Visa to Pay Restaurants to Stop Taking Cash | Hacker News Reader

Visa to Pay Restaurants to Stop Taking Cash

wsj.com

41 pointslxm87 comments

I'm curious how this would work in a sit-down resturant, if the server doesn't explicitly state this (or require payment) prior to ordering.

Once the food is ordered and consumed, you are then presented with a check. This is now a debt.

Vendors certainly are not required to accept cash during a transaction, but you are absolutely required to accept cash if someone is settling a debt.

Might be an interesting case at some point.

This is simply ignoring Visa trying to enact their merchant discount tax on every transaction within the US economy though. This road (lack of anonymous and free means of payment) ends in tears.

I don't think it's a problem, the first time that happens is a mess, the second one it's written on the menu. Problem solved

Writing on a menu does not prevent it from happening, in either good faith (customer didn't see it) or bad faith (customer knows it, and is trying to see if they can get a free meal) situations.

Leaving cash on the table at a sit-down restaurant to pay for a meal isn't “trying to get a free meal.”

I agree. I was imagining a situation where the (bad faith) customer insists on using cash, the restaurant does not have the infrastructure for cash, and as a result (for whatever reason) the customer ends up not paying. Leaving cash on the table would be a good faith customer.

I don't think the courts would agree. Unless you pay for your food up front you've still acquired debt which must be payable in dollars.

It's not solved at all. You eat your meal. Now you owe a debt. Pay with cash. The whole point of legal tender laws is that you can always settle a debt with cash, regardless of what is says on the menu.

What the restaurant would need to do is ask you to pay up front with visa, or to provide your visa prior to ordering so that they could charge you. That would solve the problem if they charged you before you ate the meal, but if they try to charge your visa after the meal and the charge is declined, you can still settle with cash.

But somehow, with the tax avoidance issues with tips, they would either not do this or ask for the tip in cash.

I don't understand this. Surely it's up to me to accept whatever I want? If I tell you in advance that I want 5 apples in return for my 10 potatoes, that's all I'll accept. I don't want money, I want apples. Why is this any different?

Can you really "always settle a debt with cash"? Even if you are told beforehand that the deal isn't for cash? Would this mean that I am effectively forced to accept cash for rendering goods or services?

> Surely it's up to me to accept whatever I want?

It is, up until the point you turn it into a debt. This means you can require trading apples in return for potatoes, but you have to do the transaction up-front. So if you ran a food stand and rejected any cash transactions at the point of sale, you are completely within the law.

You could not give your apples to your neighbor in the spring, and force them to settle up via potatoes in the fall. If they wanted to, they could pay you the equivalent of their potato debt in cash.

And yes, if someone ends up owing you money and offers you cash to settle - you must accept it, with very few exceptions. All debts public and private actually does have some serious teeth after all.

A long time ago I had to settle a bet on this topic, and it was more extensive than this. The tldr; is that at no time in US history have you been forced to take US currency, with the exception of debts.

It actually does make sense. What happens in the event your neighbors potato harvest fails and they get out of the business? If you sued them in court, the court would award you the market value of the replacement cost of the potatoes you did not receive (most likely). And thus they would be settling up via cash either way.

Because it is a debt. In the U.S. all debts, public or private, may be paid in "cash" with Federal Reserve Notes (fiat currency).

You'd need to have your contract signed and agreed upon prior to rendering services or goods.

Yes, that is the definition of legal tender:

(n) coins or banknotes that must be accepted if offered in payment of a debt.

Debt != barter

A potential workaround would be if the menu's prices were not in dollars, but instead in credit card points or some such nonsense, but even this is probably arguable.

Dollars are legal tender for all debts, public and private. It means you can walk out without paying and if they sue you, they'll just get the dollars anyway. To be honest, no one would spend money to sue you for $30 anyway.

However, you won't be able to go to that restauran again.

Also, I believe even if they WARN YOU in advance that they don't take cash, you could STILL go and eat and then offer cash! Because LEGAL TENDER. Estoppel is only a defense, can't be used to prosecute someone and get them to pay by VISA.

There is, however, no Federal statute mandating that a private business, a person or an organization must accept currency or coins as for payment for goods and/or services. Private businesses are free to develop their own policies on whether or not to accept cash unless there is a State law which says otherwise.[1]

[1]http://www.news-leader.com/story/news/watchdog/2014/12/24/as...

From the article:

"What about debts already incurred, such as a restaurant bill presented after the meal is eaten, a lawsuit judgment or an annual tax bill? For those debts, a plain reading of the Coinage Act suggests that any kind of legal tender, whether coins or bills, must be accepted."

> It means you can walk out without paying and if they sue you, they'll just get the dollars anyway.

I'm pretty sure dine-and-dashers don't just get sued - they get arrested.

I'm wary of people offering legal advice and interpretation without some credentials.

Good luck calling the police on someone who's leaving because the restaurant won't take the cash they have

I'm getting the popcorn for that

Even better luck trying this in front of a judge

Even better luck, for most restaurants and similar business, trying it in front of the court of public opinion; even if you could win in court, it won't be worth it.

In fact, VISA could suffer a lot of blowback if a campaign was organized for people to go to the restaurants that took VISA up on their offer, IGNORE the restaurant's signs, order a large meal and insist on paying with cash. There's literally nothing the restaurant can do about it. It would be a big embarrasment for the campaign and would make at least restaurants (and other establishments that don't take payments up front) wary of signing a pledge not to take cash!!

For those of us who want to fight "on the other side" of the war on cash -- ie to keep it in circulation -- such a campaign would be worthwhile. I, for one would participate. Someone should make a website with a list of the establishments that partnered with VISA on this crap and post it here :)

what basis do they have to arrest you when the restaurant won't take your money?

> This is now a debt.

This exactly. That's why I always pay cash, incl. tips. A charge on a credit card is essentially a loan from the Credit Card Company at the agreed upon interest rate. So I'm not comfortable taking out a loan to pay for my food -- granted you don't pay any interest if you pay your bills in full on time, but still it just feels wrong.

I also pay cash because I want the wait staff to get the entire tip amount I leave -- usually generous around 25% to 30% minimum. Because I was told by several waiters (mostly at Indian / Pakistani restaurants here in San Francisco) that if the tip is left on the card, that they never see it ever * .

[ * A waiter friend at Dosa on Fillmore told me this is illegal and that I should report it. Who do I report it to? And will they really take action? In a couple of Indian restaurants in downtown, the wait staff doesn't get the cash tip either. 1 waiter friend discouraged me from leaving any tip because they don't get a single penny. I tried to insert some cash in his pocket and he got scared. I think the owners forbid them from taking any cash from customers even if it's tip ]

What about using a debit card? That's not a loan.

Correct. That's why I explicitly said

> A charge on a credit card

But depending on how the debit card is run (often as a credit card) there are still fees and a cut being taken by Visa or MasterCard... I wonder if the establishment eats all of the transaction costs and gives the full tip amount on receipt to the wait staff or if some pass on some of the transaction cost(s) and take it off the top of the tip (unscrupulous and shady if they do).

Yes, and then you said you always pay cash for that reason, but didn't mention debit cards as an alternative.

The desire to make sure the waitstaff gets your tips still applies.

Got it.

I never use debit cards, for all the reasons that @URSpider94 has stated elsewhere in this thread... Permalink => https://news.ycombinator.com/item?id=14755538

There is also the option of having a Visa Debit Card and just pay from your own deposit account. Is that uncommon in the US?

It's not that common in the US, because most financial advisors strongly recommend against it. If someone steals your debit card, they can clean out your bank account. You will probably get the money back, but you will be broke in the mean time. If you pay with a credit card and it gets stolen, the debt is frozen while they clean up the mess.

This is because: a. Almost all US merchants take all VISA or MC branded cards, while in Europe many vendors will only take debit cards because of lower fees.

b. The USA doesn't have chip-and-PIN, so it's laughably easy to use a stolen bank card. At least now with EMV and signature, someone has to actually go through the trouble of stealing your card instead of just cloning it. But there are still a ton of merchants that are just using mag swipe ...

Merchants who accept payments using the Mag swipe are now liable for any fraudulent charges. So any hold-outs will quickly switch once they get targeted.

I would expect banks to soon start limiting the amount that can be charged via the mag stripe to slowly close this loophole. $100 per transaction should be sufficient for the majority of use cases.

Gas stations are currently the major holdouts due to the cost of switching out the terminals on pumps.

I would think many, possibly most urban dwellers in the US are using debit cards to pay for food, coffees, etc. And chip-and-pin rollout has been going on for the last two years, most US cardholders now have chipped cards, but maybe half of merchants have updated their POSes to support dipping instead of swiping.

That's chip and signature, not chip and PIN. If you get physical possession of someone's card, you can scribble whatever you want on the receipt and you are good to go.

Europe uses chip and PIN, where you have to enter a numeric code at the time of each transaction that is used to unlock the card. So, you need PIN and card, the traditional what you have / what you know.

A lot of European banks even issue EMV readers that connect to your PC for online shopping and banking.

In the US, I see people paying with their debit card all the time. And we do have chip and pin. I'm confused as to whether I'm understanding your comment correctly.

We don't have chip and PIN here in the USA. Let me explain.

If you use your debit card as a debit card, you will be asked to enter your bank PIN, which is sent back to the bank and validated with them. That's different than EMV chip-and-pin, where the PIN is actually presented to the card itself to unlock it. So, your card has a chip and you enter your PIN, but it's not "chip-and-PIN" in EMV parlance.

If you use your bank card as a credit card, then you'll be asked to sign for your purchase just like if you used a credit card.

Here's a primer: https://www.theatlantic.com/business/archive/2016/03/us-dete...

And here's a list of chip-and-PIN cards offered in the USA (not many) http://www.cardrates.com/advice/chip-and-pin-credit-cards/

From what I've been able to determine (though I can't seem to get access to the standard which defines it without paying some amount of money, apparently ISO/IEC 7816), both types of chip and pin cards are covered and are appropriately called chip and pin. Do you have information otherwise you could share? It's hard for me to make an accurate determination here because I can't get access to the standard to see for sure. It's certainly included in the link below but I'm not sure how authoritative or accurate they are. I did research it more, I'm not relying on this one source, this one just seems like it's the easiest and most relevant to link to short of the standard itself.

https://www.cardfellow.com/emv-pin-debit/

Your linked list is of the "best", it is certainly not exhaustive. My chip and pin card, for example, is not listed (though a different one from my bank is, and I have seen no reason to believe they differ in this regard).

I use my debit card all the time. It's been stolen (cloned?) once; my credit union called when they detected it, and we went through the recent transactions and reversed the fraudulent ones.

In case the thief really does manage to "clean out" my checking, I usually keep most of my money in savings and only transfer back when necessary. Savings could probably be cleaned out too if someone has my PIN, but if one's just using it for credit transactions, then at least most of my money's safe.

That all said, I still do take a lot of precautions with my card. Namely: I only use it at places that I trust. Everywhere else, I use cash.

I'm sure the IRS would be very interested as most business that do this are typically cooking the books in other ways. State tax boards also.

You can report that kind of thing here: https://www.dir.ca.gov/dlse/howtoreportviolationtobofe.htm

Thanks. I'll file a report today.

Too bad I can't report anonymously like you can for DHS violations.

Because the owner of the establishment is a very good friend of mine. But I feel obligated to report him as the waiters are also friends of mine and they are just being robbed blind (cos as it is they work for less than minimum wage)

Not paying tips to the staff when paid on card is also a thing in the UK, so I avoid these places.It became news a couple of years ago so some companies modified their behaviour, but it is still a big problem.

Even with notice, the same logic applies, and, anyway, what are they going to do when you leave cash on the table? Not deposit it and treat the person who paid it like a dine-and-dasher?

On the fast-food and fast-casual end with payment up front, OTOH, this might work in theory, but that's the segment that can least afford to exclude the unbanked, so the payment is going to have to be significant.

> if the server doesn't explicitly state this (or require payment) prior to ordering.

Seems like asking for an immediate credit card pre-auth wouldn't be that much of a shift in cultural norms.

Gas stations already ask cash users to pre-pay and pre-auth credit/debit cards so the shift would be tiny.

There is almost certainly nothing legally to prevent them from taking cash. The idea is simply (probably) to get them to say they only take credit cards. Obviously they will take cash if the person only has cash and insists. They post that they don't accept cash and if someone doesn't see that they will take cash and Visa will be fine with it (where 'fine' means they will look the other way).

It's the golden rule. He who has the gold rules. [1] The one with the balance of power wins.

[1] Let's say in the normal course of business you are owed $5000 and have been trying to get a deadbeat customer to pay for a year. It's obvious that you don't want to get paid in pennies. In this case the customer says 'I will pay you but it has to be pennies'. What would anyone do? Accept the pennies.

I dealt with this issue as a young boy when trying to pay for some candy at the local bodega with a large sack of pennies. The clerk simply refused my business.

I was outraged and asked some lawyers in my family to look into it. Turns out the business had no obligation to accept the transaction. "Legal Tender" means that the currency may be legally used as currency, not that it must be accepted when offered/tendered.

Your situation is similar. However, did you consume the candy before paying? Or maybe restaurants will ask customers to pay first if they use this.

There is a difference between accepting a purchase transaction offered and accepting payment for a debt which has been occurred. The former is a matter of whether a contract is formed at immediately fulfilled and the latter of whether an existing contract is violated in a manner that the State will concern itself with.

Restaurants sometimes operate in the former mode (fast-food and fast-casual) and sometimes in the latter (full table service).

I've never thought of it that way before in terms of a contract. Very interesting.

Let's hope visa doesn't convince society that getting rid of cash is the future. Not only would that be a terrible blow to privacy, it would entrench the need to pay Visa or another credit card company 2% of every transaction.

I'll stop eating at any place that doesn't take cash. I mostly use cash for small transactions, because I like it.

As you say, I see no reason why the CC cartel should get 1/50th of retail transactions by virtue of being too big to fail (or too big to stop from colluding).

Nah, let Visa destroy themselves with terrible business decisions. If they successfully eliminate cash then the logical step is to create a nationalized payment processor.

Exactly; when banknotes displace coin as the main payment mechanism, it wasn't long till government extended their monopoly to banknotes.

So, yeah, I can see VISA inadvertently hastening the day when everyone pays with their Federal Reserve Card.

This won't fly. Lot of mom'n'pops restaurants prefer cash so they can under-report their income and save on tax. In fact, quite a few restaurants that I've been to in San Francisco take only cash.

Ex: Udipi on Valencia near Dosa has a big board at door and at counter that says in caps "CASH ONLY"

> Lot of mom'n'pops restaurants prefer cash so they can under-report their income and save on tax.

Or just avoid paying the private tax on card processing.

Plenty of chinese takeaways in the UK that only accept cash. The one near me doesn't put it in the till, it's taken to the back, and asking for a receipt infuriates them. There's plenty of reasons to take cash only over and above CC charges.

AIUI though this can be something of a false economy. Cash has processing fees too: you need to pay someone to count it, secure it, take it to the bank. Plus you need to deal with shrinkage.

I can't find numbers now, but I remember seeing somewhere that suggested all of this was not all that much less than credit card processing fees. The only citation I can find now is that theft is something like $40 billion, falling most heavily on small businesses that don't pay for transport.

Wouldn't this have the effect of preventing many minorities from dining at certain restaurants? E.g.:

http://www.creditcards.com/credit-card-news/race-age-gender-...

That's actually a reason some restaurants might sign up for it; it's racial discrimination they can get away with.

Isn't it illegal for a merchant to refuse US currency in the US?

After debts incurred, yes.

At the point of sale, no. For a debt, yes.

If you go to a store or a fast-food restaurant where you pay before being able to take the goods, then they can legally refuse to accept cash.

But at a full service restaurant, once your food has been delivered to you and you have eaten it, your bill to the restaurant is considered a debt. They legally MUST take cash in this case.

As a retail merchant, I'd never want to intentionally restrict accepted payment methods. It's bound to lose you some sales, period. I don't think $10,000 would even be worth it for a food business.

I'm more used to encountering the opposite - establishments that, sometimes unexpectedly, only accept cash. If an ATM of my bank isn't nearby, usually the only option is to use a 3rd party ATM, which incurs fees that usually total 10-30%.

The one time I've found t difficult to have only cash and not a credit card is when driving in remote areas at night. You may encounter gas stations that are closed, but have pumps on for card transactions, but no way to pay with cash.

I guess this move would be outright illegal in at least some countries. Cash is legal tender, nearly everywhere. In some countries that means if you're selling something to someone in person, you have to accept it as a payment method.

This is becoming increasingly common in the UK. A lot of popup stores only take card (contactless).

I very rarely see people using cash these days - so it's a lot of hassle to collect and process cash for a small % of customers that do use it.

Bristol Pounds!

Haha. I live near there in Cheltenham and have read quite a bit about the BP. Do people actually use it, what's the acceptance rate, and is it a good thing?

Well from what I heard, it helps keep money circulating within the economy. When you pay someone in BP you are in a sense investing in Bristol's continued vibrancy.

Adding a cash handling charge to any cash users would remove the incentive to use cash. In Europe and Canada chip and pin reduced the use of cash significantly. Contactless and mobile payment options like Apple Pay is the next nail in the coffin.

Merchant's like it (not have to transfer large sums of cash to the back, significantly reduced risk of fraud), Government's like it (easier to ensure that the correct tax is being paid on transactions) and Consumers like it (don't have to carry cash).

The US is significantly behind in this area which is why credit cards getting cloned and used at physical stores is still an issue.

Aren't restaurants already paying visa by way of transaction fees? Unless the amount visa is giving back is > the amount in transaction fees, what is the incentive?

Excellent point. And this does seem to be the case:

> United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes and dues. Foreign gold or silver coins are not legal tender for debts.

Cash has costs too. You have to track it, it gets stolen, you have to write out deposit slips and drive it to the bank every night. Banks also charge for treasury services, I.e. Processing your cash deposits and keeping you stocked with coins and small bills.

I've never seen a full accounting, but I wouldn't be surprised if a fully cash-free business actually had better overall costs, even with the card fee taken into account.

AFAIK this is a reason supermarkets give cashback, as it reduces their cash processing costs (and isn't charged at the normal rate by the CC providers). Is this true?

Don't know, but I do know a lot of supermarkets used to offer their employees to cash their paychecks in the store - probably for the same reason, to reduce deposits.

Ler's make a practical example. We are talking here of (smallish) restaurants.

You get 4,000 dollars in cash, after having prepared and sold in your restaurant 100 meals at 40 US$ each on average.

Visa (or other card processor+ all the fees) will get (example taken from here): https://www.paypal.com/us/webapps/mpp/brc/demystifying-credi...

3%+0.25 US$/transaction.

That is 0.034000+0.25100=120+25=145 dollars

If you have cash and while driving home you deposit the money at the bank you have 4,000 US$, if you go all Visa you have 3,855 dollars.

You get 155 dollars for spending 10 minutes more on the way home.

Even if you manage to get half of that rate, you get 75 dollars for 10 minutes.

Before, you probably worked (once detracted costs) for 10% net of the 4,000 dollars i.e. 400 dollars for 8 to 10 hours of (hard) work or 40-50 dollars per hour (and the average small restaurant cook/owner rarely can make that much).

> If you have cash and while driving home you deposit the money at the bank you have 4,000 US$

This is an ideal world calculation that also assumes the owner working in and out every day, no hired managers, no shift workers, no sick or vacation time for the owner.

How are you making sure you have enough coins and dollar bills to cover change? How is the cost calculation impacted if a rogue employee steals, a robber demands all cash, or if sketchy customer passes a counterfeit bill?

>This is an ideal world calculation that also assumes the owner working in and out every day, no hired managers, no shift workers, no sick or vacation time for the owner. The ideal part is only in the "average" income of 4,000 US$ each day, the model is that of a typical small restaurant.

>How are you making sure you have enough coins and dollar bills to cover change? Exactly how it has been done, for the past roguhly 5,000 years money has been in use.

>How is the cost calculation impacted if a rogue employee steals, a robber demands all cash, or if sketchy customer passes a counterfeit bill? They are called enterprise risks, they date back to before the money was even invented. You fire the rogue employer, you have a robbery - maybe - once in 30 or 40 years of activity, you get one, maybe two counterfeit 50 dollar bills a year.

What I wanted to show is only that the 2-3% a credit card transaction costs easily represents in small activities 20% of the net (before taxes) income the activity produces for the owner/worker.

From what I can tell, Visa is offering an essay contest food establishments can enter on why their store would benefit from going cashless. Then they "pledge" to go cashless and get the money. Hard to say for sure when the site for it says "details coming" and every article is using the same press release.

So, an ad campaign saying "credit cards are better than cash."

Ugh the libertarian in me just died a little inside.

So that shady servers can take away your card, copy the numbers including the 3 digit extra "security" code and then use it to buy things online with it.

At least if restaurants had those portable scanner machine like they do in other countries, but they don't here in US usually.

VISA would have to make it worth while to compensate for unreported cash sales.

I don't like this idea one bit. We have a digital cash solution (crypto-currency) but there are too many hurdles to implement it (USA probably doesn't want to give up their de-facto status as the world's reserve currency and...it's ability to change it's value with the flip of a switch [i.e. Fed's recent QE programs]).

I'm not sure how society will grapple with this (cashless society) but I hope we simplify crypto to make it as simple as cash.

What's the cost of a single BTC transaction in today's dollars?

Too much, imho.

Some people just hate privacy and not depending on 3rd party companies, huh?

From the small snippet of the article I can actually read without the paywall, it looks like Visa is not offering to pay restaurants--it's offering to upgrade their payment systems for them (which have some dollar value).

I'd love to know: 1. Why on Earth a restaurant would willingly turn down a customer who has cash in hand and is willing to pay, and 2. How on Earth Visa is going to verify that the restaurant doesn't take cash.

For 1. many restaurants I've been to love cash and give you the stink eye when you pull out a card (because fees). The incentives seem to not make sense. For 2. is Visa actually going to send spies into restaurants and have them offer cash and see if the owner bites? I don't know this just all seems like crazy-land.

> 1. Why on Earth a restaurant would willingly turn down a customer who has cash in hand and is willing to pay

There's a risk of employees stealing cash, a risk of being robbed, the cost to store and bank the cash (purchasing the safe, depositing the cash in the bank account, making sure the restaurant has the right coins and bills to make change), the risk of accepting counterfeited cash. Those risks and costs widely among the restaurants, of course.

From the article: "Michael Ryan, the co-owner and co-founder, said he never ordered cash drawers or a safe. By not having to count cash, visit a bank or order change, Mr. Ryan estimates, the manager on duty saves about 23 hours a week."

>From the article: "Michael Ryan, the co-owner and co-founder, said he never ordered cash drawers or a safe. By not having to count cash, visit a bank or order change, Mr. Ryan estimates, the manager on duty saves about 23 hours a week."

Still from the article: "Some merchants have already stopped taking cash. New York City-based 2nd City, a Filipino taqueria, hasn’t accepted cash since it opened its doors in 2016."

The owner and co-founder has seemingly more than a whopping whole year of experience in the field.

How much does he pay in transaction fees per week in order to save the (calculated/estimated) 23 hours of work?

As a testimonial, I would like to have someone who managed a restaurant for 10-20 years and then in 2016 decided to go "no cash".

Paywall removed https://outline.com/6gJU6n

Please stop linking to pay walled articles.

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