I forgot about this, and you’re right. Some stores still do this for the folks still using checks, too.
The motivation you describe (hope that the customer will proceed to spend the cash he just got back) may not apply in stores, but it certainly does in pubs, where cashless customers will often buy their first drink with a card and subsequent ones with cash obtained from cashback. This is more convenient for both the patron and the publican, since it’s much faster to pay by cash. Having a large wad of cash on hand may also tempt the patron to spend more than he originally intended…
This sort of thing is an advantage for other venues where the customer tends to stick around and make multiple transactions. Casinos and gaming venues, maybe, and definitely cinemas, theatres, and sporting venues (debit card to buy your ticket at the box office and then cash to buy from the concession area or from vendors walking through the stands, the latter of whom don’t even take cards).
Not just that, but the flat rate for each transaction will add up quickly if a customer has six drinks and some food and pays for each on on it’s own.
I suppose that would be true if customers were charged a fee for debit card transactions. I don’t think that’s the case in the UK.
The customer isn’t, but the pub almost certainly is. By providing cash to customers, the pub could save itself quite a lot of money in fees.
Why not just have less cash in the till in the first place?
Exactly! Just think of how easy it would be if they just gave away everything for free instead of selling it in exchange for cash.
Because most people have $20 and $50 notes and expect change regardless of the amount of their purchase, for some reason. And what Psychonaut said. 
So hold up… what kept me from taking advantage of this before is… do you get charged one of those high “cash advance” % or something by the credit card company? Or is it really just a free ATM?
EFTPOS (Electronic Funds Transfer at Point Of Sale) uses your ATM card. Provided the merchant you are purchasing from gives cash out, it’s basically a free (or significantly cheaper) ATM.
You can’t do cash out on Credit Card transactions via an EFTPOS Terminal (well, OK, it could be done using a system similar to the “writing a cheque for the purchase amount plus extra cash” system mentioned earlier, but no Major Business will do that for you as they get stung high fees on Credit Card transactions), but you can do it via an ATM. You don’t get any Interest Free period if you do that, though- you’re on the hook for the Interest immediately.
One other thing: EFTPOS terminals here have three buttons on the top: “SAV CHQ CRD” (Savings Account, Cheque Account, Credit Card). If you have your savings or cheque accounts hooked up to your Credit Card, you can use your Credit Card like any other ATM card. The Credit Card rules only apply if you use the “Credit” option.
Awesome. And here I was thinking it was some sort of scam. (Honestly, what finance-related thing isn’t?)
Just a reminder that I live in Australia and am speaking for the situation in Australia (and, I believe, NZ). I don’t know how it works in the US or UK, but I’m 99% sure it’s pretty much the same.
But if you encourage people to take cashback, then you run out of cash sooner…
Say you need $500 per day in a till for regular retail purposes and unprompted cashback (pulling a figure out of the air). If you prompt people to take cashback, maybe that rises to $800. You’re saying that to avoid the undesirable situation of having cash left over at the end of the day, you encourage cashback. I’m saying, why not keep schtum unless the customer asks for cashback, then you only need $500 in the first place?
It seems like you’re adding cash to the till, then desperately trying to get rid of it, all for no real purpose.
I don’t understand psychonaut’s response, I’m afraid. I didn’t say have no cash in the till.
No, you don’t. Trust me. The amount of cash coming into the till exceeds the amount being withdrawn by cashouts exponentially.
Because people pay cash for items, so we’re going to end up with lots of money in the till anyway? A $500 float is generally made up of small notes- $5 and $10s, along with $1 and $2 coins and some shrapnel.
Most people making cash purchases are using either $20 or $50 notes (because that’s what ATMs dispense here), so the purpose of the float is to provide change for those cash purchases. As the day goes on we’ll acquire $20 and $50 notes and run out of $5 and $10 notes. It doesn’t take long to have far, far more money in the till than you started with- say, people buy $1000 worth of stuff in cash that day. You still have your original $500 float (give or take a few dollars for errors) and now you’ve got $1000 extra, generally in $20 and $50 notes.
You could have NO float at all, and you’d still have this issue (assuming no-one wanted change, which is almost impossibly unlikely).
However, if you can get people to take cashout, you might get that extra cash (above your float) amount down to, say $750. As a company you’ve still “made” that $1000, but you only have to count and take $750 of it to the bank- the other $250 has been transferred electronically.
The idea isn’t to avoid having any cash left over at the end of the day, it’s to avoid having Phat Wads Of Ca$h in the store, which is an obvious security risk and a logistical pain in the ass.
Respectfully, It seems like you’ve never worked in retail and therefore don’t know what you’re talking about. It’s really not that hard a concept to grasp, IMHO.
Is it possible the contract with the credit card processor forces the offer?
Not in my experience.
EFTPOS here is provided by the bank, not Visa or MasterCard or whoever; there’s nothing in the contract at all about having to offer cash out. Lots and lots and lots of places here don’t offer it; it’s entirely at the merchant’s discretion.
Correct. I think in previous threads on this subject some US customers have reported being charged fees on debit transactions, which presumably include the cash-back element if it is a percentage fee. However, I have never come across a business charging for cash-back, and that includes customers of my company - we develop debit/credit software.
This is true. Somehow I was thinking of tills as things that banknotes generally flow out of, rather than into. Maybe because I rarely pay cash except for trifling purchases.
Oh, absolutely. We are still a society of people, and are not robots yet.