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Comment by NickC25 | Hacker News Reader

Sure, but that also means that taxes on those businesses are burdensome to the point where it's better to not accept digital payments or credit cards.

Or people just don't want to pay inflated prices just so a payment processing company gets a nice % of every single purchase.

As I said in another post in this thread, I myself run a small business, and the vast majority of my sales are done through digital payments. I have no problem with this, but if I was to cut the payment platforms' fee, I could offer much better prices without having to take a hit on my margins (which themselves are sustainable and healthy, but not fantastic). It's not about me bypassing taxes, it's about providing a better price to my customers.

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You're paying the same taxes whether customers pay with cash or CC, aren't you? What am I missing here?

I've been to a few restaurants that are cash only. Is that an option for you?

I'm paying the same taxes, yes, but on top of taxes, I'm paying a cut of each (pre-tax) sale to the CC company or payment processing platform (Stripe, for example, charges 2.3% of each transaction). That cut, while it might seem like pennies to a customer (because in a sense, it literally is roughly a quarter for a given $10 charge) but over time and at scale, those cuts really add up.

If my revenue is say, $1m, that's roughly $23k that a CC or payment processor gets right off the bat, so I'm paying taxes on the $1mm but the cut takes a nice hit off my end profits. That $23k would be infinitely more valuable if I could reinvest it in my workforce, my product, my team, or myself.

I'm not a restaurant but I am a food service provider. I wish I could go cash-only but that would restrict who I do business with, which at the stage I'm at, is not really an option.

>If my revenue is say, $1m, that's roughly $23k that a CC or payment processor gets right off the bat, so I'm paying taxes on the $1mm but the cut takes a nice hit off my end profits.

If you are talking U.S. income tax, that is incorrect. You are not paying taxes on $1 million, rather you are paying taxes on $977K since the payment processing fees are tax-deductible.

You could incentivize people to pay cash by giving them a 2.3% discount while raising your prices with the same amount to cover banking comissions.

IMO the crux of the issue is that CC companies can legally forbid you from charging a different amount for CC vs cash transactions.

https://www.nationalmerchants.com/is-it-legal-to-surcharge-o...

Increasingly (in Chicago) I've been seeing restaurants and cafes that are credit card- / debit card-only.

I always wonder if processor terms force vendors not to offer a separate cash price (or cash discount) or if it's just the pain of doing it that makes it not super common. I only use points cards because I'm trying to claw back the premium for everybody using credit. I'd love to just pay less in the first place and do cash everywhere.

In the US, processor terms and state laws often prohibited charging processing fees, but a cash discount was ok. Recent court decisions support merchants charging processing fees or offering cash discounts, and most merchant agreements and state laws have been updated to be compliant.

There's rules about the fees and making sure things are transparent to customers, but I think merchants are tending not to do it because of the pain of doing it. Otoh, the last time I was at my car dealer service center, they wanted to charge 3% to run a credit card, so that one went on debit.

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