3 ms·

This is a surprising point I never see raised, that cash has its own overhead costs, just that they're diffuse (training and paying employees to close and count

This is a surprising point I never see raised, that cash has its own overhead costs, just that they're diffuse (training and paying employees to close and count the registers, hiring Garda trucks to transport cash) versus explicit (processor fees). 3% is presumably still far higher than cash's overhead, but the rate is so entrenched in the US that I wonder what it would take to get it dislodged.

lotsofpulp 4y ago
3% is not for electronic payment, 3% is for accepting credit card payment. Debit cards are much, much cheaper. And merchants are free to charge credit card payers an extra 3% or whatever they want to cover credit card costs. https://www.ftc.gov/business-guidance/resources/new-rules-electronic-payments-lower-costs-retailers https://www.ftc.gov/business-guidance/resources/new-rules-el... > Beginning October 1, 2011, interchange fees for certain debit cards are capped at 21 cents plus 0.05% of the transaction value. https://www.federalreserve.gov/paymentsystems/regii-average-interchange-fee.htm https://www.federalreserve.gov/paymentsystems/regii-average-... > In 2020, the average interchange fee per covered transaction was equal to $0.23. This value has not changed significantly since Regulation II took effect on October 1, 2011. Hopefully, the upcoming FedNow system will make electronic payments effectively free. https://www.federalreserve.gov/paymentsystems/fednow_about.htm https://www.federalreserve.gov/paymentsystems/fednow_about.h...
- Nursie 4y ago
  > 21 cents plus 0.05% This would seem to make it potentially quite expensive on small transactions? People use cards for the most trivial amounts here in Australia. Apparently the typical transaction fees are apparently 0.5% for debit and 0.9% for credit, which means that yeah, I just wave my phone to buy a donut...
  - lotsofpulp 4y ago
    It is definitely too high for small dollar amounts. This website has links to payment processors that show the different price for merchants with small dollar amount transactions: https://www.cardpaymentoptions.com/credit-card-processing/debit-fees-explained/ https://www.cardpaymentoptions.com/credit-card-processing/de... For banks not covered until the regulations that cap fee, the cost is only 1% + $0.04. But it seems the banks that are covered under the regulations are charging the max allowed, 0.05% + $0.21.
  - Daedren 4y ago
    Over here in Portugal, many small merchants don't accept card because of this, or at least have a notice mentioning "5€ minimum to pay by card".

lotsofpulp 4y ago

3% is not for electronic payment, 3% is for accepting credit card payment. Debit cards are much, much cheaper. And merchants are free to charge credit card payers an extra 3% or whatever they want to cover credit card costs. https://www.ftc.gov/business-guidance/resources/new-rules-electronic-payments-lower-costs-retailers https://www.ftc.gov/business-guidance/resources/new-rules-el... > Beginning October 1, 2011, interchange fees for certain debit cards are capped at 21 cents plus 0.05% of the transaction value. https://www.federalreserve.gov/paymentsystems/regii-average-interchange-fee.htm https://www.federalreserve.gov/paymentsystems/regii-average-... > In 2020, the average interchange fee per covered transaction was equal to $0.23. This value has not changed significantly since Regulation II took effect on October 1, 2011. Hopefully, the upcoming FedNow system will make electronic payments effectively free. https://www.federalreserve.gov/paymentsystems/fednow_about.htm https://www.federalreserve.gov/paymentsystems/fednow_about.h...

Nursie 4y ago
> 21 cents plus 0.05% This would seem to make it potentially quite expensive on small transactions? People use cards for the most trivial amounts here in Australia. Apparently the typical transaction fees are apparently 0.5% for debit and 0.9% for credit, which means that yeah, I just wave my phone to buy a donut...
- lotsofpulp 4y ago
  It is definitely too high for small dollar amounts. This website has links to payment processors that show the different price for merchants with small dollar amount transactions: https://www.cardpaymentoptions.com/credit-card-processing/debit-fees-explained/ https://www.cardpaymentoptions.com/credit-card-processing/de... For banks not covered until the regulations that cap fee, the cost is only 1% + $0.04. But it seems the banks that are covered under the regulations are charging the max allowed, 0.05% + $0.21.
- Daedren 4y ago
  Over here in Portugal, many small merchants don't accept card because of this, or at least have a notice mentioning "5€ minimum to pay by card".