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Comment by TRDRVR | Hacker News Reader

A huge aspect people ignore is how expensive it is to handle cash. From storage, administration, transportation, loss, etc. it's usually a little more expensive to take cash vs. card.

This is why your grocery store partners with an ATM network to let you take out extra cash at the POS. As long as you're paying the fee, they'll do whatever they can to trade you cash for a digital deposit into their bank account.

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I worked at several small businesses and we always preferred cash, we even accepted multiple currencies. The handling was no problem but I admit that it must be more difficult for larger businesses.

Card payments made the price of the service more expensive for all customers because we weren't allowed to have a card payment fee.

Small businesses put in sweat equity to handle cash payments, like the owner going to the bank to make a deposit. If they had to pay an hourly employee to do that, it might even out with credit card processing fees. Also small businesses can fudge numbers with cash payments in a way that’s a lot harder to do when some other company keeps a record of all of your cc transactions.

Yup, cash handling costs are significant when done as a service, they can be cheaper if you don't account for the time and risk (of both theft and forgery). Banks in the UK typically charge about 0.6-0.8% to pay cash in for large companies, and even more for small ones, and very few locations will take cash.

However nothing beats that sweet sweet tax evasion that cash allows.

Back when I was publishing a magazine in the 90s, I preferred credit card payments over checks in the mail because while there was the 3% vig for the merchant account on the credit cards, taking piles of checks to the bank was a pain and there was always the risk of a check bouncing (yes, there was also the chance of a charge being reversed, but in the whole time I did this, that only happened once—selling subscriptions for a print product is a good hedge against fraudulent use of cards and the one time I got stung it was someone who bought a big pile of back issues and had them shipped to Hungary). Add in that credit card orders could be handled by phone or internet while checks had to come in the mail and it was a clear win. And that’s ignoring the multiple studies that show that credit card purchasers at brick and mortar retail tend to spend more money than cash purchasers.

I also worked at small businesses and they absolutely preferred cash but not because it was easy to handle but because, you know... taxes, wink wink.

From the other side, my wife owns a small business where 90% of her sales are on credit cards. She has no desire to encourage cash as we honestly report all income regardless of source (and cash is a hassle and increases theft risk). The ~3% credit card fee is also more than made up for by the higher spend of credit card buyers.

From talking to other business owners, though, the lure of "tax free" cash is definitely a factor.

many such cases. imo it's a skill issue but understand the thought process and why it's so prevalent

>we even accepted multiple currencies

You accepted multiple currencies without taking a spread on Forex? How did you convert it for free? Not even actual forex businesses can do that...

When I sold on eBay and they allowed cash/bank draft payments, I accepted local currency, but also major currencies like US$ (in cash or bank draft because I had a US$ account too) and other major currencies in cash (like EUR and GBP) because they were cheaper to convert with when travelling (or I could use directly). Without a spread.

Used the EUR in Cuba when a buyer mailed me cash.

Plenty of places in the world accept currencies besides the local ones because they are more stable or just worth more in general. Depending on the business, they might handle currency the same way too.

I usually see this only in tourist traps, where the EUR/USD price is 120% or more of the "local" price.

Oh boy. Go to Ko Chang or even Vietnam with plenty of ironed-out bills and see how much the locals like you more.

> How did you convert it for free? Not even actual forex businesses can do that...

Actual forex businesses convert currency at negative cost. That's what it means to be a forex business.

"we weren't allowed to have a card payment fee. "

BTW. Good luck catching that. In SF, that is how many businesses work. You want to use a card? Ok, one extra dollar. Nothing enrages visa more, but, the merchant should have this right.

In a properly working market, every consumer would pay their exact interchange fee and it would be printed on the receipt as a pass-through cost.

This would actively drive interchange fees lower when consumers have to choose to pay 3% on an Amex swipe vs 1.6% no frills MasterCard swipe, or .05% for a debit swipe.

The reasons there is no downward pressure today is because there is because there is no transparency, and no incentive for consumers to choose a lower cost card.

I think the restrictions on this have loosened over the last (not sure how many) years.

One of the best marketing phrases I've seen to charge a fee to use a credit card:

Convenience Fee.

Massachusetts and Connecticut are the two states that have laws banning credit card surcharges. Massachusetts also has a law requiring acceptance of cash.

This isn't really true for Connecticut, because the law allows for a "cash discount" which is functionality identical.

https://portal.ct.gov/DCP/Legal/Credit-Card-Surcharge

>Connecticut law prohibits a business from charging a customer a surcharge for using one payment type (usually credit card) over another payment type (usually cash). However, the law does allow a business to offer a discount if a customer chooses to use one type of payment (e.g., cash) over another type of payment (e.g., credit card). Receiving the discount is not the same as adding a surcharge. As long as the discount policy is clearly written and presented to the customer and the final receipt shows a discount, it complies with Connecticut law

At least it requires them to be honest about what they're charging, I guess, which is more than I can say about the CT DRS.

Between the Massachusetts Right to Repair Act and requirement to accept cash (Part III, Title IV, Chapter 255D, Section 10A), that state is looking more and more like the right kind of place for me to land once I'm done doing the FAANG thing. Convince me otherwise.

Or what I've seen some people do here in Mexico: 3% discount when paying in Cash :-)

I think the law should be that you state the maximum price for a given transaction and then discount down.

So you can have a cash discount but it's okay to say no credit card fees. These are the "junk fees" that came up in political discourse in the last year or two. Credit card vendors shouldn't be allowed to restrict cash discounts. I know this isn't libertarian, but I want it to be a pre-negotiated thing simply for the sake of keeping cash alive, like how minimum wage is a pre-negotiated wage to avoid the overhead of getting the whole nation into a labor union.

That's why I like free shipping on Amazon. I know it's not literally free, I just want to see what you're _actually_ gonna charge me, it cuts off an avenue of bullshit.

I was just thinking about the other day how much cash used to flow through grocery stores.

The routine was to show up at the store with your paycheck, cash it, pay for your groceries, and keep the change.

Our store used to have the safe up front next to the bags of charcoal.

This is why your grocery store partners with an ATM network to let you take out extra cash at the POS. As long as you're paying the fee, they'll do whatever they can to trade you cash for a digital deposit into their bank account.

This is not universal.

Where I currently live, and where I lived five years ago, supermarkets charge a fee (50¢ here, 25¢ where I used to live) to take out cash at the POS, because the card transaction cost more than handling cash.

There was a lot of "Are you sure?" prompts on the screen because the supermarkets (both big chains) didn't want the burden of the plastic transaction.

I've seen it stated a lot in technology forums that "cash is more expensive for merchants than cards," but I've never seen that spelled out from any source other than the card companies.

Every low-margin business I patronize, from the garden centers, to the convenience stores, to the antique stores all either offer a discount for cash, or charge a fee to use plastic.

Just last week, a woman who's run an antiques store for 35 years told me that card fees were going to put her out of business, and she practically begged me to go down the street to my bank to get cash for my purchase.

A lot of businesses have a few percent cash discount to offset credit card costs, so they make the same amount either way. An antique store that would go out of business unless you pay in cash is either because they aren't paying consigners honestly, or they aren't paying taxes.

I hope you don't mind if I take the word of a woman who's been running her business for 35 years and is a staple in the community over some rando on the internet who doesn't know her business, hasn't seen her financial records, has zero information about how much the fees actually cost her, and may not even be in the same hemisphere?

Small businesses offer a discount for cash because they are underreporting their sales to pay less tax.

Meanwhile eBay forces payments by debit/credit card/Paypal, because they have arrangements with a (formerly owned) processor, even though I, as a seller, would be happy to accept cash/drafts/cheques/COD/whatever to keep that ~3%.

You do not need credit card for that. Debit card is enough.

My wife takes big payments at her company.

I'm pretty sure lots of people are putting these on credit and... might not ever pay it back.

She literally couldnt get cash from these people.

(US medical btw)

I agree, which is why merchants should be allowed to charge different prices for different card operators and for cash.

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