Burgling is breaking into unoccupied buildings & stealing stuff. A merchant that left cash in their register or cash drawer overnight is pretty naive. That’s what safes are for. Safes are hard to burgle.
Somebody coming in while the store is staffed and stealing money from the register, whether by threat of force or by sneakiness, is engaging in robbery.
And yes at one time a lot of small storefronts and peddler carts in big cities switched to card-only precisely to have zero robbable cash on hand. Which led to some political backlash since that effectively locked the “unbanked” out of that commerce. And so was discriminatory against the honest poor people.
I went to a small convention once, and someone talking about organizing it mentioned: One year they ahd an arrangement with a local bookstore to process credit card memberships - until someone got their bill and said”Hey! I never bought anything from that store!”. It got sorted out, but the bank told them they could not use someone else’s credit processing. Apparently, the difference in card rates between some small organization and a decent-sized business was close to 2%. The bank wanted their money.
I also saw something that, as mentioned above, the fees are a total crapshoot, depending on what benefits the card pays - the merchant does not know what their percentage will actually be until later.
Debit, a I understood, was a fixed amount - something like 25¢ under $10, and 50¢ over that, or something. For a while, the banks charged fees so high that places that sold small amounts, like a cup of coffee, would have a sign “no debit under $5”. Canada then put a limit on the amounts. Not sure what the US rules are.
It used to be against the merchant agreements to set minimums, but it’s now allowed.
I was talking to a coworker one day and noticed she had like a dozen lighters in her purse. When I asked her about it she mentioned that she picks up a pack of cigarettes every day at the gas station but it’s not enough to hit the minimum to use her credit card so she gets a lighter too. She didn’t have an answer for me when I asked her why she didn’t just buy two packs every other day (or a Red Bull or really anything other than more lighters) instead.
For that, and a few other things, I’ve often used her, even on this board, as an example of someone that’s not very good with money.
It’s gone K shaped just like everything else. The small business pays more and more, the big business pays less or at least the same. There are least cost processors that only billion dollar businesses can afford.
Small businesses are also more likely to have the cost of the equipment built into the swipe fee (“free” terminals, “free” integration service with your POS), while big businesses count that as part of their IT infrastructure.
From my experience based on 5 different small business merchant accounts what they are really paying is about 3.5%. The percentage is effectively a little more on small charges because for example Square is 3.5% + 0.15 per transaction.
If a business is doing a lot of charges the ~3.5% fees over time will add up to a significant number, so a 3% charge to the customer is sort of understandable. Some places are charging 4% or more and that is gouging unless they have a merchant account that is gouging them.
At our business we generally prefer credit card payments because you don’t have to handle cash or checks or deal with places like PayPal. We don’t charge fees.
The credit card fees twist my brain into recursion a little, I think “Ok, with a 3% card fee on the customer I would be charging $103 on a $100 order, so that means I’m paying the bank a $3.60 fee on $103 instead of $3.50 on $100. I wind up with $99.50 instead of $97.00, so the bank would get more but I would too. The customers pay more of course.
I’ve done software dev involving international transactions in three different jobs. The “recovery” is an absolute lie and just a profit perk for doing no work whatsoever.
I mean, I worked in online gambling, the most avaricious industry imaginable, and we wrung profit out of stone.
Of course any business is free to expose as many of their expense line items to their customers as they choose. Here’s the rent recovery fee, the credit card recovery fee, the income tax recovery fee, the … fee.
And yes, lots of room to play games with that.
For in-person transactions where cash is a plausible alternative to card, there really is an immediately attributable line item of incremental expense depending on which way the customer chooses to pay. The logical error of course is that there’s also an attributable cost to handling cash on that transaction too. The exact amount is just more nebulous, being buried in a monthly overhead number.
I’m not a fan of these fees becoming popular. But I can see how and why they are becoming so. I can also see why for decades the credit card monopoly tried (and mostly succeeded) to prevent them.
I think you have that a little confused - during some period of time when the merchant agreements prohibited surcharges, they allowed cash discounts which meant that price tags , signs and menus showed the higher credit card price and if you paid cash, there was a discount. Now that credit card surcharges are permitted, sellers generally show the lower, cash price and then add the surcharge. They can still show the higher price and give a discount- but why would they?
I was recently at a dentist office and they mentioned that if I used a Credit Card there was a 2% charge but none for check or Debit Card. Since the card I used gives me back 2% it was a wash. I did not have my Discover Card Credit card with me, which gives you 1% back (yes, it is a debit card) up to a certain amount per month, or I would have used it.
Fees vary by merchant, based on various metrics: volume, business type (i.e., likely amount of fraud), etc. I’ve been told that McDonald’s, for example, pays a flat rate based on volume–no per-transaction fee. That’s why they can afford to take a credit card for a 50-cent fruit pie (OK, they’re probably a lot more that these days, but last time I got one they were like 50 cents!). But they also have basically no chargeback capability–they have to eat (!) any fraud.
Someone like Best Buy, OTOH, who are selling relatively high-priced, easy-to-resell goods, is going to pay a higher rate. Except that with their volume, they may be able to negotiate a lower rate. Etc. And as others have noted, it’s hard for them to even predict, though larger merchants have fancy back-end systems that do some analysis and may route different cards through different processors to optimize their rates.
Much like the health insurance industry, at this point there are so many non-primary players involved that it’s hard to see how to “fix” it without causing major disruption. That doesn’t mean folks shouldn’t try, just that it’s not as simple as saying “OK, we’re capping fees at 1%!”
Depends on the purchase - I don’t care about receipts at restaurants, often not at convenience stores and other small purchases. The places near where I worked that said “cash, no tax” when I walked in gave cash customers handwritten receipts out of a book rather than the cash register receipt I got when paying with a credit card ( I didn’t want to save the 8% enough to help them hide income) and I would imagine plumbers , etc can give you one of those receipts from a book as well.
I had a friend who had a dry cleaning business. 90% of the time, people paying cash at pickup did not insist on a receipt. He was claiming (on the accounting books) that 25-30% of his orders were never picked up. So his tax return showed that he never made a profit beyond some minimal salary he paid to himself, his wife and one other relative. Everything went into the “system” because it was connected to the back-end plant that actually did the cleaning.
Why was he telling me this? Because he was trying to sell the business for $300k on the basis that it generated $75k in unreported income on top of the salaries. Because I’m Indian American he thought I would have connections in the community that would help market the “opportunity” and that I would be sympathetic to his tax evasion because “Indian people are clever. They know how business works.” ( He was Korean-American).
Spoiler alert: he was trying to sell the business for three years and in the end gave it up for nothing, turning over the lease to a small local chain.
But he was committing tax evasion on a grand scale for decades.
People who buy the story that small businesses are averse to taking electronic payments because of the transaction costs are deluding themselves. The major driver is tax evasion.
Well, in general i wont use that merchant or i will pay cash.
And of course- Cash has a cost also. Estimates are 1-2%, Banks charge for depositing cash in larger amounts, then there are armored car fess. Then of course- shrinkage, aka employee theft. Sometimes extra charges on the Insurance for hold up coverage. Then the cost of two staffers spending half an hour counting and double checking the cash.
In general, to be fair, CC fees run about 1% more than the cost of cash.
yep
We generally have no odea of what out cards charge the merchants. And 3% is on the high side.
There is one time where a surcharge is reasonable- businesses that do many smaller transactions, as the fees do get high with low average charges- like $10. So some merchants reasonable ask for cash below $10, which I honor.
And there is the fact that accepting charge cards in general- increases sales around 12-18%.
That does happen.
Hardly ever.
To a larger extent that many will admit, yes. 3% especially is bogus.
You can jigger cash registers, and also some places give hand written receipts.
The general “keeping cash off the books” is more for smaller contractors and such service personnel. I paid the guy who replaced my old windows $800 cash. He did everything for 6 windows including replacing the moldings inside, a quick drywall repair where one molding pulled off a chunk drywall, took away the old ones. Back in the day - simpler for him, simpler for me. WHether he reports it is his problem. It was particularly an issue in Canada, where contractor and repairmen collect a 5% GST and often provincial sales tax (7 to 8%) on their work, as well as their marginal income tax rate in the 30% range if they make enough.
I suppose a laundry is a handy business too, since thre’s no inventory to account for except consumables like soap. Why would he even pretend some things did not get picked up? Just under-report volume. Whereas if you sell televisions or clothing or other physical items, or gas by the gallon, where the input inventory is traceable, it’s rather difficult to significantly cheat.