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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

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.

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.