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It was a bit buried, but calls out an interesting fact I wish more people knew about business: cash has processing fees too. If you deal with commercially rele
by mike_d 4y ago
It was a bit buried, but calls out an interesting fact I wish more people knew about business: cash has processing fees too.
If you deal with commercially relevant quantities of cash, in addition to your own labor costs associated with it, your bank will assess a fee for depositing it. Larger retailers will negotiate their own bespoke rates, but the right ballpark for small businesses above a nominal amount is 3 bps, or $3 per $10,000 transacted.
- swyx 4y agodamn, they get you coming and going. cant even deposit your own money in your own account without paying something
- mattclarkdotnet 4y agoYou don’t have to deposit it, you can just keep it under your mattress for no fee
- paranoidrobot 4y agoThe context is commercially relevant. As a regular consumer you can deposit cash without additional fees. If you're running even a modest business, keeping large amounts of cash on-hand for any length of time is a business risk. Some vendors may not want to be paid in cash, particularly for larger payments. Depositing it is the only way to deal with a lot of things.
- TedDoesntTalk 4y agoWalmart, Target, McDonalds branches deal with so much cash that they would need at least two mattresses.
- inopinatus 4y agoWalmart & Target also sell mattresses, making them a vertically integrated financial services provider.
- franga2000 4y agoThe thing is, a business is already paying for (example from my bank): - bank account fee - online and mobile banking fees - card "membership" fee - individual payment fees - ATM fees - incoming card payment fees - [probably more] And the bank is already making money by lending out my money to others and charging interest. I'm not saying none of those fees are justified, but at some point you have to ask: have they not taken enough??
- remram 4y agoThey could increase the bank account fee and waive the cash handling fee. That would make no difference to them, but that means every business customer is now paying for part of the cash handling, even if they don't deal in cash themselves. Why not itemize?
- djbebs 4y agoOften you're not legally allowed to spend it if you do that.
- dylan604 4y agoit's not like you can drop off a bag full of cash with a note that says "we swears it is $10,000" without some human employee counting it. even with counting machines, they still have to sort it (unless I'm so out of the cash counting game that the counters can sort for you). besides, you just wouldn't respect them in the morning if they did NOT take some money from you, would you?
- TedDoesntTalk 4y ago> they still have to sort it Is OCR really that bad?
- JumpCrisscross 4y ago> Is OCR really that bad? Still not 100% automatic. (There is also the anti-counterfeit component.)
- franga2000 4y agoI'm pretty sure my bank has a machine that counts and checks for counterfeits. I haven't seen anyone do a manual check in years, about as long as they've had the new machines. Of course there's still work involved, but it's mainly just feeding the machines and typing into a computer.
- hef19898 4y agoLuckily, machines don't have costs associated with them. Software and computers neither, I guess that is why I get my MS Office package for free...
- franga2000 4y agoWho said it was free? No shit machines cost money, but nowhere near as much as employees.
- nigamanth 4y agoThey are doing some work to count the amount of money deposited, the amount isn't that much for the amount of labor that the employee is doing. Don't you think it's fair for the employee to get paid as well?
- swyx 4y agodont be disingenuous. they primarily get paid off the net interest margin between the cash i deposit and what they loan out.
- beefield 4y agoYep, so real question is if it is fine that cash using companies are subsidized by non-cash using companies. If you do not cover the banks' cost of handling the cash in cash fees, then you need to cover it in net interest margin.
- Matumio 4y agoKind of true, but keep in mind that they are allowed to loan out 20x of what you deposit (fractional reserve banking).
- knewter 4y agoDuring covid they lifted reserve requirements, essentially removing the "limit" of 20x
- kasey_junk 4y agoThe reserve requirement is likely the least important restriction on loan to deposit ratio in banking. The reserve lifted the limit because US banks weren’t loaning out _enough_. At the time of the lifting of the limit the loan to deposit ratio was sitting somewhere around 60%. Since it was lifted that ratio has gone up to 62% (during a corresponding increased interest rate environment). The fed, fdic and occ all maintain a variety of a&l rules that outline what categories of loans can be approved that range the gamut from in state/out state to subsidized loans/market rate loans. Thats before taking into account all the consumer protection frameworks. All that is to say, if a bank gets to a loan/deposit ratio above .9 they are likely considered insolvent depending on the framework in question. The reserve requirement is no brake on their ability to loan out deposits, but there are lots of other ones that apply.
- dan_quixote 4y agoThere are lots of extra security effort/measures that are required when a bank has LOTs of cash on hand. Yes, there is added cost in counting, but it's the security that really costs the bank.
- cobertos 4y agoI wish that was towards the top of the article. It makes the whole "mystical paper" terminology make more sense. Cash becomes a burden to anyone moving lots of volume of money. That's what the article means by "useful money" not being paper money.
- conductr 4y agoIf you think that's crazy, try depositing $10,000 in coin
- mmoskal 4y agoStill 100x less than a typical US credit card fee.
- raverbashing 4y agoAdd on top of that handling costs, "attrition" costs (fake notes, wrong change, theft, etc), etc
- bonzini 4y ago100x less than Amex, others should be much cheaper (don't know about the US but flat monthly fees are common in Europe). Also the fee does not include the time and risk of bringing cash to the bank.
- zinekeller 4y ago> don't know about the US but flat monthly fees are common in Europe It's definitely still percentages, not a flat fee, and it's not limited to 0.3 percent which is applicable to you, it's much, much higher even in a debit transaction. This is why some small shops only accepts cash.
- hocuspocus 4y agoDefine much. For big businesses, PSPs are well under 1% for both debit and credit cards, as long as said cards are issued in the EEA. With interchange capped at 0.2/0.3 respectively and scheme fees a little over 0.1, PSPs are can be profitable at 0.6~0.7%, a fraction of the situation in other regions, especially the US.
- kuschku 4y agoIf you're a regular business, regardless of if you're using Zettle, SumUp, Sparkasse or Deutsche Bank for payment handling, you'll pay 0.125% for girocard, 0.2% for cash, and 0.9 to 1.9% for a mix of debit and credit cards. It's absolutely ridiculous, and MasterCard's attempt to destroy girocard by forcing banks to choose one or the other is an obvious cash grab to destroy competition.
- quickthrower2 4y agoWhat about buying rolls of coins and small denominations too?
- balsam 4y agoPhysicists like to call this kind of sum “finite”, to make it sound closer to infinity, which sounds better than “nonzero”, which makes it sound too close to zero.
- deleted 4y ago[deleted]