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The true crime is involving a multinational corporation in a transaction between two private individuals at the local market.

I like cash because it's direct, and where possible I avoid paying by card because I don't want the merchant to pay fees to third parties.

In Europe, most of the time, using cash doesn't imply avoiding taxes on the transaction, but having cash is essentially sovereignty.

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Sovereignty or not, at least in Germany, cash-only restaurants are definitely at least as much about tax evasion, especially now that card interchange is heavily regulated in the EU.

There were even complaints that lowering the restaurant sales tax (which happened a while ago) would be unfairly disadvantaging small restaurants, since benefiting from a tax cut requires paying taxes in the first place…

FYI, handling cash has fees to "third parties" too.

In a lot of cases it's a lot higher than just taking card.

My business needs to insure cash that we keep at the shop in case we get robbed, but that amount is much much less than we pay in credit card fees. In other words, we would much prefer customers to pay with debit or cash.

Is this comparison made with the cost of transactions in the US or elsewhere? For example in Europe interchange fees are generally much lower, especially for debit cards which are also more common than credit cards.

Interchange for debit and credit cards is now almost the same in Europe (0.2% vs. 0.3%).

Yeah it’s the US credit card fees that are the real problem. No reasonable person would argue that Visa should get to be a 3% tax on all consumer financial activity.

It's not as simple: Visa and Mastercard don't get the 3%; the issuing banks do.

But Visa and Mastercard effectively set the rates, and the higher they are, the more issuer business they get; meanwhile merchants are essentially never in a position to reject either Visa or Mastercard (notable exception Costco confirming the general rule), so market forces are pretty one-sided.

I think if Visa and Mastercard were three-party networks like Amex or Discover (now Capital One), their interchange would have long been regulated down by >90%.

Customer...

French companies pay social contributions (~45% of the full salary) via Visa and MasterCard, and the French authorities are making it nearly impossible to pay these by wire transfer.

Do you pay salaries in cash too or do you need to get the cash to a bank etc? Of course might be easier if a small business vs a large corporation

What about the extra costs of handling cash, the practical effort to count it, prepare it for transport (including bags, counters, and so on), transporting to the bank, increased security, possibly more cash registers, counterfeit detectors etc.? Overall is it usually more expensive to take credit cards than cash or just in particular cases?

Retailer here: Most of these costs are fairly fixed. We have to have a safe, bags, armored transport, staff training on counterfeit detection, etc. whether the percentage of our sales in cash is 8% or 80%. The few costs that are variable are still far, far less than the processing fees.

It's also worth noting there are also huge fixed costs for credit card transactions. We're currently upgrading our pinpads and it's been an absolute nightmare to get the right parts in just for physically connecting the damn things to our counters, we lost almost a whole day of backend POS access for our vendor to push a required update, and I'm looking at more fees to be able to support other types of cards which require POS certification.

We strongly prefer our customers use cash.

There are a number of brick and mortar retailers I frequent who swing the other way and don't accept cash, only credit or debit. Presumably, they prefer paying the cost of credit card fees to the costs of handling cash. What's driving that difference?

Margins, maybe? I work for a grocery retailer. A healthy profit margin in my industry is roughly equivalent to the percentage we pay in credit card fees.

Couple that with inertia. We couldn't go cash-only even if we wanted to without pissing off a lot of our customers and losing sales. We only recently decided the cost of check fraud outweighed the push back we knew we'd get if we discontinued accepting personal checks.

We're a community-owned business with a fiercely loyal customer base. When we tell folks what payment method is cheapest for us, many will actually choose to use that payment method just to help us save money.

Buddy of mine runs a cash only bar and grill.

The costs to handle cash are fairly low. He bought one of those fancy cash counters like they have at the bank for a few hundred. He also bought one of those cheap little ATMs for perhaps $500 and charges $1 to take out cash. He keeps $2,000 on hand at all times between the safe and the ATM itself. Otherwise, he just stops by the bank two blocks down the street to deposit profits. As for security, well, they just carry concealed weapons.

The ATM paid for itself in the first month, presumably also the cash counter machine. Notably they did have one counterfeit $100 come through that they forgot to scan. I suppose that’s novel to cash although chargebacks on cards also do occur.

At least these are mostly local jobs.

Is inefficiency somehow better if it creates local jobs?

As long as we live in this economic system it's important that something creates local jobs.

I don't know how it is in Europe but when I worked at restaurants, it was just part of the managers job to bring the cash to the bank. It took 20-30 minutes, we'll say 1 hour if it's busy. The bank didn't charge a fee to deposit the cash. Pay was like $20/hr, let's say 50% overhead so $30 to deposit the cash. The frequency was just about weekly, and would be into the thousands. Let's say it's only $1,000. That's 3%. And they generally did it when there was down time anyways, so I think it's wrong to attribute 100% of that to depositing cash, since it would be an expense regardless.

But this is just my anecdotal experience, do you have actual numbers/statistics on this?

Its also really expensive for your time when dealing with it.

The only people who think it's cheaper are those that value their time at 0.

Studies say otherwise: https://link.springer.com/chapter/10.1007/978-3-642-40654-6_...

Cash is actually faster in many cases, the 'slowness' is the matter of perception and the need to make a cognitive operation of 1st grader counting, which is apparently a daunting prospect for many people.

And even if it were slower by 20-30 secs, the advantage it gives in control and privacy is such enormous that I don't understand people who use banks at all.

The last thing other people should know is how, where, and when a person spends their money. And due to the AML surveillance from the discussed article the banking privacy is practically dead.

All of those talking points appear to be some preprepared copy pasta, because they don't appear to relate to my comment at all.

I never spoke about speed.

> the need to make a cognitive operation of 1st grader counting, which is apparently a daunting prospect for many people.

Don't be a condescending prick. The fact that counting exists at all is a cost that people don't measure.

> due to the AML surveillance from the discussed article the banking privacy is practically dead.

Or if you read the fine article you would realise that AML rules generate so much noise that there isn't any analysis.

> Or if you read the fine article you would realise that AML rules generate so much noise that there isn't any analysis.

Which is even worse, since the only practical use of that data is now selective enforcement and/or parallel construction.

Not to mention the constant hassle such laws have for regular folks trying to transact in cash while barely being a speed bump for those engaging in actual money laundering at scale.

> The fact that counting exists at all is a cost that people don't measure.

When cash skills were common and regularly utilized, the average cashier could count out most change in about the time a card swipe or dip happened. Tap makes it considerably faster though.

Today I agree - the average cash handling skills are effectively nonexistent to the point I comment on it when a cashier understands how to count back change correctly, much less do it from muscle memory.

I use a credit card that I pay off in full every month and I get 2% cash back paid for by interest other users pay.

Most of your cash back money actually comes from fees that merchants pay. In the US and especially for credit cards with cash back those fees can be quite high, and unfortunately it's illegal for merchants to discriminate against credit cards with high fees.

This used to be true. But the 2025 Interchange Fee Settlement abolished the “Honor All Cards” regime. Perhaps, I know it’s crazy, but… perhaps segmenting the market into extremely high-spending customers, normal pay-every-month-relatively-low-fees, and no-frills, was a smart move by the big issuers? My sense is that alienating big spenders (whose interchange fees tend to be in the 4% range) is just not worth it?

All I can say for sure is no store I’ve ever encountered has operationalized the newfound ability to differentially reject some cards yet. I am starting to see grittier establishments offer 5% cash discounts more frequently than they used to, and I’m always happy to pay cash when they do.

But when there’s no discount, why would I forgo better accounting and 3-5% back in points?

Costco in the US has, for as long as I’ve shopped there, only accepted visa or debit.

This is orthogonal to the Interchange Fee Settlement.

The settlement allows stores to decline different *classes* of Visa cards. It was always possible to accept Visa but not MasterCard, etc. What was not previously possible was to query, before the transaction “what will the fees be” and reject cardholders presenting high-fee cards from a network you have a relationship with.

That is now allowed, by consent decree. But so far no one is doing it.

That’s only fairly recently at my Costco. For years and years it was only American Express and debit.

I'm pretty sure this is because they negotiated a very good rate with Visa in exchange for being exclusive.

Interesting. In Canada they only accept Mastercard in store.

> it's illegal for merchants to discriminate against credit cards with high fees

Do you have a source for this? Often times merchants don't accept American Express because it charges higher fees [1].

[1] https://www.bankrate.com/credit-cards/business/why-american-...

Those rules are about discriminating against various cards from the same brand. They have also been significantly limited in many jurisdictions by now.

It isn't illegal but it is against most credit card companies merchant agreements. But I do rarely see it like in some vending machines.

Don't you pay 3% of every purchase to your credit card?

Most of the time it’s the other way around, at least in the US: because cash and credit card prices are almost always the same it is the cash users who are overpaying, to the tune of 2-3% of the purchase price. It makes no sense to use cash.

Sure, but somebody is still paying more in aggregate than what you get out as rewards, or this industry would not exist.

Yes, the 12 to 30 percent interest the credit card companies charge.

No, the merchant pays, although recently more and more have been handing off the 3% to the consumer by giving a lower cash price. But well, most people don't have cash so that's essentially a convenience fee.

The credit card companies tell you that the merchant pays. Cost incidence doesn't work like that. If every seller in a fungible commodity market has the same additional cost, the price is going up by that amount.

Yes, but you’re perhaps missing OP’s point?

Incidence is very much on customers, but (high interchange fee) credit card users are getting a rebate of most, if not all, of that. It’s the cash users who AREN’T getting a rebate, and thus the incidence is on them (and people using other low-or-zero cashback payment methods).

The incidence is on everyone. Paying 3% more or, for small purchases, >10% more is a net loss even if you get 2% back. Meanwhile merchants are increasingly offering a lower price for paying cash, and the ones offering that will generally have the same credit prices as the ones who don't, so paying with a card is paying 3%+ more to get 2% back -- and not everyone even gets 2% back. People with poor credit typically aren't offered those cards.

No? There's zero % interest for every purchase if you pay for it fully the next billing cycle

Yes, but consider who pays the merchant fee in the end. Sure, you might be getting a kickback of that in rewards, but usually less than you pay yourself in fees indirectly.

Very few places offer discounts for cash, so ultimately everyone pays it, but only those with good credit card rewards get some of it back.

Yes, that's the problem: Part of people are getting part of the pot of extra money back, through a highly complex coupon collector's version of a Rube Goldberg machine that skews win rates towards those with better credit.

It's really the perfect scheme, as the system creates its own never ending supply of advocates.

as opposed to what, though? You don't get a 3% discount for using cash.

In many cases they do actually offer the discount (or tack on the "hidden" fee for using a credit card). In some markets there are also sellers who only accept cash (often discount stores etc.) and correspondingly have lower prices, which is a slightly more inconvenient version of the same thing if you patronize them.

Moreover, we should encourage every retailer to offer this, because getting 2% back (or less) while paying 3% more is not just a net loss, it's also worse for privacy.

Depends on your points usage, airline points can be much more valuable than the 3% fee.

Airlines also sell "points" for cash and you can get them for essentially the same cost as the credit card companies do. They're just using the 2% cash back to buy them for you, so even if you want flights, getting a 3%+ discount and using the money to buy points puts you ahead. It also lets you time your purchase (there are sometimes temporary "deals" on points), collect interest on the cash until you exchange it for something, and not lock yourself in to getting only airline miles instead of any of the other things you can buy with money until you decide that instead of having it imposed you at the point you use that card.

That's not really true on a practical level. For the most part, you can't just buy airline points at the one to two cent price that you effectively get them for in credit card transactions or the even lower price that the credit card companies themselves are likely paying.

Airlines do regular promotions where you can buy miles for less than 2 cents per mile. If you get 2% cash back or pay with cash and get a 3% cash discount and can then buy miles for 1.2 cents/mile during the promotion, you're losing 0.8% or 1.8% respectively by using the card that gives you miles instead.

So do credit card companies run transfer bonuses. There are only a handful of airlines who sell pts < 2 cent per point during promo, like Avianca. Others, including the big three US carriers, seldom do this.

Also the big part of this game is sign up bonuses, like spending $5,000 and get 100,000 points instead of the 2% daily rate.

Cash discounts only really exist for locally owned restaurants and other smaller retailers, not bigger ones like Macy's or Best Buy which have a flat price. So in most cases it is in fact the cash purchasers who are paying the 3% fee implicitly but getting no benefits back in the form of cash back or points.

On average they’re worth much less. After all, why would airlines cross-subsidize a card on which they earn <3%?

On average yes, but for savvy people they are worth much more for biz/first class travel. There is even a whole industry built around mileage booking.

Why subsidize? There is no subsidize at all, an empty seat on a flight is an empty seat unsold, any money they can make back is extra profit. Airlines do not make money by flying people nowadays, but by selling miles in bulk to banks [0].

[0]: https://youtu.be/ggUduBmvQ_4

> There is no subsidize at all, an empty seat on a flight is an empty seat unsold, any money they can make back is extra profit.

This completely disregards the opportunity cost of being able to sell the same seat. Even if the airline is absolutely unable to sell the empty seats cheaper, consider what consistently giving away seats for free would do to the remaining paid seats...

> Airlines do not make money by flying people nowadays, but by selling miles in bulk to banks

They certainly make some money from this, but definitely not the bulk, or even all of it. Don't believe everything you hear on the Internet, even (or maybe especially) if it's presented in a shiny, high production value video.

What you said is true, but it pertains to how to balance the game once it started, while I was giving a explanation why the game is started in the first place.

> consider what consistently giving away seats for free would do to the remaining paid seats

After all those years it is still fairly niche because few people knew about how it actually works, and it took quite a bit of learning, with dedicated forum [0] existing for decades. It shows even in this thread, and I would rank hn ppl very tech-savvy. Also the award seats are not given out free, since airlines got paid when they sold miles to banks.

> but definitely not the bulk

Even CNN thinks otherwise: Frequent flyer programs: The most profitable part of the airline industry [1]. If you think about it a bit, this is basically money printing under little oversight. What business can be more profitable than that?

I chose that video because it does explain why and is often quoted to newcomers in the community, hence its view count. I myself have been in this game for a couple years and my family almost travel solely on international award tickets now, so it is not just something heard over the Internet.

[0]: https://en.wikipedia.org/wiki/FlyerTalk

[1]: https://edition.cnn.com/2024/09/08/business/frequent-flyer-p...

Oh, I don’t doubt that mile optimization/churning works or that it can be very lucrative.

I do however very much doubt that it’s somehow core to the economics of airlines. I think that the real power of rewards programs is that they exploit the principal-agent problem of business travel, with an added bonus of many people being very bad at redemptions and realizing how much they’re often overpaying for a few extra miles or status.

In some areas you do actually, lots of local restaurants for example.

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