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Living in New York City, I've noticed that there are a whole lot of businesses that are either cash-only or card-only. I always understood the cash-only ones.
by apeace 4y ago
Living in New York City, I've noticed that there are a whole lot of businesses that are either cash-only or card-only.
I always understood the cash-only ones. If you can get plenty of customers who are willing to pay in cash, why would you want to pay credit card fees?
The card-only ones were harder for me to understand, until I realized that handling cash costs money, too. Somebody needs to count it all at least once a day, if not more. Employees can steal it. Robbers can steal it. You need a safe. You need cash registers. You need to get the cash deposited in the bank, by paying someone to go do that. You need to maintain an inventory of smaller bills and coins to make change. You need to train people on all of this.
Even just the accounting costs might make up the 2-3 percent in fees. "Your register said you made $150 in cash that day, but the deposit that night was only $135." That's what you pay accountants to deal with, rather than just exporting from your Square account to Quickbooks or whatever.
I had this realization because I went to a new coffee shop that had opened up. It appeared to be owned and operated by just one lady, and she was really nice. So, as I normally do for the nice local business owners in my neighborhood, I got out some cash instead of a card, thinking it would benefit her business. But then she told me they were card-only and it dawned on me: she's just one lady running a store by herself, _of course_ she doesn't want to deal with cash.
So, I'm not sure the 2-3 percent fees are all that bad, though I could be convinced otherwise. Plenty of small business owners seem pretty happy just setting up a Square reader and not dealing with the headache of cash. I think there's a lot of value in that for them.
- throw__away7391 4y agoThe "cash only" businesses in NY are generally cheating on their taxes. A congressman was arrested a few years back for tax fraud on the profits from cash only businesses he owned in the city. His defense was that "this is a well-known common practice in the city".
- apeace 4y agoI don't doubt that for a second :)
- conjecTech 4y agoThis is a false dichotomy. Other countries have debit systems that solve all of the problems you outline and charge 0.1%.
- apeace 4y agoFair point, and I'd be happy if my coffee lady could get a better deal on card processing. I'm just saying that I don't view it as such a big disaster for card processors to be charging fees in general, given that it does provide a significant value to the business owner.
- thfuran 4y ago3% off the top is quite a lot. Grocery stores, for example, tend to operate at around a 2-3% profit margin.
- deltree7 4y agocredit cards provides plenty of benefits to the customer which debit cards won't. Fraud protection, charge backs. This in turn, makes consumers use more credit cards stimulating the entire business economy
- NoPicklez 4y agoI get the same protection on my debit card as I do a credit card here in Australia. Fraud protection, chargebacks, tap to pay and chip in card. In fact over here, Credit Cards incur more fees for the business than debit cards. In all my years of being alive, I've never understood the need for a Credit Card.
- zppln 4y agoI was the same until recently. Nowadays I don't see a good reason for not using a credit card over a debit card. My bank charges me like $2 a month for a Visa. My Mastercard is free and has a tiny cashback. It's not gonna make me a millionaire, but so far I haven't experienced any downsides.
- dfxm12 4y agoThe other side of this is that card only businesses de facto discriminate (not in an illegal way, of course) against people who don't have/can't get cards. Not being able to buy a cup of coffee from one particular coffee shop might not seem like a big deal, but it sends a signal as to who is/isn't wanted in the shop. Further, if it becomes a trend and all coffee shops go card only, spreading to other business like grocery stores, etc., then it starts to be a problem.
- codyb 4y agoI'm pretty sure card only is illegal in NYC for precisely this reason. I come across them occasionally and I think the pandemic made it a bit more common place but it's technically against the law here to not accept cash. https://abcnews.go.com/US/cashless-stores-restaurants-banned-york-city-law/story?id=68478650 https://abcnews.go.com/US/cashless-stores-restaurants-banned...
- Phrodo_00 4y agoIn my country, the state-owned bank (normal bank that happens to be owned by the state, not the central bank) came out with an automatic, free checking account so that everyone can use cards. It's not perfect because it has some less than ideal fees, but it helps getting over this problem.
- actionablefiber 4y agoI've seen posts on Reddit[1] that say that cashless establishments in NYC will just give you your food for free if you try to pay with cash. Never tried it though. [1]https://www.reddit.com/r/nyc/comments/vcebns/im_an_ex_employee_of_van_leeuwen_ice_cream_i_got/ https://www.reddit.com/r/nyc/comments/vcebns/im_an_ex_employ...
- mnd999 4y agoI dunno about US law but in the UK the law of legal tender requires you to accept payment of a debt in (exact) cash and if you've already eaten the food then a debt would certainly exist. This would not apply in a shop of course as they could just refuse to sell you the goods.
- causi 4y agoI wouldn't require someone to be able to provide change, but "accepting the currency of the nation you live in" seems like it should be one of the basic requirements of civilization.
- gretch 4y agoI bought a house and was required to wire transfer the down payment. Would it have been reasonable for me to drop off a briefcase of cash? Was this transaction somehow unreasonable?
- causi 4y agoYes, that would've been reasonable, and it wouldn't have been a briefcase. Fifty thousand dollars in hundreds is a stack less than three inches thick.