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I have no dog in this fight as I rarely deal with cash and do not run a retail business. However from a conceptual point of view I really have a viscerally nega

I have no dog in this fight as I rarely deal with cash and do not run a retail business. However from a conceptual point of view I really have a viscerally negative reaction to not accepting cash. It is a societal acceptance of the rent seeking behavior of the credit processing networks. I already have to pay a sales tax to ${TAX_ENTITIES.length} different government entities, I don't love that I also have a 3% tax going to VISA/Mastercard/Amex/...

Guvante 3y ago
Visa gets 1% and the bank gets the rest actually. Which they use to fund cash back programs...
- smohnot 3y ago
  Besides the point but visa actually gets about 0.14%
  - Guvante 3y ago
    I pulled up their financials previously and their gross margin was 1%. Net income is a weird number so I tend to ignore it for this kind of stuff. Certainly I could have missed the payback style stuff they do but I thought that was included in the number I checked.
- akira2501 3y ago
  It'd be nice to see what an actually competitive payment processing market would look like. Merchants seem to have no power in this system and I don't see much effort between banks to compete for business, either. These offerings are stagnant and reflect an effort to keep profits artificially high rather than reduce costs and expand on volume.
  - Guvante 3y ago
    I think cash discounts and similar models can work to avoid paying the CC fee (now that vendors are allowed to do that)
lotsofpulp 3y ago
> I don't love that I also have a 3% tax going to VISA/Mastercard/Amex/... You don’t. The merchant you are buying from is choosing to pay 3% for credit card payments because they believe incentivizing people to pay with credit cards will result in them earning more (via higher prices or higher margin goods) than incentivizing them to pay with debit/cash. If a merchant wanted to, it would be trivial for them to give you a 3% discount for paying with debit. In fact, Target gives you 5% off for paying with debit via their Redcard, but I suspect they do not advertise it because they still want their non savvy buyers to use credit cards. And they want to funnel their rewards seeking savvy buyers to the 5% discount since they bet the cost benefit for those people does not work out.
- foolswisdom 3y ago
  Assuming that's correct, that effectively boils down to the same thing? Prices would be somewhat lower if merchants didn't need to consider the ~3% disappearing in the payment processor.
  - deleted 3y ago
    [deleted]
  - zoky 3y ago
    That doesn’t necessarily follow though. Consumers are more likely to go to a store that takes credit cards and spend more once they are there than a store that accepts only cash. If the merchant has to pay 3% in credit card fees for a 20% increase in revenue, that’s likely a good deal for the merchant.
    - nirvdrum 3y ago
      There's a huge network effect that's effectively led to a 3% tax on the economy. Since every other store accepts credit cards, you need to too. It's not a case where a credit card allows someone that was going to buy a $500 TV to now spend $1,500. It's that you won't sell anything if you're a cash only business. And with Covid fewer people want to handle cash. Debit cards exist and partially solve the inconvenience of holding cash. But, they're really inconvenient in other ways. As a consumer I'll prefer credit cards most of the time just for the security benefits. If there's a breach at a merchant and my number is stolen I don't have to worry about my checking account being screwed up for however long it takes to sort things out. It'd be nice if we had another option for cashless payments. Particularly, one that doesn't impose such a large financial burden on everyone. Yeah, rewards are nice but they're disproportionately allocated as well. I think it's fairly evident going forward cash will be handled less and less. Credit card companies are the incumbents and path to least resistance to accepting cashless payments, but they don't need to be the only option. With real competition I suspect we'll see those swipe fees suddenly decrease. Unfortunately, some of the bigger attempts at non-credit card payments (e.g., PayPal) charge commensurate fees. So, maybe I'm off and 3% is the minimum needed by the middlemen to stay afloat.
dehrmann 3y ago
> I don't love that I also have a 3% tax going to VISA/Mastercard/Amex/... People seem to forget processing cash isn't free. If you're small, it's a trip to the bank. If you're large, it's an armored truck. Employee theft is a problem. Counterfeit money is a problem. If we pretend it's 1% instead of 3% (since you can get 2% cash back), 1% for not dealing with the downsides of cash sounds ok.
- shapefrog 3y ago
  Banks also literally charge a % fee to deposit cash into your account.
  - marklubi 3y ago
    Can you provide a citation on that one? I've never heard of such an absurd issue. The closest I can think of is when a bank tried to charge my son for using their coin counting machine because he didn't have an account there (he's a minor, but I had an account).
    - jdietrich 3y ago
      Many business accounts have a monthly allowance of free cash deposits, but the standard fee is 30¢ per $100. https://www.bankofamerica.com/salesservices/smallbusiness/resources/business-schedule-fees/ https://www.bankofamerica.com/salesservices/smallbusiness/re... https://www08.wellsfargomedia.com/assets/pdf/small-business/information-schedule.pdf https://www08.wellsfargomedia.com/assets/pdf/small-business/...
      - marklubi 3y ago
        Thanks for the details. While I think it's ridiculous, a 0.3% fee for over $20k in deposited cash per month doesn't sound unreasonable for handling risk. Personally, I wouldn't be banking with either of those companies because I think they just exist as parasites. Find a good credit union.
Boltgolt 3y ago
The EU limits the processing fee to 0.2% of transactions, which solves a lot of the problems with taking cards as a store. Why can't the US? The only downside is less benefits on your credit card because you didn't indirectly pay that 2.8% extra on everything you buy

Guvante 3y ago

Visa gets 1% and the bank gets the rest actually. Which they use to fund cash back programs...

smohnot 3y ago
Besides the point but visa actually gets about 0.14%
- Guvante 3y ago
  I pulled up their financials previously and their gross margin was 1%. Net income is a weird number so I tend to ignore it for this kind of stuff. Certainly I could have missed the payback style stuff they do but I thought that was included in the number I checked.
akira2501 3y ago
It'd be nice to see what an actually competitive payment processing market would look like. Merchants seem to have no power in this system and I don't see much effort between banks to compete for business, either. These offerings are stagnant and reflect an effort to keep profits artificially high rather than reduce costs and expand on volume.
- Guvante 3y ago
  I think cash discounts and similar models can work to avoid paying the CC fee (now that vendors are allowed to do that)

lotsofpulp 3y ago

> I don't love that I also have a 3% tax going to VISA/Mastercard/Amex/... You don’t. The merchant you are buying from is choosing to pay 3% for credit card payments because they believe incentivizing people to pay with credit cards will result in them earning more (via higher prices or higher margin goods) than incentivizing them to pay with debit/cash. If a merchant wanted to, it would be trivial for them to give you a 3% discount for paying with debit. In fact, Target gives you 5% off for paying with debit via their Redcard, but I suspect they do not advertise it because they still want their non savvy buyers to use credit cards. And they want to funnel their rewards seeking savvy buyers to the 5% discount since they bet the cost benefit for those people does not work out.

foolswisdom 3y ago
Assuming that's correct, that effectively boils down to the same thing? Prices would be somewhat lower if merchants didn't need to consider the ~3% disappearing in the payment processor.
- deleted 3y ago
  [deleted]
- zoky 3y ago
  That doesn’t necessarily follow though. Consumers are more likely to go to a store that takes credit cards and spend more once they are there than a store that accepts only cash. If the merchant has to pay 3% in credit card fees for a 20% increase in revenue, that’s likely a good deal for the merchant.
  - nirvdrum 3y ago
    There's a huge network effect that's effectively led to a 3% tax on the economy. Since every other store accepts credit cards, you need to too. It's not a case where a credit card allows someone that was going to buy a $500 TV to now spend $1,500. It's that you won't sell anything if you're a cash only business. And with Covid fewer people want to handle cash. Debit cards exist and partially solve the inconvenience of holding cash. But, they're really inconvenient in other ways. As a consumer I'll prefer credit cards most of the time just for the security benefits. If there's a breach at a merchant and my number is stolen I don't have to worry about my checking account being screwed up for however long it takes to sort things out. It'd be nice if we had another option for cashless payments. Particularly, one that doesn't impose such a large financial burden on everyone. Yeah, rewards are nice but they're disproportionately allocated as well. I think it's fairly evident going forward cash will be handled less and less. Credit card companies are the incumbents and path to least resistance to accepting cashless payments, but they don't need to be the only option. With real competition I suspect we'll see those swipe fees suddenly decrease. Unfortunately, some of the bigger attempts at non-credit card payments (e.g., PayPal) charge commensurate fees. So, maybe I'm off and 3% is the minimum needed by the middlemen to stay afloat.

dehrmann 3y ago

> I don't love that I also have a 3% tax going to VISA/Mastercard/Amex/... People seem to forget processing cash isn't free. If you're small, it's a trip to the bank. If you're large, it's an armored truck. Employee theft is a problem. Counterfeit money is a problem. If we pretend it's 1% instead of 3% (since you can get 2% cash back), 1% for not dealing with the downsides of cash sounds ok.

shapefrog 3y ago
Banks also literally charge a % fee to deposit cash into your account.
- marklubi 3y ago
  Can you provide a citation on that one? I've never heard of such an absurd issue. The closest I can think of is when a bank tried to charge my son for using their coin counting machine because he didn't have an account there (he's a minor, but I had an account).
  - jdietrich 3y ago
    Many business accounts have a monthly allowance of free cash deposits, but the standard fee is 30¢ per $100. https://www.bankofamerica.com/salesservices/smallbusiness/resources/business-schedule-fees/ https://www.bankofamerica.com/salesservices/smallbusiness/re... https://www08.wellsfargomedia.com/assets/pdf/small-business/information-schedule.pdf https://www08.wellsfargomedia.com/assets/pdf/small-business/...
    - marklubi 3y ago
      Thanks for the details. While I think it's ridiculous, a 0.3% fee for over $20k in deposited cash per month doesn't sound unreasonable for handling risk. Personally, I wouldn't be banking with either of those companies because I think they just exist as parasites. Find a good credit union.

Boltgolt 3y ago

The EU limits the processing fee to 0.2% of transactions, which solves a lot of the problems with taking cards as a store. Why can't the US? The only downside is less benefits on your credit card because you didn't indirectly pay that 2.8% extra on everything you buy