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>For its doughnuts, the shop takes only green cotton notes from the Federal Reserve. >The proximate reason is obvious. If it were to accept credit cards, Carls

>For its doughnuts, the shop takes only green cotton notes from the Federal Reserve. >The proximate reason is obvious. If it were to accept credit cards, Carlson’s would have to pay an interchange fee to a network, for the privilege of selling doughnuts. These fees run roughly between one and two per cent, sometimes higher, particularly for smaller retailers like Carlson’s. I feel like I'm taking crazy pills. We all know this is to avoid tax, right? Why are we pretending otherwise? They take card for everything else. This is just some tax-free pocket money for the owner.

selcuka 1y ago
> We all know this is to avoid tax, right? Of course. More correctly, to evade tax.
jldugger 1y ago
See, I thought it was because cash only businesses are a great way to launder money, ie actually pay taxes on illegal money so you can spend it freely in the banking system.
jancsika 1y ago
Retail card processors often charge a flat fee per swipe/tap/whatever in addition to the 1-2% percentage mentioned above. E.g., a five cent flat fee doesn't matter on a $20 lunch, but it's over 3% of a sale for a single $1.60 donut. Perhaps more importantly, consider the following design document for donut transaction software a la Mitch Hedberg: "I'll just give you the money. You give me the donut. End of transaction."[1] Cash achieves this out of the box. You could have John Carmack and a billion dollars seed money and your cc terminal would still need to be rebooted in the middle of a transaction on at least a bi-weekly basis. 1: https://www.youtube.com/watch?v=xPq0-8dyl8I https://www.youtube.com/watch?v=xPq0-8dyl8I
- xethos 1y ago
  And to really drive home your point, > a five cent flat fee doesn't matter on a $20 lunch, but it's over 3% of a sale for a single $1.60 donut. Now do the math for profit instead of revenue
monster_truck 1y ago
You're both massively underestimating the interchange fees and overestimating their need to dodge taxes. If you had any idea how much money they made you'd know that they can offset all of that via writeoffs without having to even do any "clever" accounting. They would need to be doing an insane amount of business to get fees that low. In reality it's anywhere between 7-15%, especially for small tx. When you combine this with the penalty system for chargebacks (which quickly escalates to not being allowed as merchants) and people trying small tx with stolen cards, this is why coffee shops, corner stores, etc charge a flat +% for any cc purchase and especially leverage an additional fee for small ones if they even accept them at all.
verisimi 1y ago
Possibly this is it. Perhaps you prefer tax, er, "minimisation", to only be available to corporations and individuals (eg politicians) that have enough power to have law makers and tax authorities (legally) decrease their tax for them?
rendall 1y ago
I don't know why you would swap in your own interpretation over the article's. Credit merchants in the US charge a lot per transaction. Many businesses find that is not worth it to allow credit payment for low-cost items (like donuts). Many businesses have a credit card minimum of $20. What about that leads you to the conclusions is to evade taxes?
- mingus88 1y ago
  Also, CC companies give cash back and other perks to encourage people to use credit everywhere If the CC firms take 3% in fees, and give 1-2% back to the customer, why would anyone pay in cash? It’s free money. it’s pretty easy to see this is rent seeking behavior and you can’t blame small shops for not playing that game. It’s not enough to take interest from the consumer, they have to squeeze the businesses too.
bitshiftfaced 1y ago
You might have a point because the donut shops that I've been to have started moving to the "discount for cash" model. Same with restaurants.
IAmBroom 1y ago
When you hear a credit card fee, remember that it is calculated off gross sale, not profit. A 5% fee on an item marked up 100% is a 10% drop in income to a family-shop. Food profits run much tighter than other goods, so it can be even worse.

selcuka 1y ago

> We all know this is to avoid tax, right? Of course. More correctly, to evade tax.

jldugger 1y ago

See, I thought it was because cash only businesses are a great way to launder money, ie actually pay taxes on illegal money so you can spend it freely in the banking system.

jancsika 1y ago

Retail card processors often charge a flat fee per swipe/tap/whatever in addition to the 1-2% percentage mentioned above. E.g., a five cent flat fee doesn't matter on a $20 lunch, but it's over 3% of a sale for a single $1.60 donut. Perhaps more importantly, consider the following design document for donut transaction software a la Mitch Hedberg: "I'll just give you the money. You give me the donut. End of transaction."[1] Cash achieves this out of the box. You could have John Carmack and a billion dollars seed money and your cc terminal would still need to be rebooted in the middle of a transaction on at least a bi-weekly basis. 1: https://www.youtube.com/watch?v=xPq0-8dyl8I https://www.youtube.com/watch?v=xPq0-8dyl8I

xethos 1y ago
And to really drive home your point, > a five cent flat fee doesn't matter on a $20 lunch, but it's over 3% of a sale for a single $1.60 donut. Now do the math for profit instead of revenue

monster_truck 1y ago

You're both massively underestimating the interchange fees and overestimating their need to dodge taxes. If you had any idea how much money they made you'd know that they can offset all of that via writeoffs without having to even do any "clever" accounting. They would need to be doing an insane amount of business to get fees that low. In reality it's anywhere between 7-15%, especially for small tx. When you combine this with the penalty system for chargebacks (which quickly escalates to not being allowed as merchants) and people trying small tx with stolen cards, this is why coffee shops, corner stores, etc charge a flat +% for any cc purchase and especially leverage an additional fee for small ones if they even accept them at all.

verisimi 1y ago

Possibly this is it. Perhaps you prefer tax, er, "minimisation", to only be available to corporations and individuals (eg politicians) that have enough power to have law makers and tax authorities (legally) decrease their tax for them?

rendall 1y ago

I don't know why you would swap in your own interpretation over the article's. Credit merchants in the US charge a lot per transaction. Many businesses find that is not worth it to allow credit payment for low-cost items (like donuts). Many businesses have a credit card minimum of $20. What about that leads you to the conclusions is to evade taxes?

mingus88 1y ago
Also, CC companies give cash back and other perks to encourage people to use credit everywhere If the CC firms take 3% in fees, and give 1-2% back to the customer, why would anyone pay in cash? It’s free money. it’s pretty easy to see this is rent seeking behavior and you can’t blame small shops for not playing that game. It’s not enough to take interest from the consumer, they have to squeeze the businesses too.

bitshiftfaced 1y ago

You might have a point because the donut shops that I've been to have started moving to the "discount for cash" model. Same with restaurants.

IAmBroom 1y ago

When you hear a credit card fee, remember that it is calculated off gross sale, not profit. A 5% fee on an item marked up 100% is a 10% drop in income to a family-shop. Food profits run much tighter than other goods, so it can be even worse.