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Cashless is convenient but effectively amounts to automatic inflation. Not just from the merchant fees but making it easier to slowly raise prices/fees/tip %.

Cashless is convenient but effectively amounts to automatic inflation. Not just from the merchant fees but making it easier to slowly raise prices/fees/tip %. Plus whatever % of the population is dumb enough to revolve credit and get buried in debt.

mattmanser 2y ago
There's fees for handling cash as well. They're just less obvious. In the old days, those armoured vans used to have to go to stores every single day at peak times (Xmas, etc.). Plus you've got to pay for bags of change to be delivered. You've got to pay for a safe, insurance for your safe, plus a hard limit that safe is allowed to hold. If you're going to go over you need to request an on demand pickup from the cash people. You've got to have people in store collecting the cash, accounting it, trying to catch embezzlement, the cost of embezzlement, etc. All those costs were added on to the cost of goods. I used to work in the industry in the 90s, can't remember what any of that cost now, but I reckon it's comparable to the card merchant fees. Yes, the present duopoly is taking the piss with their fees, but accepting cash is also expensive.
- matthewdgreen 2y ago
  I worked in a smaller, independent guitar store for a few years in the 90s. We received enough cash and checks that once a day someone would have to walk over to the “night deposit” slot and toss a bag in. Our cash handling cost was equal to my salary for the 30 minutes it took me to make that walk, plus the risk that I would get mugged ($0 lost over a few years.) Often the owner would rake out enough to cover his spending needs, so there was an additional (slightly illegal) tax benefit to using cash. Armored cars and pickup only comes into play when you’re a big store doing loads of transactions, and then economies of scale probably keep the costs modest as a percentage. Credit cards, on the other hand, can easily run you 30% on a $5 transaction here in the US, due to the unjustifiable fixed + percentage structure. Maybe it’s a little better in Canada.
  - ascorbic 2y ago
    The owner was probably still paying fees for the cash deposits, even via the night deposit box.
  - NeoTar 2y ago
    Add to the cost of handling cash: - dealing with fake notes, - mistakes in handling notes and change (mistaking a ten for a twenty, etc.) - theft from the store (not just mugging on the way to the safety deposit box) - employee theft, - reduced transaction capacity; cash transactions can take much longer (customers finding the cash, employee counting it, employee making can age) - requirement to ‘cash up‘ at the end of the day (I.e. ensure the till takings match stock sold) - occasional trips to the bank to get change (which must be during bank working hours) For an independent guitar store some may not be relevant, but for some businesses they could be significant.
    - deleted 2y ago
      [deleted]
  - wenc 2y ago
    > Credit cards, on the other hand, can easily run you 30% on a $5 transaction here in the US, due to the unjustifiable fixed + percentage structure. Maybe it’s a little better in Canada. Are you sure it's 30%? Credit card fees are usually in the order of 3% + minimum fixed charge. Stripe is 2.9% + 30 cents. There are some extra charges for manually entered cards, international cards, etc. but even if you max that out it's still only 11.2%, not 30%. https://stripe.com/pricing https://stripe.com/pricing
    - matthewdgreen 2y ago
      You’re absolutely right. I was thinking of smaller transactions. It’s “only” 11% for a cup of coffee. For comparison in my high sales tax city the tax rate is 6%, and that funds a huge fraction of our municipal infrastructure
  - mattmanser 2y ago
    Your bosses' bank would have been charging him a cash processing fee. Easy to forget! A quick Google and found Danske UK's small business fees, 80p per £100 (or 0.8%). Without all the other costs associated that I mentioned that your boss took a lot of risks not handling. Obviously stores that 90% of transactions actually happen in can't take those risks. And that 30% for a $5 is totally made up, that's not the fees charged. I'm not from the US or Canada, but UK, so the first Google result is Square's fee that say 1.4% + 25p, so on £5 that's 32p, or about 6%. Obviously that's for small transactions. https://squareup.com/help/gb/en/article/5068-what-are-square-s-fees https://squareup.com/help/gb/en/article/5068-what-are-square... Obviously bigger chains won't be paying anywhere near that much. My point was cash has processing fees, and gave people some context for that.
- brainwad 2y ago
  Interestingly, in Australia there is a problem because the demand for cash has dropped so much that the remaining cash-transport monopoly is insolvent. The major banks and retailers just bailed it out: https://www.theaustralian.com.au/breaking-news/armaguard-to-be-given-50-million-lifeline-deal-with-big-four-banks-major-retailers/news-story/112a5203f8600371199dbb8c0e4fba33 https://www.theaustralian.com.au/breaking-news/armaguard-to-...
radicality 2y ago
Why is it easier to raise prices/fees/tip % with cashless vs cash payments ?
- itake 2y ago
  cashless has higher tx costs, charged by the payment network. This puts upward pressure on prices, even for cash. it is also much easier to spend $250.99 on a credit card than to count out 13 sheets of paper and 9 coins. People went from spending the cash in their pocket to cash in their bank account, increasing demand for products.
  - rustcleaner 2y ago
    >People went from spending the cash in their pocket to cash in their bank account, increasing demand for products. I hate how so many just don't have the game theory of commerce in the forefront of their minds. It's always "Boy this stuff sure is super convenient," and "nevermind those crusty privacy kooks over there!"
  - brainwad 2y ago
    > People went from spending the cash in their pocket to cash in their bank account No they didn't. In the olden days, you would get your paycheque, cash the whole thing, and then spend that money until next paycheque. That's no different to having your pay go directly to your account, and then spending directly out of your account by card.
causal 2y ago
You don't have to be dumb to get buried- just being poor is enough. Credit cards very much favor the well-off.

mattmanser 2y ago

There's fees for handling cash as well. They're just less obvious. In the old days, those armoured vans used to have to go to stores every single day at peak times (Xmas, etc.). Plus you've got to pay for bags of change to be delivered. You've got to pay for a safe, insurance for your safe, plus a hard limit that safe is allowed to hold. If you're going to go over you need to request an on demand pickup from the cash people. You've got to have people in store collecting the cash, accounting it, trying to catch embezzlement, the cost of embezzlement, etc. All those costs were added on to the cost of goods. I used to work in the industry in the 90s, can't remember what any of that cost now, but I reckon it's comparable to the card merchant fees. Yes, the present duopoly is taking the piss with their fees, but accepting cash is also expensive.

matthewdgreen 2y ago
I worked in a smaller, independent guitar store for a few years in the 90s. We received enough cash and checks that once a day someone would have to walk over to the “night deposit” slot and toss a bag in. Our cash handling cost was equal to my salary for the 30 minutes it took me to make that walk, plus the risk that I would get mugged ($0 lost over a few years.) Often the owner would rake out enough to cover his spending needs, so there was an additional (slightly illegal) tax benefit to using cash. Armored cars and pickup only comes into play when you’re a big store doing loads of transactions, and then economies of scale probably keep the costs modest as a percentage. Credit cards, on the other hand, can easily run you 30% on a $5 transaction here in the US, due to the unjustifiable fixed + percentage structure. Maybe it’s a little better in Canada.
- ascorbic 2y ago
  The owner was probably still paying fees for the cash deposits, even via the night deposit box.
- NeoTar 2y ago
  Add to the cost of handling cash: - dealing with fake notes, - mistakes in handling notes and change (mistaking a ten for a twenty, etc.) - theft from the store (not just mugging on the way to the safety deposit box) - employee theft, - reduced transaction capacity; cash transactions can take much longer (customers finding the cash, employee counting it, employee making can age) - requirement to ‘cash up‘ at the end of the day (I.e. ensure the till takings match stock sold) - occasional trips to the bank to get change (which must be during bank working hours) For an independent guitar store some may not be relevant, but for some businesses they could be significant.
  - deleted 2y ago
    [deleted]
- wenc 2y ago
  > Credit cards, on the other hand, can easily run you 30% on a $5 transaction here in the US, due to the unjustifiable fixed + percentage structure. Maybe it’s a little better in Canada. Are you sure it's 30%? Credit card fees are usually in the order of 3% + minimum fixed charge. Stripe is 2.9% + 30 cents. There are some extra charges for manually entered cards, international cards, etc. but even if you max that out it's still only 11.2%, not 30%. https://stripe.com/pricing https://stripe.com/pricing
  - matthewdgreen 2y ago
    You’re absolutely right. I was thinking of smaller transactions. It’s “only” 11% for a cup of coffee. For comparison in my high sales tax city the tax rate is 6%, and that funds a huge fraction of our municipal infrastructure
- mattmanser 2y ago
  Your bosses' bank would have been charging him a cash processing fee. Easy to forget! A quick Google and found Danske UK's small business fees, 80p per £100 (or 0.8%). Without all the other costs associated that I mentioned that your boss took a lot of risks not handling. Obviously stores that 90% of transactions actually happen in can't take those risks. And that 30% for a $5 is totally made up, that's not the fees charged. I'm not from the US or Canada, but UK, so the first Google result is Square's fee that say 1.4% + 25p, so on £5 that's 32p, or about 6%. Obviously that's for small transactions. https://squareup.com/help/gb/en/article/5068-what-are-square-s-fees https://squareup.com/help/gb/en/article/5068-what-are-square... Obviously bigger chains won't be paying anywhere near that much. My point was cash has processing fees, and gave people some context for that.
brainwad 2y ago
Interestingly, in Australia there is a problem because the demand for cash has dropped so much that the remaining cash-transport monopoly is insolvent. The major banks and retailers just bailed it out: https://www.theaustralian.com.au/breaking-news/armaguard-to-be-given-50-million-lifeline-deal-with-big-four-banks-major-retailers/news-story/112a5203f8600371199dbb8c0e4fba33 https://www.theaustralian.com.au/breaking-news/armaguard-to-...

radicality 2y ago

Why is it easier to raise prices/fees/tip % with cashless vs cash payments ?

itake 2y ago
cashless has higher tx costs, charged by the payment network. This puts upward pressure on prices, even for cash. it is also much easier to spend $250.99 on a credit card than to count out 13 sheets of paper and 9 coins. People went from spending the cash in their pocket to cash in their bank account, increasing demand for products.
- rustcleaner 2y ago
  >People went from spending the cash in their pocket to cash in their bank account, increasing demand for products. I hate how so many just don't have the game theory of commerce in the forefront of their minds. It's always "Boy this stuff sure is super convenient," and "nevermind those crusty privacy kooks over there!"
- brainwad 2y ago
  > People went from spending the cash in their pocket to cash in their bank account No they didn't. In the olden days, you would get your paycheque, cash the whole thing, and then spend that money until next paycheque. That's no different to having your pay go directly to your account, and then spending directly out of your account by card.

causal 2y ago

You don't have to be dumb to get buried- just being poor is enough. Credit cards very much favor the well-off.