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Comment by bagacrap | Hacker News Reader

I'm not sure how that's different? When a merchant accepts cash, they have to pay for physical security and pickup, it's prone to theft or miscounting, etc. So cash isn't free. Accepting card payments is also not free. Merchant pays visa for convenience (to both merchant and customer); visa kicks some back to customer.

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I've seen this said a lot, but in my experience whenever a merchant has different prices for cash and credit card, the cash price is always lower. So whatever the merchant is paying to Visa and/or MasterCard, it's more than it costs to handle cash.

Traditionally the discount for cash in many professions is due to avoiding tax.

i.e. a plumber will do a job for cheaper if they are paid in cash as they won't be declaring that work in their accounts - avoiding the ~20% tax that would be due otherwise.

While true, I know of many small businesses that give cash discounts because the credit card fees ruin the profit margin on small purchases. Sometimes they even lose money on transactions. For instance if you buy a scone for a $1.05, the credit card fees alone might come out to 38¢ for the merchant. This is why you often see "minimum card purchase $5" at coffee shops and small businesses.

Yes, the fee is usually fixed cost plus percentage, which makes small transactions very expensive.

The small transaction problem is vastly worse with Bitcoin, though. The catch is that the transaction fee is paid by the buyer, so that $1.05 scone costs the consumer $8.05.

$1.05 goes to the consumer $8 transaction fee goes to the miner Some fraction (eventually most) of that $8 transaction fee goes to the energy company supplying the miners with electricity.

Now your $1.05 scone transaction includes the cost of charging a Tesla battery 3 times over, because that's how much energy went into the transaction on the blockchain.

Absolutely true. I'm not advocating for crypto to replace credit card transactions, as that would be insanely impractical and wasteful. I wanted to draw some attention to how badly merchants are treated when they accept card payments.

Losing money to credit card transaction fees is actually a huge problem the average person does not know about. The problem is that these credit card companies charge a percentage based on each transaction which screws over the merchant in two ways. One, it is inflation resistant. Two, Visa/Mastercard do not pass savings and efficiencies onto the client, they pocket the difference.

Just as an illustration, if a merchant's profit margin on an item is 10% and the cc fees are 3%, they've lost a third of their profit on that sale.

You're correct, but it is different. There is no free way to accept payments. I personally pay with a 2% cash back card myself. I just hope people have a full picture of the costs and benefits of each approach. Crypto transaction fees are expensive but there are also a lot of hidden costs of the credit system.

https://twitter.com/maxfield_wall/status/1287097229220536321

I lived in Taipei for a year and almost all transactions there are cash, debit, or bank transfer. You can do a bank transfer to anyone instantly for pennies. Really puts the ACH system to shame. Some things are better than getting 2% back.

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