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Comment by nunez | Hacker News Reader

While I agree that cash is extremely convenient and largely anonymous, it is still much more of a hassle to manage than credit or debit cards are. I lived in NYC for a bunch of years and the one thing that I absolutely do not miss is paying for >$100 dinners, entirely in cash, because the restaurant was "too cheap" to handle processing and transaction fees.

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> because the restaurant was "too cheap" to handle processing and transaction fees.

I applaud businesses like this. The fact we slowly let a few giant private corporations enact a 1-3% fee against pratically the entire consumer economy would be ludicrous in any other situation.

Plus the privacy concerns just are not worth the convenience. Whenever possible I use cash, simply so I slow the day coming where I can't function in society without having my entire spending history out there for any agency to decide to take a look at.

I'm not a big fan of credit cards, but cash isn't free.

Money is an information and accounting system. Regardless of how implemented, it has processing costs.

The bulk of that transaction fee gets rebated back to the consumer as points, cash back, etc. I only use 2% cash back cards.

So anyone who isn't creditworthy (ie. poor) pays additional tax in the form of higher-priced goods. But to heck with them for being poor, right, because you get the convenience and cash back?

That's not at all what creditworthiness is. You can be rich and have bad credit as easily as being poor and having good credit.

The bulk of people with bad credit are not rich... and bad credit disproportionately harms people who are not rich. But that wasn't the point of my comment or the GP's; we were talking about the 1-3% tax on goods (effectively) imposed by credit companies... and how people who aren't in lower socio-economic classes are largely oblivious to the costs it imposes on poorer populations.

I was just pointing out that the 1-3% isn't fully eaten by the credit card intermediaries. I do agree with you that it does pass on a tax to the consumer, and it would be better to just charge a 0.2% fee (or whatever the actual cost of credit card processing is) without the points, rather than take 2.5% from everyone and then give the bulk back to whomever you deem "creditworthy"

Amen to that!

To be fair, the poor shouldn't be racking up credit card bills. That's just adding fuel to the fire. A world existed before credit cards became commonplace.

You're talking about something entirely different. Let me take another crack at explaining. You're a grocery store. Some (large) fraction of your patrons use credit cards. Rather than charge just those patrons a 1-3% surcharge to cover Visa's fees, you simply raise your prices across the board by 1-3% so that you can make enough margin to survive.

A poor person, who can't (or shouldn't) use credit cards comes in to buy food. They now pay the full-price (already marked up 1-3%) -- essentially paying that as a "tax" that wealthier patrons, with good cash-back cards, get back later as a refund.

A lot of businesses here in rural ND that do accept cards (the bakery doesn't) have signs that say the won't accept cards for transactions under $10.

There are costs to accepting cash for a business too. It probably costs the restaurant more to go 100% cash than it would to accept credit cards.

> The fact we slowly let a few giant private corporations enact a 1-3% fee against pratically the entire consumer economy would be ludicrous in any other situation.

Well, if you look at it from a bigger picture, its actually good business to accept card. The reason being is, as I mentioned in another comment, people spend more when they use card than if they use cash. So you may have to pay a 3% fee to the CC companies but you may get 6%+ more business. Especially in the restaurant/bar industry. The last thing you want to do is allow your customers to feel "pain" when they order that third or forth drink (pain being their wallet getting physically thinner)

There's also costs to handling/processing large amounts of cash, it's not "free."

How else do you think the infrastructure for processing cc transactions will get paid though?

Which means your bank knows if you buy a sex doll, if you have diarrhea, if you are a member of a political party or if you donated to your cult.

And I don't believe in the legal system enough to think that the information is not shared.

Also, cash is one of society safety net. You see, nothing is black and white, and society is not perfect. If it can control everything, then the citizen has no margin, no grey zone to try things that the current society consider wrong.

And this is a problem, because you can't make society evolve if you can't try what you want to change for first.

Cash let a small part of society locally try things that are not (currently considered) right. Without it, you would soon have a static society.

Another problem is that, because society is imperfect, it will create rules that in certain situation are bad for the people. Without a way to bypass the system at a local level, you are at the mercy of errors (not even talking about evil doing), with no short term solution.

Without cash, if visa or bank x doesn't like you, you are screwed. Without cash, if you are doing something moral but illegal, you are screwed. Without cash, if you are doing something that society consider immoral (ex: going to a gay bar in a repressive country), you are screwed.

Yes cash is abused, but a life without cash eventually would derive to something way worse : a rigid society.

In my state (NC), membership in a political party is public information.

I recall that america was chasing communists pretty badly some decades ago...

> still much more of a hassle

That's when everything works correctly. What about when the power goes out and the card reading device stops working? What about transaction denials due to bank mistakes (or predatory policies)?

Having the option to pay with credit/etc is nice, but the failure modes can be nasty.

I've had the pleasure (?) of going on vacation without notifying the card company. Because a hotel was late with a correction to their charge, that showed the card in use at two places at once, so they shut it down. While I was on vacation. That got... uncomfortable.

Fortunately, they only shut down my card. My wife's still worked, and we were able to proceed. It made for a more stressful vacation, though...

Pro tip. Always carry a second credit card (from a different bank) when you travel. It's just too easy for anti-fraud systems to be triggered by something they don't like and to be in a situation where you're not really in a position to spend 30 minutes on the phone proving you are who you say you are.

The systems can really trigger on random stuff too. After the last time when I gave them holy hell and threatened to pull my business, I haven't had trouble since. But before that, as someone who travels worldwide, I had transactions declined at 1.) a gas station convenience store and 2.) a grocery store in the Western US.

This is why I always have two bank accounts (with two different banks and two different ATM cards) and always have two credit cards, in case one bank account or one credit card gets shut down or skimmed it wouldn't be a big inconvenience. Especially helpful if you are going out of the country.

I've never gone so far as to have a second bank account. But I'm guessing a brokerage account could basically serve as the same thing.

Yes, absolutely, most brokerage accounts let you request ATM card/debit card/checks to access your core position. Additionally, Both Fidelity and Schwab let you open a free checking account(1) as well with no balance limits and ATM reimbursement.

Second bank account is more important than second credit card, IMO. Being locked out of your cash is much worse than being locked out of your credit.

(1) technically they are brokerage accounts also, at least for Fidelity, but they hold your deposits in FDIC insured banks and are designed to be used for everyday spending, exactly the same as a checking account.

>Being locked out of your cash is much worse than being locked out of your credit.

As a general principle I tend to agree. But, when traveling, having something that functions as a credit card can be pretty important. (Of course, if you have a healthy cash balance and a debit card, that works equally well.)

My wife had her wallet stolen in Florence while we were traveling. It turned out that some banks will give different numbers to each card and other banks (Bank of America) will give the same number.

We had to cancel the BofA card that I had.

Fortunately our CapitalOne card used different numbers and we were able to keep traveling without a lot of hassle. For our next trip, we're going to make sure there's no number overlap.

There's card numbers, and then there's card numbers.

That is: My wife and I have cards that have the same number on the front. On the back, though, the three-digit... I forget what it's called, but there's this additional number that is not embossed into the face of the card. Her card has a different one of those than mine does. And the bank can tell the difference, can tell which card made the purchase, and can shut down one but not the other.

So it doesn't matter if the two cards share the same main number, as long as the bank can tell them apart.

Does BofA give different three-digit extra numbers to their cards? Do they give the same extra numbers? Do they give extra numbers at all?

The numbers on the back - the CVV code - is essentially a cryptographic hash of the information on the front of the card: expiration date, name, card number, whatever else is on there. So each physical card should have a different CVV if the card number is the same. Given 3-4 digits and millions of issued cards, there will of course be collisions among cards with different numbers.

I think every card issued by Visa, Mastercard and American Express (at the very least) in the US has these extra numbers.

I was buying gas at 2AM in Grand Forks, ND on my way back to my parents home. I had stopped at that same station multiple times, but Citibank denied the authorization (plenty of money, and I only used that card for gas). I foolishly was about $5 short on cash[1], had to call Citibank and yell. Had to walk to the across the street that had an ATM that would work with my bank card (gas station ATM didn't have the network). It was a typical ND winter night.

The failure mode on getting permission is really nasty.

Thinking about it, they really had some sh!+ software at that point since I only used the card at 4 gas stations with 1 in the Plymouth, MN and the other three on the I94 / I29 route.

1) after this I started following my Dad's policy of hiding $100 in the car for emergencies.

The declines can really be out of left field sometimes. As I mentioned elsewhere,I now make a point of always having a backup.

I've had a card that routinely has very large travel expenses in multiple countries turned down for a $20 gas purchase when traveling domestically.

> it is still much more of a hassle to manage than credit or debit cards are

I don't really get this. I use credit cards (almost entirely online), but I've never used a debit card. Not out of any deep-seated aversion, I just don't see the point.

The appeal is largely that credit cards let you spend money you don't have, and debit cards, by definition, don't. For people who have a hard time operating within their budget with credit cards, this is a huge difference.

Worth pointing out that this can be fuzzy, I have a £1600 overdraft facility that I can use with my debit card (I don't use it though).

True enough, but I hate those things. They tend to incur nasty fees when used on top of the overdraft itself, and then there's interest to be paid on the overdraft amount if not paid in full, etc., etc.

If allowed, I will always disable them, and when not allowed, I will change banks to one that will allow it.

I agree with the sentiment, though I'd argue they're getting better. For example the Nationwide FlexDirect current account[0] comes with a £1,200 overdraft limit that gets charged at 50p per day it's used. A vast improvement in my mind, I remember getting charged around £30 for going £2 overdrawn for less than 2 hours!

[0] http://www.nationwide.co.uk/products/current-accounts/our-cu...

Also there's no work I have to do later if I'm keeping my credit cards at zero balance. I don't have to worry about paying another bill.

Well yes, but surely that's something that cash does even better, isn't it? I take a fixed amount of cash out once a week and that's everything I'm going to spend that week. Not only can you not spend money you don't have, you can't accidentally spend more money than you were planning to spend. (I carry a few extra weeks' buffer for emergencies, but could put that in a separate pocket or something if it ever became a temptation; so far it hasn't.)

My tinfoil-hatted side does wonder whether this is half the motivation of these new "convenient" debit mechanisms - like those fake "points" currencies used by various stores and in-app purchase schemes, I'm sure people spend more money when it doesn't feel like spending money.

Agree re credit cards, but I never carry a balance, they're just a payment mechanism.

> Well yes, but surely that's something that cash does even better, isn't it?

[...]

> Agree re credit cards, but I never carry a balance, they're just a payment mechanism.

I think you just answered your own question.

For most people here (Holland), a credit card is not a 'default' (and so many people don't even have one). We still use our debit card all the time because it's so much more convenient as payment method than messing around with cash.

Over the past few years they've been rolling out contactless payment, which is even better. You see the amount of a screen, swipe your card, and only after x transactions or over a certain amount are you asked to use the chip and enter your PIN. I'm pretty sure most of these machines also allow you to use your phone (or watch) to pay for things, but that's not as common yet.

Or another example: one of the big supermarket chains here has been rolling out self-checkout kiosks at many of their stores, making the process even easier: take the stuff you want, scan it, swipe your card, and just walk away!

We (UK) have had self-checkout tills for a few years too, but they still take cash as well as debit card.

Maybe I'm just old, but I don't want payment to be too frictionless. Cash still strikes the right balance for me; convenient enough that I don't get annoyed by it, not so convenient that I lose track of what I'm spending.

Whereas I get annoyed by it and lose track of how much I'm spending when I use it!

The difference is that I generally feel safe carrying a debit card around where I wouldn't with even $100 in cash. In the US, we are just getting chip cards for debit, so even if my wallet is stolen, I can just call the bank and cancel it, but I can't do that with cash.

I'm with you on the credit cards-- for me, they're just a point-generating mechanism-- but it's easy for me, since if I accidentally go over my budget, I have enough savings to easily cover it whenever that happens. For people who live more paycheck-to-paycheck, that can be devastating, and it's sometimes non-trivial to compute your safe-to-spend amount from a current credit card balance, expected expenses, and current bank balance.

I am exactly the opposite. I use a debit card, but I've never used a credit card. Why would I want to borrow money (and risk owing interest), if I already have money readily accessible via my debit card?

- Very good rewards deals (cash back, points, free checked luggage, etc)

- Free perks like rental car insurance and extended warranties

- You never have to worry about your bank account being cleared out

If you pay your bill this all comes for free. It's a pretty amazing deal actually.

In the UK, at least, Credit Cards also have much better protection under the law: http://www.money.co.uk/current-accounts/is-debit-card-protec... - Debit Cards are not _required_ to have any protection.

I don't use a credit card instead of a debit card, I use cash instead of a debit card. I mentioned the credit card just to emphasize that this isn't out of some weird card phobia.

> Why would I want to borrow money (and risk owing interest), if I already have money readily accessible via my debit card?

Because if your credit card is used fraudulently, you tell the credit card company, they disallow the charges, and nothing comes out of your pocket.

If your debit card is used fraudulently, the money comes direct from your bank account, and you get to find out how much work it is to get that money back--and in the meantime, you don't have it.

The biggest reason I can think of is safety. With a good credit card you are not liable for any fraudulent charges, which definitely isn't the case for debit cards.

https://www.nerdwallet.com/blog/credit-cards/credit-card-vs-...

Heh, where I live in Brooklyn there are no places that take card for less than $20 (sometimes $10). It definitely required some adjusting.

And yet I'm living in a village outside Leicester in the UK and I've paid <£0.50 on a card/using Android Pay on multiple occasions.

Historically a lot of restaurants and retail establishments in the US had minimum charges for credit cards. My anecdata is that this is far less common today (Brooklyn notwithstanding).

There's also just been this psychological shift that makes it generally OK in most places to put that $3 salad on a credit card. I'd never have done that 10 years ago. Now I routinely charge my lunch or a cup of coffee.

I don't know how much of this is changes to credit card fee structures and how much is that it's just become a cost of doing business many merchants now feel they have to put up with.

We had that in the UK for a while too. It seemed that the big corps ended up absorbing the fee and then most others had to too. There's still the occasional merchant that has a minimum but I see less and less as time goes on.

In theory, our interchange fees were reduced, but from what I saw it just resulted in most decent cashback schemes disappearing. This seems to have resulted in issuers making the same margin as they no longer pay out a part of it to the customer.

Almost certainly a violation of their agreement with their card processor. If you want to be a jerk, you can pressure them into taking your card.

Minimum spends are allowed so long as it's posted.

Did you mean less than? The processing fees part is throwing me off.

I do agree though, in Japan I'm seeing a lot of credit or phone based transactions , I almost never carry cash now.

Side note: my wallets last longer!

There are business owners who for some reason think it is appropriate to stick their customers with that burden.

Those business owners are customer hostile and are worthy of neither my business nor anyone else's.

Interesting -- just got back from Japan, traveling in smaller communities. Almost all of our transactions were in cash.

Yes while travelling it's a huge cash based society here, but Tokyo/yokohama are really leaning towards cards/suica(the train ticket pre-charge card)/Edi(mobile phone payment system) and such.

Restaurants and anything mom&pop will probably be cash-only, but pretty much anything that's a chain (big supermarkets, stores in malls with their own branded cards [includes JR train stations], etc) tends to support electronic payments.

I find a lot of places may accept cards if you ask them, but they don't have card logo stickers anywhere or a prominent card reader.

Greater than, makes paying in cash annoying

Start a business, discover the fees.

Its probably both the fees and the taxes. They want to be able to choose what business activity to report.

I assure you the reason they didn't accept anything but cash was not because they were cheap but because they could mix in and clean up dirty cash from their other clients for a fee without an audit trail.

Also related, tax purposes, e.g. they can pay workers under the table.

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