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Not using cash means someone gets a cut of a processing fee. Every time, with almost no exceptions. I’m not down to have rent seeking companies taking a slice

Not using cash means someone gets a cut of a processing fee. Every time, with almost no exceptions. I’m not down to have rent seeking companies taking a slice of my hard earned money just so I don’t have to manage a few pieces of paper. You’re generally paying 3-4 percent of every transaction now, as that’s pretty standard for debit cards on businesses, and it doesn’t matter if it’s charged to the card holder or the business, the consumer ultimately pays for it in higher prices. Heck, people pay transaction fees on payments they make the to government because the government won’t take cash. Do we really need to make not paying invisible fees in everything illegal? Seems crazy.

noodlesUK 3y ago
There were already costs. There were always costs and risks associated with cash handling: armored trucks doing cash collection, risks of money in tills being lost. If it really were a lot cheaper you wouldn’t see businesses clamouring to go cashless. That’s not to say I think cash should go the way of the dodo, but I don’t think there’s that much difference paying g4s to collect your money vs Mastercard. IMO the benefits of cash are on the consumer, not the business.
- poisonborz 3y ago
  These are even higher for digital, all the associated software development, audits, etc. That processing fee is on top of this, and is easily variable.
  - pjc50 3y ago
    You need exactly the same level of software durability for cash handling; see the Post Office scandal, where the computer system was misrecording cash transactions.
- graemep 3y ago
  I do not think so. Otherwise the British government would not have needed to outlaw charging customers more for card transactions to encourage the move away from cash.
  - noodlesUK 3y ago
    I strongly suspect that the reason cash is seen to be cheaper for these businesses is that they don’t report all of their cash income to their tax authority, rather than because cash is actually that much cheaper. Alternatively, they were counting the time they spent cash handling as a business owner as zero cost, which isn’t really true.
    - graemep 3y ago
      Those are reasons some people prefer cash, but it does not explain the need to ban passing on card fees. Someone willing to take the risk of the severe penalties for dodging taxes would not be deterred from offering discounts for cash payments because they broke another law by doing so. They can also avoid the law by not taking card payments at all. I have found that many people in businesses traditionally took cash payments do not take cards but are happy to be paid by bank transfer (which is usually free on both sides in the UK if the sender is not a business). The value of the time spent on cash handling may be very low. What is the opportunity cost of the time if it can be done in otherwise dead time? It is worth what value they attach to it.
      - nikau 3y ago
        They can't just stop taking cards as they would lose a lot of customers. Most small places not declaring cash want to stay off the radar, they use tricks like using old cash resisters that don't have trackable invoice ids. Food places are rife with it as they can claim excess food was thrown out as spoiled.
- tyfon 3y ago
  I work in a bank and cash handling is a major headache in terms of internal control, logistics, reconciliation and AML. It's a large extra cost. It is much cheaper for the bank and customers to use cards, but where I live the banks own a payment network that does not involve visa and mastercard so the cost is much lower and there is no rent seeking so card use have no fees. We also have an app for sending "cash" for free to friends, family and businesses that under the hood are just instant bank payments between the accounts.
  - noodlesUK 3y ago
    The issue is, whilst I’m sure that cards are cheaper overall, they present a serious burden for people who can’t use them: unbanked people for various reasons, older people, children etc.
    - tyfon 3y ago
      Children and old people here all use cards or apps. And derisking is illegal, so you have to provide a bank account and cards to anyone who wants. The high risk customers just need more follow-up on terms of AML.
      - noodlesUK 3y ago
        Where are you based where derisking is illegal? Here in the UK it makes the news fairly frequently when someone notable becomes unbanked because of CIFAS or SARs or similar. Also, I wasn’t able to get a debit card until I was 12, but perhaps that has changed over the past few decades.
        tyfon 3y ago
        I live in Norway. My kids got a card at around 5, but they are older now. Not with visa/mastercard of course :)
        qubex 3y ago
- SoftTalker 3y ago
  Yes there are costs to handling cash. And they are vastly higher than the cost of handling bits. A 3% fee to write some bits to a database is insane. A 3% fee to pay all the people who need to handle the currency in a cash transaction is probably not covering costs.
  - pxx 3y ago
    Yeah so you get consumer surplus if you pay 2.5% to a credit card processor instead of paying more than 3% to physical cash logistics. Everybody's happy besides your weird sense of "insane." Furthermore you get a lot more than just writing a few bits with a credit card transaction. You can bypass the cc companies and cash logistics costs by taking checks. But certainly the revealed preference is to not do that.
  - gizmo 3y ago
    That’s such a misrepresentation. The credit card fees exist because customers get benefits like delivery insurance, return insurance, holiday insurance, cashback, free credit, etc. If you just want to transfer bits you can do that for next to no fees (in Europe, where digital payments without consumer protections are common).
    - panarky 3y ago
      > such a misrepresentation Exactly. All the talk about fees misses the point because accepting and securing paper money is also very costly. And the provocateur's stunt in the article also misses the point, because electronic payments for groceries aren't a dystopian tyranny no matter how loud he screams about it. And the crypto skeptics are missing the point when they say you can't buy a coffee with bitcoin, because buying coffee is a solved problem, tap to pay with a bank card works just fine. And the crypto advocates are missing the point when they say that lightning or solana or something else will solve the coffee-buying conundrum because that's not a problem that needs solving. The real point about cash payments and crypto is whether people should be able to make large person-to-person payments that are not trivially surveilled or controlled. In a free society, should people have this capability? Or are the dangers of illegal transactions so great that this freedom must be eliminated? Europe has mostly free and mostly instant SEPA transfers which are one answer. Large payments are easy and cheap, though they are not secret or untraceable. Perhaps that's a reasonable trade-off. The US payments system is a mess by comparison, where we have no privacy paired with extreme inconvenience. Try to buy a $20,000 car from a private party on a holiday weekend to see how well that works.
- mab122 3y ago
  I would argue that cash maybe a little better than cashless because fees are tied to physical problem of moving cash around where as cashless fees are just one board meeting from changing ten fold.
- Am4TIfIsER0ppos 3y ago
  If it was cheaper the government wouldn't force you to take part in the scam under pain of death.
beAbU 3y ago
And yet, when last did you get a 3-4% discount when paying cash? I remember that from the 90s and 00s. In fact, I have seen some small places ask a 3-4% surcharge for cash payments, because banks don't process cash for free any more.
- fullspectrumdev 3y ago
  A lot of places around here charge a bit less for cash payments.
- j7ake 3y ago
  Cash only restaurants are often 10-20 percent cheaper than comparable restaurants.
  - jusssi 3y ago
    That would be because at least some of the cash bypasses the cash register and the tax report. Edit: alternatively they might not have same profitability requirement as other restaurants, because a cash-only restaurant is perfect front for money laundering.
    - ghaff 3y ago
      And they're probably just not comparable restaurants on average.
  - SoftTalker 3y ago
    My barber only takes cash. $18 for a standard haircut.
    - progbits 3y ago
      That's not because of card fees but because of taxes. They can underreport their cash income, but can't do that if the bank and card processor are involved.
    - thebruce87m 3y ago
moooo99 3y ago
> I’m not down to have rent seeking companies taking a slice of my hard earned money just so I don’t have to manage a few pieces of paper. You’re pretending as if there weren’t any costs associated with handling cash. There’s almost always a handling fee if you want to put the cash into an account, which you will need to do if you want to pay people that are somewhere else than you are. If you have larger quantities of cash, you’ll also have to pay for safe transportation of the funds. If you make an honest comparison
- caeril 3y ago
  > There’s almost always a handling fee Citation needed. I've been depositing cash for years, with multiple banks, and nobody has ever charged a "handling fee". > safe transportation of the funds Yes, a lot of people have this irrational reaction to carrying large amounts of cash, as if your unremarkable Toyota miraculously sports a giant "BRINKS" logo every time you carry cash, attracting the attention of would-be criminals everywhere. I assume you believe that thieves and pickpockets are regularly carrying millimeter-wave scanners to see what's in your pockets, briefcases, backpacks, etc?
  - gruez 3y ago
    >Citation needed. I've been depositing cash for years, with multiple banks, and nobody has ever charged a "handling fee". It's a fee associated with business accounts. >https://www.bankofamerica.com/smallbusiness/deposits/resources/fees-at-a-glance/ https://www.bankofamerica.com/smallbusiness/deposits/resourc... >Cash Deposit Processing No fee for first $7,500 in cash deposited per statement cycle at an ATM or Financial Center; then $0.30 per $100 deposited thereafter
    - Espressosaurus 3y ago
      0.3% vs. 3-4%
      - jasode 3y ago
        >0.3% vs. 3-4% No, the total costs of handling cash currency & coins for large businesses will still add up to 3% or more which is in the range of the fees of credit-cards processing. Costs of accepting cash also includes: - paying for armored trucks and security guards to transport bags of cash to the bank - percentage of cash lost to crime such as --- employees/cashiers theft/skimming by handling cash, --- robberies, --- counterfeit bills https://www.google.com/search?q=retailer+total+costs+of+handling+cash https://www.google.com/search?q=retailer+total+costs+of+hand... For a business, a true arbitrage of not paying 3% credit-card fees would be convincing customers to pay by check or electronic ACH bank account withdrawal. Those payment methods avoid the costs of managing loose cash and also avoid the fees from the credit-card processors. But they also have the same privacy concerns as CCs if customers care about that aspect.
phpisthebest 3y ago
The reality is most business prefer the 3% fee because the cost of Cash processing is higher when you factor in Bank Fees, Security, Accounting, Theft, and other factors. [1] https://www.businesswire.com/news/home/20180130005244/en/New-Research-IHL-Group-Shows-Retailers%25E2%2580%2599-Cash-handling/ https://www.businesswire.com/news/home/20180130005244/en/New...
solatic 3y ago
Banks sometimes charge fees to make cash withdrawals from ATMs, even ATMs belonging to the same bank that holds your account (true at least in my personal case, outside the US). If you are paid via direct deposit, you're financially incentivized to stay cashless. The direct cost of spending via debit/credit card (if one doesn't carry a balance) is zero, compared to the cost of withdrawing cash. If you want to inventivize salaried professionals to pay with cash, try outlawing fees on ATM withdrawals first.
cubefox 3y ago
There are now systems that are far cheaper than credit cards or debit cards. In the US it's called: FedNow. The system enables direct bank transfers in real-time, almost for free. https://en.wikipedia.org/wiki/FedNow https://en.wikipedia.org/wiki/FedNow The support is still very limited, but in India a similar system (UPI) managed to become ubiquitous.
- deleted 3y ago
  [deleted]
- pasttense01 3y ago
  With Visa/Mastercard... debit and credit cards you get some purchase protection. With those direct bank transfer systems you don't. Have you never done a chargeback on a credit card? With Fednow, UPI etc you can't.
  - cubefox 3y ago
    Credit card companies are highly profitable, meaning that people spend significantly more money on credit card fees than they save through purchase protection. So it's not worth it. Especially not in cases where it replaces cash, which also has no chargeback.
scotty79 3y ago
Exchanging value between two economical entities using pieces of paper seems crazy when you have better ways. Try to explain buying with cash in 200 years to someone who never seen it. What if I need to pay just a little, do I tear a bit of the paper? No, you can't tear. If your piece of paper is worth too much then the seller gives you other pieces of paper worth less. Can I throw out the rest of paper after I'm done buying? Not unless you want to lose a piece of your value. What if I don't have enough pieces of paper on me? Then you can't buy. So I should just carry all my worth in pieces of paper on me at all times? That's a bad idea because when you loose this paper or it gets stolen or destroyed you no longer own their value. Where do I get the paper from? Your employer can five it to you every month or week and you hold it in your home. Alternatively employer transfers the value to the bank normal way and when you need paper the bank can dispense it to you through various devices or service points. Are any of those devices handheld? Unfortunately no. What if my house get burned down or robbed? Then you lose all the value associated with all the papers kept there. And so on.
- dudefeliciano 3y ago
  I don't think OP was arguing to completely get rid of all wired transactions. And for all the points you made you still missed OPs major gripe, paying a third party for every single transaction you make. Wanna give your children pocket money? bank gets a cut...doesn't seem right tbh
  - scotty79 3y ago
    But you pay for facilitating the service of value transfer. If you do it by hand yourself the effort burdens you and the seller. You might argue that the cost is too much and maybe it should be state run and paid from taxes since it's the state that provides the service of money.
- nayuki 3y ago
  Exchanging value between two economic entities using primitive card numbers seems crazy when you have better ways. Try to explain buying with a credit card online 200 years ago to someone who has never seen it. You type in about 23 digits (16-digit card number, 4-digit expiry month, 3-digit verification code) to make a payment. But these digits only change every few years as you renew your credit card. So many parties will learn of your digits and you won't know who leaked them. The merchant on the other end can take out any amount of money from your account; it's pull-based, not push-based. The merchant on the other end can trap you in a recurring subscription without your knowledge or make it very hard to cancel. People have credit limits in the thousands of dollars, and in any single transaction you are liable to lose that much money. Meanwhile, you can't lose more than the hundreds of dollars of cash in your wallet. You can call your card issuer to dispute charges, but now you're at the mercy of an intermediary. The intermediary skims about 2~4% of every transaction, for the luxury of being able to spend your own money. You can't process certain types of transactions in an offline environment, such as debit cards during a power outage or on an airplane (though Wi-Fi is slowly becoming more common). And you think cash is crazy?
dr_dshiv 3y ago
Haha, Americans with their 2-4% transaction tax, it’s so funny. No seriously, when I first moved to the Netherlands I was wondering what kind of backwards country wouldn’t let me use a credit card at the grocery store. And that’s when I learned about how crazy it is that credit cards and even American debit cards have such needlessly high transaction fees.
- hhh 3y ago
  I use an Visa tied to an American bank every day for groceries in NL. I only have ever had issues using a card at a very small record store, I just make sure to carry 100eur in cash just in case. I do have more issues online when something only takes iDEAL though.
  - somenameforme 3y ago
    I'm sure you're aware of this - though others may not be: another trick US banks use is gouging you on exchange rates. My bank was charging something like a 0.5% fee visible fee and then an invisible fee several times that in exchange rate gouging. I found trying to use US banks abroad an absolutely painful experience, to the point I swapped my banking abroad which is itself a huge PITA thanks to FATCA and other stuff making Americans borderline persona non grata at most foreign banks.
    - xadhominemx 3y ago
      Banks all over the world make healthy margins on cross-border transactions involving a currency cross. It is not unique to American banks at all.
      - newaccount74 3y ago
        My EU bank charges less than 1% currency exchange fee. US banks have charged me 5-8%. It's not the same.
        3y ago
tgsovlerkhgsel 3y ago
The EU has indeed banned most of the rent-seeking on payment cards by setting upper bounds on various fees that can be charged.
caldarons 3y ago
maybe we should start thinking of payment infrastructure as a core public service if we move away from cash? Just like there is an official entity that can "print" cash, we should start doing the same with digital payments (I believe the EU is doing somethig similar). That way you don't have a duopoly taking a cut of every transaction.
- Aerroon 3y ago
  Governments should be running their own digital counterparts to cash, but they need to add the anonymity of this cash into the constitution. Otherwise the security apparatus is going to ruin it for everyone.
  - krapp 3y ago
    ... because the security apparatus is definitely held in check by the Constitution?
    - Aerroon 3y ago
      At least it could theoretically be. Anything outside of that would definitely not be. And at that point the digital cash equivalent will not be considered private. The government has to go above and beyond for people to believe the digital cash would preserve their privacy.
- Gare 3y ago
  This is called CBDC (Central Bank Digital Currency) and it is being worked on. But there are concerns about state surveillance and misuse.
  - lobocinza 3y ago
    CBDCs are a pandora box that once opened will not be closed. At best they will use for massive surveillance which is already scary.
marcosdumay 3y ago
I pay a fixed monthly fee for my bank that comes with full access to the interbank payment system. Every business on my country does the same for the other side, and we get unlimited transactions with no marginal cost. Anyway, as somebody else said, a 3% fee on transactions is just ridiculous. If you get any bit of competition, transaction-value based fees tend to be on the order of 0.5%.
aembleton 3y ago
Maybe the government should limit the cut that can be taken to something like 1%. All it would require is some legislation,
santoshalper 3y ago
It definitely matters who it is charged to. In almost all cases, it's just rolled into the overall price of the item, which means you pay it whether you use cash or not. It would be very interesting to see if prices for card were 3% higher across the board, if people would still use them as much. I honestly have no idea.
deleted 3y ago
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namaria 3y ago
Using debased money (does the paper in the note have any value?) is already submitting to paying seignorage to the issuing authority. There's not escaping it unless you sit on the top of that food chain.
fennecbutt 3y ago
Almost like our govs should create a standard for digital currency with 0% fees involved. But you know, our governments are fucking useless, so that ain't happening anytime soon.

noodlesUK 3y ago

There were already costs. There were always costs and risks associated with cash handling: armored trucks doing cash collection, risks of money in tills being lost. If it really were a lot cheaper you wouldn’t see businesses clamouring to go cashless. That’s not to say I think cash should go the way of the dodo, but I don’t think there’s that much difference paying g4s to collect your money vs Mastercard. IMO the benefits of cash are on the consumer, not the business.

poisonborz 3y ago
These are even higher for digital, all the associated software development, audits, etc. That processing fee is on top of this, and is easily variable.
- pjc50 3y ago
  You need exactly the same level of software durability for cash handling; see the Post Office scandal, where the computer system was misrecording cash transactions.
graemep 3y ago
I do not think so. Otherwise the British government would not have needed to outlaw charging customers more for card transactions to encourage the move away from cash.
- noodlesUK 3y ago
  I strongly suspect that the reason cash is seen to be cheaper for these businesses is that they don’t report all of their cash income to their tax authority, rather than because cash is actually that much cheaper. Alternatively, they were counting the time they spent cash handling as a business owner as zero cost, which isn’t really true.
  - graemep 3y ago
    Those are reasons some people prefer cash, but it does not explain the need to ban passing on card fees. Someone willing to take the risk of the severe penalties for dodging taxes would not be deterred from offering discounts for cash payments because they broke another law by doing so. They can also avoid the law by not taking card payments at all. I have found that many people in businesses traditionally took cash payments do not take cards but are happy to be paid by bank transfer (which is usually free on both sides in the UK if the sender is not a business). The value of the time spent on cash handling may be very low. What is the opportunity cost of the time if it can be done in otherwise dead time? It is worth what value they attach to it.
    - nikau 3y ago
      They can't just stop taking cards as they would lose a lot of customers. Most small places not declaring cash want to stay off the radar, they use tricks like using old cash resisters that don't have trackable invoice ids. Food places are rife with it as they can claim excess food was thrown out as spoiled.
tyfon 3y ago
I work in a bank and cash handling is a major headache in terms of internal control, logistics, reconciliation and AML. It's a large extra cost. It is much cheaper for the bank and customers to use cards, but where I live the banks own a payment network that does not involve visa and mastercard so the cost is much lower and there is no rent seeking so card use have no fees. We also have an app for sending "cash" for free to friends, family and businesses that under the hood are just instant bank payments between the accounts.
- noodlesUK 3y ago
  The issue is, whilst I’m sure that cards are cheaper overall, they present a serious burden for people who can’t use them: unbanked people for various reasons, older people, children etc.
  - tyfon 3y ago
    Children and old people here all use cards or apps. And derisking is illegal, so you have to provide a bank account and cards to anyone who wants. The high risk customers just need more follow-up on terms of AML.
    - noodlesUK 3y ago
      Where are you based where derisking is illegal? Here in the UK it makes the news fairly frequently when someone notable becomes unbanked because of CIFAS or SARs or similar. Also, I wasn’t able to get a debit card until I was 12, but perhaps that has changed over the past few decades.
      - tyfon 3y ago
        I live in Norway. My kids got a card at around 5, but they are older now. Not with visa/mastercard of course :)
        qubex 3y ago
SoftTalker 3y ago
Yes there are costs to handling cash. And they are vastly higher than the cost of handling bits. A 3% fee to write some bits to a database is insane. A 3% fee to pay all the people who need to handle the currency in a cash transaction is probably not covering costs.
- pxx 3y ago
  Yeah so you get consumer surplus if you pay 2.5% to a credit card processor instead of paying more than 3% to physical cash logistics. Everybody's happy besides your weird sense of "insane." Furthermore you get a lot more than just writing a few bits with a credit card transaction. You can bypass the cc companies and cash logistics costs by taking checks. But certainly the revealed preference is to not do that.
- gizmo 3y ago
  That’s such a misrepresentation. The credit card fees exist because customers get benefits like delivery insurance, return insurance, holiday insurance, cashback, free credit, etc. If you just want to transfer bits you can do that for next to no fees (in Europe, where digital payments without consumer protections are common).
  - panarky 3y ago
    > such a misrepresentation Exactly. All the talk about fees misses the point because accepting and securing paper money is also very costly. And the provocateur's stunt in the article also misses the point, because electronic payments for groceries aren't a dystopian tyranny no matter how loud he screams about it. And the crypto skeptics are missing the point when they say you can't buy a coffee with bitcoin, because buying coffee is a solved problem, tap to pay with a bank card works just fine. And the crypto advocates are missing the point when they say that lightning or solana or something else will solve the coffee-buying conundrum because that's not a problem that needs solving. The real point about cash payments and crypto is whether people should be able to make large person-to-person payments that are not trivially surveilled or controlled. In a free society, should people have this capability? Or are the dangers of illegal transactions so great that this freedom must be eliminated? Europe has mostly free and mostly instant SEPA transfers which are one answer. Large payments are easy and cheap, though they are not secret or untraceable. Perhaps that's a reasonable trade-off. The US payments system is a mess by comparison, where we have no privacy paired with extreme inconvenience. Try to buy a $20,000 car from a private party on a holiday weekend to see how well that works.
mab122 3y ago
I would argue that cash maybe a little better than cashless because fees are tied to physical problem of moving cash around where as cashless fees are just one board meeting from changing ten fold.
Am4TIfIsER0ppos 3y ago
If it was cheaper the government wouldn't force you to take part in the scam under pain of death.

beAbU 3y ago

And yet, when last did you get a 3-4% discount when paying cash? I remember that from the 90s and 00s. In fact, I have seen some small places ask a 3-4% surcharge for cash payments, because banks don't process cash for free any more.

fullspectrumdev 3y ago
A lot of places around here charge a bit less for cash payments.
j7ake 3y ago
Cash only restaurants are often 10-20 percent cheaper than comparable restaurants.
- jusssi 3y ago
  That would be because at least some of the cash bypasses the cash register and the tax report. Edit: alternatively they might not have same profitability requirement as other restaurants, because a cash-only restaurant is perfect front for money laundering.
  - ghaff 3y ago
    And they're probably just not comparable restaurants on average.
- SoftTalker 3y ago
  My barber only takes cash. $18 for a standard haircut.
  - progbits 3y ago
    That's not because of card fees but because of taxes. They can underreport their cash income, but can't do that if the bank and card processor are involved.
  - thebruce87m 3y ago

moooo99 3y ago

> I’m not down to have rent seeking companies taking a slice of my hard earned money just so I don’t have to manage a few pieces of paper. You’re pretending as if there weren’t any costs associated with handling cash. There’s almost always a handling fee if you want to put the cash into an account, which you will need to do if you want to pay people that are somewhere else than you are. If you have larger quantities of cash, you’ll also have to pay for safe transportation of the funds. If you make an honest comparison

caeril 3y ago
> There’s almost always a handling fee Citation needed. I've been depositing cash for years, with multiple banks, and nobody has ever charged a "handling fee". > safe transportation of the funds Yes, a lot of people have this irrational reaction to carrying large amounts of cash, as if your unremarkable Toyota miraculously sports a giant "BRINKS" logo every time you carry cash, attracting the attention of would-be criminals everywhere. I assume you believe that thieves and pickpockets are regularly carrying millimeter-wave scanners to see what's in your pockets, briefcases, backpacks, etc?
- gruez 3y ago
  >Citation needed. I've been depositing cash for years, with multiple banks, and nobody has ever charged a "handling fee". It's a fee associated with business accounts. >https://www.bankofamerica.com/smallbusiness/deposits/resources/fees-at-a-glance/ https://www.bankofamerica.com/smallbusiness/deposits/resourc... >Cash Deposit Processing No fee for first $7,500 in cash deposited per statement cycle at an ATM or Financial Center; then $0.30 per $100 deposited thereafter
  - Espressosaurus 3y ago
    0.3% vs. 3-4%
    - jasode 3y ago
      >0.3% vs. 3-4% No, the total costs of handling cash currency & coins for large businesses will still add up to 3% or more which is in the range of the fees of credit-cards processing. Costs of accepting cash also includes: - paying for armored trucks and security guards to transport bags of cash to the bank - percentage of cash lost to crime such as --- employees/cashiers theft/skimming by handling cash, --- robberies, --- counterfeit bills https://www.google.com/search?q=retailer+total+costs+of+handling+cash https://www.google.com/search?q=retailer+total+costs+of+hand... For a business, a true arbitrage of not paying 3% credit-card fees would be convincing customers to pay by check or electronic ACH bank account withdrawal. Those payment methods avoid the costs of managing loose cash and also avoid the fees from the credit-card processors. But they also have the same privacy concerns as CCs if customers care about that aspect.

phpisthebest 3y ago

The reality is most business prefer the 3% fee because the cost of Cash processing is higher when you factor in Bank Fees, Security, Accounting, Theft, and other factors. [1] https://www.businesswire.com/news/home/20180130005244/en/New-Research-IHL-Group-Shows-Retailers%25E2%2580%2599-Cash-handling/ https://www.businesswire.com/news/home/20180130005244/en/New...

solatic 3y ago

Banks sometimes charge fees to make cash withdrawals from ATMs, even ATMs belonging to the same bank that holds your account (true at least in my personal case, outside the US). If you are paid via direct deposit, you're financially incentivized to stay cashless. The direct cost of spending via debit/credit card (if one doesn't carry a balance) is zero, compared to the cost of withdrawing cash. If you want to inventivize salaried professionals to pay with cash, try outlawing fees on ATM withdrawals first.

cubefox 3y ago

There are now systems that are far cheaper than credit cards or debit cards. In the US it's called: FedNow. The system enables direct bank transfers in real-time, almost for free. https://en.wikipedia.org/wiki/FedNow https://en.wikipedia.org/wiki/FedNow The support is still very limited, but in India a similar system (UPI) managed to become ubiquitous.

deleted 3y ago
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pasttense01 3y ago
With Visa/Mastercard... debit and credit cards you get some purchase protection. With those direct bank transfer systems you don't. Have you never done a chargeback on a credit card? With Fednow, UPI etc you can't.
- cubefox 3y ago
  Credit card companies are highly profitable, meaning that people spend significantly more money on credit card fees than they save through purchase protection. So it's not worth it. Especially not in cases where it replaces cash, which also has no chargeback.

scotty79 3y ago

Exchanging value between two economical entities using pieces of paper seems crazy when you have better ways. Try to explain buying with cash in 200 years to someone who never seen it. What if I need to pay just a little, do I tear a bit of the paper? No, you can't tear. If your piece of paper is worth too much then the seller gives you other pieces of paper worth less. Can I throw out the rest of paper after I'm done buying? Not unless you want to lose a piece of your value. What if I don't have enough pieces of paper on me? Then you can't buy. So I should just carry all my worth in pieces of paper on me at all times? That's a bad idea because when you loose this paper or it gets stolen or destroyed you no longer own their value. Where do I get the paper from? Your employer can five it to you every month or week and you hold it in your home. Alternatively employer transfers the value to the bank normal way and when you need paper the bank can dispense it to you through various devices or service points. Are any of those devices handheld? Unfortunately no. What if my house get burned down or robbed? Then you lose all the value associated with all the papers kept there. And so on.

dudefeliciano 3y ago
I don't think OP was arguing to completely get rid of all wired transactions. And for all the points you made you still missed OPs major gripe, paying a third party for every single transaction you make. Wanna give your children pocket money? bank gets a cut...doesn't seem right tbh
- scotty79 3y ago
  But you pay for facilitating the service of value transfer. If you do it by hand yourself the effort burdens you and the seller. You might argue that the cost is too much and maybe it should be state run and paid from taxes since it's the state that provides the service of money.
nayuki 3y ago
Exchanging value between two economic entities using primitive card numbers seems crazy when you have better ways. Try to explain buying with a credit card online 200 years ago to someone who has never seen it. You type in about 23 digits (16-digit card number, 4-digit expiry month, 3-digit verification code) to make a payment. But these digits only change every few years as you renew your credit card. So many parties will learn of your digits and you won't know who leaked them. The merchant on the other end can take out any amount of money from your account; it's pull-based, not push-based. The merchant on the other end can trap you in a recurring subscription without your knowledge or make it very hard to cancel. People have credit limits in the thousands of dollars, and in any single transaction you are liable to lose that much money. Meanwhile, you can't lose more than the hundreds of dollars of cash in your wallet. You can call your card issuer to dispute charges, but now you're at the mercy of an intermediary. The intermediary skims about 2~4% of every transaction, for the luxury of being able to spend your own money. You can't process certain types of transactions in an offline environment, such as debit cards during a power outage or on an airplane (though Wi-Fi is slowly becoming more common). And you think cash is crazy?

dr_dshiv 3y ago

Haha, Americans with their 2-4% transaction tax, it’s so funny. No seriously, when I first moved to the Netherlands I was wondering what kind of backwards country wouldn’t let me use a credit card at the grocery store. And that’s when I learned about how crazy it is that credit cards and even American debit cards have such needlessly high transaction fees.

hhh 3y ago
I use an Visa tied to an American bank every day for groceries in NL. I only have ever had issues using a card at a very small record store, I just make sure to carry 100eur in cash just in case. I do have more issues online when something only takes iDEAL though.
- somenameforme 3y ago
  I'm sure you're aware of this - though others may not be: another trick US banks use is gouging you on exchange rates. My bank was charging something like a 0.5% fee visible fee and then an invisible fee several times that in exchange rate gouging. I found trying to use US banks abroad an absolutely painful experience, to the point I swapped my banking abroad which is itself a huge PITA thanks to FATCA and other stuff making Americans borderline persona non grata at most foreign banks.
  - xadhominemx 3y ago
    Banks all over the world make healthy margins on cross-border transactions involving a currency cross. It is not unique to American banks at all.
    - newaccount74 3y ago
      My EU bank charges less than 1% currency exchange fee. US banks have charged me 5-8%. It's not the same.
      - 3y ago

tgsovlerkhgsel 3y ago

The EU has indeed banned most of the rent-seeking on payment cards by setting upper bounds on various fees that can be charged.

caldarons 3y ago

maybe we should start thinking of payment infrastructure as a core public service if we move away from cash? Just like there is an official entity that can "print" cash, we should start doing the same with digital payments (I believe the EU is doing somethig similar). That way you don't have a duopoly taking a cut of every transaction.

Aerroon 3y ago
Governments should be running their own digital counterparts to cash, but they need to add the anonymity of this cash into the constitution. Otherwise the security apparatus is going to ruin it for everyone.
- krapp 3y ago
  ... because the security apparatus is definitely held in check by the Constitution?
  - Aerroon 3y ago
    At least it could theoretically be. Anything outside of that would definitely not be. And at that point the digital cash equivalent will not be considered private. The government has to go above and beyond for people to believe the digital cash would preserve their privacy.
Gare 3y ago
This is called CBDC (Central Bank Digital Currency) and it is being worked on. But there are concerns about state surveillance and misuse.
- lobocinza 3y ago
  CBDCs are a pandora box that once opened will not be closed. At best they will use for massive surveillance which is already scary.

marcosdumay 3y ago

I pay a fixed monthly fee for my bank that comes with full access to the interbank payment system. Every business on my country does the same for the other side, and we get unlimited transactions with no marginal cost. Anyway, as somebody else said, a 3% fee on transactions is just ridiculous. If you get any bit of competition, transaction-value based fees tend to be on the order of 0.5%.

aembleton 3y ago

Maybe the government should limit the cut that can be taken to something like 1%. All it would require is some legislation,

santoshalper 3y ago

It definitely matters who it is charged to. In almost all cases, it's just rolled into the overall price of the item, which means you pay it whether you use cash or not. It would be very interesting to see if prices for card were 3% higher across the board, if people would still use them as much. I honestly have no idea.

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namaria 3y ago

Using debased money (does the paper in the note have any value?) is already submitting to paying seignorage to the issuing authority. There's not escaping it unless you sit on the top of that food chain.

fennecbutt 3y ago

Almost like our govs should create a standard for digital currency with 0% fees involved. But you know, our governments are fucking useless, so that ain't happening anytime soon.