Hacker News Reader

Comment by traspler | Hacker News Reader

I'm Swiss and try to be as cashless as possible but I can absolutely understand people & businesses opposing a completely cashless future under the assumption that the current situation remains. The fees associated with the current system are exorbitant. Credit cards, as expected, have a pretty high fee of like 2.5% or more for the accepting business and the new Visa/Mastercard debit cards that they force on everyone have even more egregious fees of CHF 0.5 to 0.95 + 1.5% per transaction. Twint (our digital payment app) also has ~1.5% in fees per transaction and the business case of Twint is to farm as much payment data of the customers as possible for analysis and offers/ads. I do like the convenience of cashless but the cost in fees for businesses and the increased interest in exploiting my transaction history for an ads business sours this a bit for me.

View on HN

It's more than just fees and surveillance. It means you need permission for each transaction. Permission to buy a loaf of bread, a taxi ride, a train ticket. And even Canada does things such as freeze protester's bank accounts without trial. Let's not make it that easy for them, shall we?

Absolutely. Other comments here already discuss that. But I think there is discussion to be had about how cash enables certain crimes and what impact that has on us, how cashless can change this and on the other hand how handing full control over our ability to spend money is handed over to the government and what risks are associated with that and what mitigations are possible. Also the state already has many, many ways to make your life hell. How big the impact of this additional way is, also needs to be discussed. I'm pretty sure most people don't store their life savings in cash at home and freezing your bank account has a similar impact now even though cash is still available.

> cash enables certain crimes

> handing full control over our ability to spend money is handed over to the government

Seems like the second one enables the crime of disenfranchisement, except that no one will be able to label it a crime and no one will ever be punished because it's the government doing it.

See the recent example of the Canadian government cutting off protesters bank access without trial. Whatever you think of the protests, that's a terrible thing for a government to be able to do.

https://www.nytimes.com/2022/02/22/world/americas/canada-pro...

People will just barter if they want the drugs bad enough. This only adds one step to the purchase.

Black markets are notorious for dealing in foreign currencies or exchanging goods or other convertible assets. Removing cash from the equation has never stopped criminals from operating, see prisons, hyperinflation, wartime, etc. People just invent or adopt a new currency if you take away the current one.

There should be data about that from Sweden, no? I don't know what the situation there is regarding that but would like to know.

It was under emergency legislation. Account freezing can’t just happen out of the blue.

"Emergency legislations" can happen out of the blue. And flipping a bit to trash my card might take some hours after that.

Removing cash at least would have one or two elections between the ban and it taking effect.

modi demonetized most bills overnight

Sure.

My point is also that "revoking all bills" is a bigger step than "disable a card", even though both or possible. Having cash is a bigger buffer against politicians up to no good.

Also you can't target an individual by revoking bills, so the threshold is way higher.

fair point

It would never be used against political rivals or to prolong a corrupt government; nope, never.

This doesn't change anything. It's actually even more scary that governments can pull up laws that quickly that are restraining liberties this much so quickly. I saw it in my country, which I hopefully didn't live in at the time: in less than half a year millions of citizens were stripped of basic liberties such as movement. And despite decades of anti-racism propaganda, it took less than a pair of months to create a state-enforced cast of paria with less rights than others (we're speaking of access to businesses, to healthcare, etc.) And they would have no legal way of exiting the country except by doing it illegally or by forging documentation.

Most Western states are a few bills away of turning full China. They now it, and will surf on any perceived or real crisis to get to that point somedays. In the meantime, they do it step by step.

So how does having physical cash in your mattress prevent your government from going full China?

This is all-or-nothing security fallacy. Having physical cash makes such transition harder for the country, because the dissidents can stay anonymous easier.

That's literally exactly what happened. People did something the government didn't like, and they made it an "emergency". It's a completely arbitrary power. If they can use it for a protest they can use it for anything.

And not just that...

I'd mention ukraine, but even in peace time, there can be huge power outages in relatively large areas (as in US, more than one in the recent years), where point of sale terminals stop working, there is no internet connection to process the transaction, but exchanging a few bills, for whatever you need always works, even in the dark.

Also privacy... Want to buy a huge buttplug from a "Huge buttplug store ltd.", but your government could collapse in a few years and the new one might not like people (especially guys) using huge buttplugs? With cash, there's nothing to trace... with cards, the government can get a list of names in few seconds.

Don't even need something as widespread as a power outage. Ransomeware or other security breaches can bring down payment systems for extended periods of time and can be far more difficult to fix.

Been in Norway recently. After long drive and reaching the airbnb, we went to the store to buy some food for dinner. Electricity went out. Payment by card not possible, payment by cash not possible. I even asked if I could take the food, leave my ID and come later to pay. They said no. What to do? Luckily after 20 minutes it was back, and after few more minutes all terminals were back online.

There are other options than the credit/debit card model.

NFC secure area base locally stored accounts are a pretty good compromise for instance. The account is locally encrypted, anonymous, with a ceiling on the max charge. You’ll pay for bread with no latency, and will only hit the network at charge time and/or if you need to for backup.

If the state freezes your bank account then you're already fucked. And nothing stops them from raiding your home and confiscating your physical cash as well.

I'm from an ex-USSR country. You can't stop an authoritarian government with physical cash in your mattress.

You can't stop them, but you can make it more expensive.

Yes, they can always stuff you into a cage when they catch you. That doesn't mean we should live in a cage full-time. As I and the sibling comment said, let's not make it easy for them. The USSR did break up, and tyrannical governments get overthrown - but that's going to be a lot harder to do if state repression becomes more efficient and easy.

What a weird argument. I guess you also don't use encryption ever because authoritarian governments can just extort the keys from you. Somehow I doubt you grew up in an USSR country or ever cared about the life back then in more detail

I use encryption to prevent criminals from stealing my data. Not because I'm afraid that my government might turn tyrannical.

Give it a couple more years.

> nothing stops them from raiding your home and confiscating your physical cash

Yes and no. I'm in Canada, so maybe the protests in Ottawa, which were mentioned above, are a good example to use.

It actually is much simpler for the Canadian federal government to just lock your bank account, than it is to raid a person's home and confiscate their cash. Entry to a person's home, or detaining them, invokes the entire set of constitutional protections against unlawful search and seizure and arrest. (And for complex, mostly stupid IMO reasons, your bank account does not.)

We do still have due process, judicial review, etc. If you were targeted during the protests without reason, and got a lawyer, you'd probably ultimately get the controls on your bank account lifted. But... you'd need to speak to a lawyer. And that requires some travel or an active phone plan. And that's where cash might actually help a lot.

There's also the question of scale. It costs a lot more, takes a lot more effort, to physically search for cash than to simply flip a bit in a database. Bank freezing can be done and applied at scale automatically, in a way that physical detention cannot. I do agree it is basically tending in an authoritarian direction. I'm worried about it and I'm not sure how we can and should fix it.

>And nothing stops them from raiding your home and confiscating your physical cash as well.

Nobody can confiscate what they dont know you have. You are making a case not to put all your eggs in your home.

I'm Swiss too, and while the fee argument is a great one, my main concern is preserving the optional privacy you have when transacting with cash. It's one of the last aspect of your daily transactions that businesses and most importantly governments cannot trivially track and tie to your identity, aggregate, and potentially use against you (and people who consume like you) in various ways.

Giving up this power, out of convenience, is a bad deal for citizens. And before anyone argues that this privacy is used by criminal/terrorists/etc., I would need to be convinced that going fully cashless would stop them to even consider it in the balance... but as far as I can tell they happily use the banking system for their criminal dealings, with the support of banks, since each year there are scandals about banks helping money laundering to the tune of hundreds of millions, even billions at the time, I don't think it happens mostly thanks to cash.

Of course there are other reasons to avoid a purely cash-free society, but couldn't the Swiss government just limit the transaction rates/fees like the the EU?

> caps interchange fees at 0.2% of the transaction value for consumer debit cards and at 0.3% for consumer credit cards;

https://eur-lex.europa.eu/EN/legal-content/summary/fees-for-...

Yes there are other reasons, you lose a lot of control, but there are other comments here already discussing that.

Yes there needs to be such mandates to limit this but it's difficult to anticipate if/when this would happen.

There was such a limit for the older Maestro cards ( https://en.wikipedia.org/wiki/Maestro_(debit_card) ) (afaik, but I'm not an expert in this domain). I think there the limit was CHF 0.3 per transaction. But you couldn't use them in online shopping or Apple Pay. The new debit cards can be used for that.

Maestro debit cards are common in NL and you can use them with Apple Pay.

(Online shopping is a bit different, instead of Maestro cards we use an NL-specific system called iDEAL https://en.wikipedia.org/wiki/IDEAL, basically direct bank transfers)

Then banks just charge stupidly high card-reader and merchant account fees. It still sucks for small businesses in EU.

Sumup charges 39€ once per terminal, .9% for debit card transactions and 1.9% for credit card transactions. Nothing more.

The times when accepting card payments was expensive have been over for years. Everyone whining about "card payments cost so much" should look what the combination of pricing caps and competition have brought up, especially with the pandemic.

[1] https://help.sumup.com/de-DE/articles/4oI3qHHji2I2S9dyvRfec3...

Seems to be a bit more in Switzerland: https://www.sumup.com/de-ch/ec-kartleser-kosten/

It's still an expense to avoid for small businesses. Especially those who do relatively few transactions.

To the contrary, small businesses can save costs by going at least partially cashless. Cash costs money in itself on a variety of factors - employee theft, employee mistakes (e.g. handing too much change, accepting counterfeit cash), robberies, counting and transporting the cash to a bank, securing the cash on-premises, lost business by people not carrying wads of cash any more...

Many small businesses are +/- one-man-operations. Robberies are not a problem in many parts of a world (last local robbing I hard about was 25-ish years ago).

Customer retention is not a problem if people are used to cash.

Transporting and keeping cash is still a thing if you accept cash. Accepting cash and cards is just doubling costs and logistical issues.

The issue for one man business is accounting. You have exceptions in some places (farmer's market) you can basically do as you wish, but in small shops you have to follow rules that makes cashless less painful.

In France at least.

Modern cashier's machines do accounting pretty well. But looking at businesses I visit - old good pen&paper seem to work great as well.

Yes, but modern cashier's machine are more expensive (again, in France) than this new white terminal the new businesses around me uses.

> old good pen&paper seem to work great as well

I think that for food businesses in brick and mortar shops in France, if you take cash, you have to get a cashier's machine. Not 100% sure that's true but that's the explanation i got from a bubble tea shop who didn't take cash.

Cashier's machine is one-off purchase. You can get a really cheap 2nd hand. Meanwhile card processing embraced subscriptions all the way.

> I think that for food businesses in brick and mortar shops in France

Even tiny food businesses have quite a few transactions in a day. Wit weird sums that may make cash painful in other ways. €6.71 is fast by card than counting coins and queue length may matter at peak times. I was talking more about, for example, hairdresser where amount is square and there're very few transactions in a day.

Why does it need to be a percentage? Isn't processing a $1.00 payment the same as processing a $1000 payment?

> Isn't processing a $1.00 payment the same as processing a $1000 payment?

Technically yes, but the cost that Sumup or whatever else processor you use gets charged is based on a percentage amount set by the card networks. Sumup just adds a .5 or whatever onto the rates they get from the card networks and there's the .9/1.9% final charge.

That still sounds like a situation where the merchants could shop around and where a functioning market could be created. That is a lot harder with the transaction fees as merchants typically don't charge different prices to customers with different cards.

Processing cash also has non-zero cost (labor to count, secure, transport) but I guess it's still slightly cheaper than digital

In addition, businesses that handle most transactions in cash, at least here in Canada, are notorious for tax evasion

That being said, I'm not a fan of payment data being sold to ad companies

In reality the digital should cost much much less. They just like having a lot of profit.

Sure, no digital system ever needs maintenance, hardware, or upgrades of any kind.

Well if it costs more why are we doing it in the first place? It was my understanding that online payment processing was orders of magnitude cheaper/faster/easier per transaction. Updates and infrastructure require a centralized system to maintain but in the case of tap chip cards, you basically reduce transaction time and effort to 0.

This isn't just about small mom and pops either, but huge city walmarts and grocery stores who never have a moment of downtime, the amount of productivity gain from having instant easy payment allows those business to service drastically faster and higher significantly less staff, producing what across the world is probably ridiculous profit.

I understand they cost money but how much is the question. I agree some kind of fee system but a dollar + some percent on every transaction? Looking back at my credit card history that would be an insane amount of money, thousands and thousands of dollars over the years that I've paid directly to the card processor. And they need millions of people doing that just to be able to run a complex aws system? On top of ad revenue as well? Some fees are okay but that sounds like way too much.

I believe you answered your own question

> Well if it costs more why are we doing it in the first place?

> Looking back at my credit card history that would be an insane amount of money, thousands and thousands of dollars over the years that I've paid directly to the card processor.

They like it because they make money off of it, businesses sometimes like it because paying extra is worth not handling cash, people like it because it's convenient and you don't need to remember to take money out of the bank.

Not a good reason to eliminate cash though. Everyone should be legally required to accept cash.

So you eventually agree with me that the fees are unreasonably high compared to their costs.

No I don't think so, the whole system could be more expensive than employing people to handle cash which could explain why the fees are so high.

Tax collectors are really good at estimating how much a business should be bringing in. Tax evasion by cash only businesses isn’t as rampant as many people think. Especially if the business sells things that require inventory. A cash only service business is more likely to be laundering money (and paying lots of taxes) than evading.

Tax evasion is still an estimated loss of tens of billions of euros of equivalent per country every year.

https://assets.publishing.service.gov.uk/government/uploads/... https://www.dianeosis.org/en/2016/06/tax-evasion-in-greece/

And as you can see in the charts, only about 1/6 of the tax gap is evasion. Accounting mistakes, interpretation, crime, etc make up much more. As for Greece, it’s difficult to use as a good example as their government is not well organized and corruption on every level is far more common.

Of course it exists but evasion isn’t the first thing I’d think of when considering a cash only business.

On the other hand, the need for non-visa-sanctioned electronic transactions is real. If a society does go cashless, the majority will be finally convinced to end their duopoly and mandate other ways to transact, because having 2 companies mandating whether porn is an tradeable good is tyranny. And yes, crypto is the current option. At least it could work for small transactions.

Not just bad for businesses my friend. I like to use Credit Cards as much as anyone else but the Idea of a cashless society is just bad, to say the least.

It's more a problem why European countries gave up to American Visa/Mastercard duopoly for cards, where the alternative is... Google Pay/Apple Pay duopoly for mobile. Their only answer are miserable local debit/ATM card systems working only in individual European countries, or superfrauds like Wirecard.

You don't need Google Pay to pay with a phone. I use my bank's app for that. It works just fine without Google Pay.

Can you pay with your bank's app in a neighbour country? Does it simply boil down to a virtual Visa/Mastercard card?

Haven't tried it in neighbouring countries yet, but as I understand - it's a virtual Visa/Mastercard card, yeah. So it should be accepted in the same places where my physical card is accepted.

So yeah it's the duopoly from my previous comment. When you buy a bloody apple in your nearby shop and pay with it, Americans are salivating.

Reply on news.ycombinator.com