Why I have to buy doughnuts with cash
ft.com
ft.com
>The proximate reason is obvious. If it were to accept credit cards, Carlson’s would have to pay an interchange fee to a network, for the privilege of selling doughnuts. These fees run roughly between one and two per cent, sometimes higher, particularly for smaller retailers like Carlson’s.
I feel like I'm taking crazy pills. We all know this is to avoid tax, right? Why are we pretending otherwise?
They take card for everything else. This is just some tax-free pocket money for the owner.
Of course. More correctly, to evade tax.
Perhaps more importantly, consider the following design document for donut transaction software a la Mitch Hedberg:
"I'll just give you the money. You give me the donut. End of transaction."[1]
Cash achieves this out of the box. You could have John Carmack and a billion dollars seed money and your cc terminal would still need to be rebooted in the middle of a transaction on at least a bi-weekly basis.
> a five cent flat fee doesn't matter on a $20 lunch, but it's over 3% of a sale for a single $1.60 donut.
Now do the math for profit instead of revenue
They would need to be doing an insane amount of business to get fees that low. In reality it's anywhere between 7-15%, especially for small tx. When you combine this with the penalty system for chargebacks (which quickly escalates to not being allowed as merchants) and people trying small tx with stolen cards, this is why coffee shops, corner stores, etc charge a flat +% for any cc purchase and especially leverage an additional fee for small ones if they even accept them at all.
Perhaps you prefer tax, er, "minimisation", to only be available to corporations and individuals (eg politicians) that have enough power to have law makers and tax authorities (legally) decrease their tax for them?
What about that leads you to the conclusions is to evade taxes?
If the CC firms take 3% in fees, and give 1-2% back to the customer, why would anyone pay in cash? It’s free money.
it’s pretty easy to see this is rent seeking behavior and you can’t blame small shops for not playing that game.
It’s not enough to take interest from the consumer, they have to squeeze the businesses too.
A 5% fee on an item marked up 100% is a 10% drop in income to a family-shop.
Food profits run much tighter than other goods, so it can be even worse.
"I bought a donut and they gave me a receipt for the donut; I don't need a receipt for the doughnut. I'll just give you the money, and you give me the doughnut, end of transaction. We don't need to bring ink and paper into this. I just can't imagine a scenario where I would have to prove that I bought a doughnut."
but for big purchase like car payment,house mortgage etc. its good to have it immutable track record so if any problem occurs its easy to show why I own the thing
Are they the same owners of Carlson's Donuts in Severn? They are also cash only.
Stablecoins like cash or other cash transfer schemes don’t offer any form of reputation of transactions for any reason. If you lose your money to theft, to a fraudulent merchant, whatever, the money is gone.
This being said, the interchange structure -is- inefficient as there’s been a lot of middle men accumulated over the years. A simpler interchange could be achieved with much lower fees for the merchant and higher rewards for the consumer. Only a major processor like stripe to accomplish this but they are too absorbed with stable coin malarkey
*They force the participating banks to offer...
You think MasterCard or Visa hand over a single dime to you? When you issue a chargeback, the money comes from the merchant bank, not from the network. Quite the opposite: the payment network penalizes the merchant bank with an additional chargeback fee.
> It’s not because of the complexity or avarice of the payment system providers,
https://www.youtube.com/watch?v=ks3wP1nlg6U
50% profit margin
This is not a competitive market.
Kind of ironic this particular article is behind a paywall.
We're launching Bitcoin payments available to every Square point of sale with 0% transaction fees for next year. 1% after that. Available Nov 10th. [https://squareup.com/us/en/releases#bitcoin]
My sincere hope is it catches on and helps out small business. The difference in fees can really add up, and with near instant settlement to dollars on the backend, the merchant doesn't even need to hold or think about Bitcoin unless they want to.
The fine article talks about stablecoins, but in my biased opinion those are much more complicated than Bitcoin to deal with right now.
It's that cash is the simplest thing that might work.
No declined cards.
No network delays.
No broken electronics.
No waiting on transactions to clear.
...And even better, it segments the market against people who want demand more than doughnuts for dollars.
For example, pulling in to buy petrol because they're displayed price is good. You don't know how much you have available in the transaction account, but you have cash.
Also unlike a phone I won't get fined for looking at my wallet while stopped at the lights.
I have a bank app. It's simple and works. Before that, they had a website. It's easy to check a balance in the morning and use that to guide you.
Before the internet was widespread, banks had a number you could call to get your balance. Heck, I think my current bank still has this, despite me being in a different country now.
Once you are in a situation where these aren't as helpful, you are probably in a bad life situation (speaking both from experience and observation of folks I know).
If you are responsible and know your balance, then using a debit card, or equivalent app, is the same as using cash.
Cash makes my budgeting easier too. I find it harder to overspend cash I don't have on my person. The cost is more tangible (as every debit/credit tap "feels" like the same amount). Consumers have been shown to spend more when using electronic payment methods too. As to the coins, those get tossed in a jar to be rolled later, then eventually taken to the bank and to a rainy day fund.
Cash is fuckin' excellent.
"What if the network's down?" is a problem solved by buying things another time on the rare occasions it happens.
Which I would posit is slightly better planning then having cash on hand, since it means you've kept a reasonable stock of whatever basic necessities absolutely can't wait.
I don’t think the extra fraud was a major concern. The person would need to happen to be in the shop with their fake card for this very rare event.
Gone the advantage of having 1.5 ready, I need to look for the ... euuhhh ... 28 cents, or give a 2 and wait for the .... euuuhhhh ... 22 cents back.
At least here when I see 18 € for a meal, I know that this is 18 €. Not 18 + some tax + some tip = holly molly, this is an expensive meal!
Americans don’t use two dollar bills.
We have them, but we don’t use them.
It’s rude.
It'd be like putting an Indian scammer call center in charge of the telephone network because there are some dropped calls. Or electing a guy who spent a career committing fraud at every turn President because the price of eggs went up a bit. Or solving the problems of the American healthcare system by putting a guy in charge who...
Oh, wait. We're definitely going to do the crypto thing. Dammit.
The timing of retiring supreme court justices may fall in their lap, which is lasting, but again that's not due to anything they've achieved.