3 ms·

And yet, there are lots of businesses that give a discount for cash specifically because of that 3% fee. Yes, I know the standard trope is that it's so they can

by bwanab 3y ago

And yet, there are lots of businesses that give a discount for cash specifically because of that 3% fee. Yes, I know the standard trope is that it's so they can avoid taxes and in some cases that's surely true. But, for many, if not most businesses, there are way too many paper trails for the IRS (or whatever the taxman is called in your country) to follow that would make that difficult to pull off at any worthwhile scale.

dghlsakjg 3y ago
If I had to guess why some businesses do this I would speculate on two things: 1. Like I said, there are a lot of indirect costs with cash, and a lot of businesses are just bad at calculating these things (a surprising number of business owners are REALLY bad with money and valuing time). For example, an owner managed business might not value or care about the owner having to count and make trips to the bank. 2. Something in the nature of the business favors cash. For example, if your average transaction value is < $5 and you are running 100+ swipes per day, the fixed swipe fees of $.10-$.30 are going to HURT (think convenience store). Another example might be low/no margin stuff like gasoline, gas is the loss leader for stations hoping you'll buy a snack with a huge margin, so they offer a cash discount since it is cheaper for them AND you have to go into the store, which increases the chance of an impulse buy. Someone with average transaction value of > $100 who only runs ten transactions a day isn't that worried about losing a dollar to swipe fees in exchange for not having to keep thousands on premise at the end of the day (think car mechanic).
creer 3y ago
One is the cost they are used to (the cost of managing cash), the other is the new outrageous cost (card processing fees, cost of the machines, etc)

3 ms·

And yet, there are lots of businesses that give a discount for cash specifically because of that 3% fee. Yes, I know the standard trope is that it's so they can

by bwanab 3y ago

dghlsakjg 3y ago
If I had to guess why some businesses do this I would speculate on two things: 1. Like I said, there are a lot of indirect costs with cash, and a lot of businesses are just bad at calculating these things (a surprising number of business owners are REALLY bad with money and valuing time). For example, an owner managed business might not value or care about the owner having to count and make trips to the bank. 2. Something in the nature of the business favors cash. For example, if your average transaction value is < $5 and you are running 100+ swipes per day, the fixed swipe fees of $.10-$.30 are going to HURT (think convenience store). Another example might be low/no margin stuff like gasoline, gas is the loss leader for stations hoping you'll buy a snack with a huge margin, so they offer a cash discount since it is cheaper for them AND you have to go into the store, which increases the chance of an impulse buy. Someone with average transaction value of > $100 who only runs ten transactions a day isn't that worried about losing a dollar to swipe fees in exchange for not having to keep thousands on premise at the end of the day (think car mechanic).
creer 3y ago
One is the cost they are used to (the cost of managing cash), the other is the new outrageous cost (card processing fees, cost of the machines, etc)