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Comment by throwaway98121 | Hacker News Reader

Unrelated but husband and I stopped at an Indian grocery store to pick up some items for a chicken tikka masala recipe we found on YouTube.

They insisted we pay cash, even though they had a machine to swipe a card.

We don’t carry cash and assumed their card machine was broken. As we apologized and started leaving, they suddenly agreed to accept a credit card.

Presumably the transaction costs per swipe are high, although we were spending about $30 and not 50 cents or something minuscule.

My more cynical side thinks they preferred cash because it’s harder to trace. Credit card transactions are probably automatically reported to the IRS by the payment processing company. Cash... well, unless the IRS sends someone to physically to your location, it’s harder to trace and easy to dodge taxes.

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I had a cab driver do this to me once, in 2016 or so. He dropped me off at the destination and told me it’d be $20 or whatever, cash only. I didn’t have cash on me, and said all I had was a card. He demanded that I prove I had no cash. Being a little dumbstruck and just wanting to get away from him I showed my empty wallet and he begrudgingly pulled out a phone with a square reader on it. Left a very sour taste in my mouth about cabs.

It’s no surprise why Uber/Lyft are eating their lunch.

As I mentioned above, transaction fees are a killer on already thin margins. And in some states it's illegal to add a charge for the credit card transaction.

As I understand it, that's often grounds for the merchant account provider to yank your ability to accept cards at all.

In NYC if you even mention the TLC their card machines will start working very quickly.

Lifehack: offer to call the cab company on speakerphone and pay with a credit card over the phone. This usually causes the in-cab CC readers to start working again.

The transaction costs are unfortunately not negligible for small vendors, they don't have the power to negotiate like Walmart et al.

IME vendors simply pass the charge along to consumers these days, esepcially for small purchases.

Specifically, they pass it on to all their customers, not to only those customers using cards (doing so is against the merchant-processor agreements). i.e. those using cards are in effect increasing the price for those not using cards.

in many places in europe there will be a surcharge added depending on the type of card you’re paying with.

And in some places in Europe that is illegal. At least here in Finland adding any hidden fees to a retail list price is illegal (meaning that VAT is already in the sticker price too)

I have never seen that happen anywhere in the EU.

It still happens in UK (some small businesses) but AFAIK [1] it's no longer legal.

It's a massive problem for businesses with lots of small transactions, if you're selling a £2 coffee and the CC processor charges 30p + 5% per transaction. Previously nearly no-one would pay the extra, now you have to cover it; so you make the coffee £2.40 ... but the large retailer with a blanket 3% transaction cost (or whatever) can undercut you by quite a lot.

https://www.theguardian.com/money/2018/jun/17/credit-debit-c...

This was banned across the EU in January (providing both the retailer's and purchaser's banks are in the EU). In the UK they extended it to all payment methods (PayPal etc)

Stripe and Square are the not terribly expensive, we use both, and they're the cost of doing business past 1992.

2.9% plus 30 cents (in the case of Stripe) is pretty darn expensive, your effectively paying 9% in fees on a $5 transaction. Better processors have slightly lower percentages (~2% & $0.05 to $0.10) but they're often a pain to work with and have a variety of hidden booyah fees that drive up the cost (PCI compliance fees, statement fee, requiring a wired internet connection for a credit/debit terminal).

Large chunks of the US still operate primarily in cash to avoid these fees and presumably some taxes, SoCal is a good example of an area where using credit is often discouraged (even Kroger is not accepting Visa!).

Stripe is 2.9% plus 30 cents, which I assume is a bad deal for the vendor if I'm buying a $0.60 bar of chocolate.

Blame reward cards and a lack of regulation on interchange fees. Stripe charge 1.4% for European cards, but 2.9% for non-European cards. In the UK, a brick-and-mortar retailer with fairly modest volumes can pay as little as 0.35% for debit card transactions; factoring in labour costs, it's often cheaper overall to accept cards than cash.

Cash has transaction costs too, and those are already built into business pricing:

1. Time spent by staff counting and reconciling cash after close of business or at the end of a shift

2. Time spent on bank runs or on an armoured car service that picks up your cash and deposits it at the bank

3. Banks actually charge businesses cash-handling fees for both providing and receiving large quantities of coins

4. Safes and other security mechanisms for keeping cash on your premises

5. Higher insurance premiums when you have lots of cash on hand

Businesses that completely eliminate cash also eliminate these costs.

Re 3. our UK bank charges us to deposit any cash not just coinage.

The cash (notes) is deposited by putting it in a machine at the bank. I guess withdrawals of cash are so small now that they want to restrict inputs of cash to avoid their own handling costs.

I don't know why this is downvoted, anyone who has ever worked in retail knows it's true.

They are charged somewhere around 3%, it certainly adds up for an already extremely thin margin.

Additionally your point about cash being less traceable is also at play, cash income is far less likely to be reported to the IRS.

Add both of those factors in and it is clear to see why cash is preferred by small businesses.

Many Indian grocery stores and some Indian restaurants in US carry a board that says minimum $10 or $20 purchase required for credit card. I guess below that amount, they don't make profit after the credit card fees. $30 is high though, never saw in any store before.

In Spain most Chinese Euroshops will when you pay in cash not give you a receipt until you ask and then they will give excuses why you don't need one.

I'm curious why you don't carry cash?

I have friends who don't carry cash simply because they realized that it has been years since they spent any.

I do carry cash, but the only time I recall spending any in Canada in the past couple of years was when I dropped some into a charity donation "hat" -- which I knew I would be doing, so I could easily have brought some along for that purpose rather than carrying cash around all the time.

It's a fair question. I'm not the person to whom you replied but thought I'd contribute my view point.

I don't carry cash because it feels more cumbersome and less speedy than paying with card. With cash, I either have to work out close to exact change or--when I'm out for a leisure day and going to several places--have a mass of coins jangling around at the end. I've noticed that I'm now irrationally irritated watching someone painstakingly count out $12.83 in exact change ahead of me at the till.

It also makes it difficult for me to track where I'm spending. That $60 or $100 might have gone to eating out or a bookstore or some other random place. I'd rather have the card transaction to know and categorize for sure.

Speaking of denominations, I'd rather not carry much money around on me yet ATMs around me only dispense in multiples of $20 and then you get into the fun dance of how to get smaller bills if needed. So many shops now say "no change made."

Finally, I put all of the spending I can (basically everything except mortgage and student loan payments) on cards for the card benefits. Miles, automatic cash back, in-store discounts, etc. Those don't happen when paying by cash. (Yes, I know, the benefits are being paid out of the transaction fees that the merchant is charged plus interest that other people pay. I'm aware that I'm leveraging that and that prices would, possibly, be lower overall if we didn't use cards or didn't have the rewards. If that day comes, I will adapt.)

No comment on the rest of it, but on this:

> I don't carry cash because it feels more cumbersome and less speedy than paying with card. With cash, I either have to work out close to exact change or--when I'm out for a leisure day and going to several places--have a mass of coins jangling around at the end. I've noticed that I'm now irrationally irritated watching someone painstakingly count out $12.83 in exact change ahead of me at the till.

I've actually timed the people in front of me, and the vast majority of the time, cards take nearly twice as long as cash. No idea why, as I would also expect counting out the change to more than make up for that.

(I'm in the US, maybe the systems are different enough to account for this?)

I don’t carry cash because it’s inconvenient. By using a credit card, I don’t need to manage individual dollar bills or change. My wallet is a small card holder that fits unobtrusively in my front pocket.

I have a couple different cards. I use an AMEX cash back card for groceries and general shopping, Amazon, etc. I get 6% cash back up to $600 a year.

For travel and hotels, I have a Chase card that gives me bonus miles, paid for my TSA pre, and some other perks.

I pay off all cards in full each month. There’s never any interest. In return, I don’t have to manage cash and I get cash back and travel points.

There’s literally no downside for me. Paying with cash for things I put on these cards means I’d be leaving money on the table.

Also, I budget through mint. All my spending automatically appears and gets categorized since my cards are linked to my account. There’s never a question of where the money went.

Considering the tax loopholes and deals the super rich get, I actually have no problem with the small mom/pop shops doing what they can to get a break on the fees.

I don’t share your views. There are legitimate services we need tax payer money to fund. Tax loopholes for the super rich are a problem that should be solved, but in my opinion, that doesn’t mean we should just cancel taxation or turn a blind eye to tax evasion.

We should solve the problem with tax loopholes and enforce the system for all.

Mom and pop businesses or small business are very foundational to our economy. Even though individually they’re small, large scale tax evasion would be death by a thousand cuts.

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