintain, and there's nothing fundamentally wrong with that.

briandear 9y ago

Stores that accept credit cards sell more than those that don’t. I have been to plenty of cash only places were the prices are exactly the same or higher than credit accepting places. Additionally cash increase the potential for tax evasion, which means that increases the price of government for those who are legitimate.