# What is the cost of handling cash? **URL:** \ **Category:** Factual Questions\ **Created:** [July 15, 2014, 11:25am UTC](https://boards.straightdope.com/t/what-is-the-cost-of-handling-cash/693151 "2014-07-15T11:25:11Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [July 15, 2014, 11:25am UTC](https://boards.straightdope.com/t/what-is-the-cost-of-handling-cash/693151/1 "2014-07-15T11:25:11Z")
It costs a business money to accept cash for purchases. Cash has to be counted and moved. It is stolen by employees. Businesses are robbed. Cash payers slow down the line, which may drive customers elsewhere or require more employees. Am I missing anything? Are these costs easy to quantify? What are they? I imagine it changes from business to business, and I’d like to know how. And I imagine the marginal cost of handling cash is pretty low for most businesses. I’d like to see some numbers, but a Google search is returning a bunch of adverts for credit cards and articles on overall costs to a country’s economy (which are significant, and possibly an interesting topic to discuss here, but not really what I’m after). Best I could find was Figure 1 from this PDF ([http://fletcher.tufts.edu/CostofCash/~/media/Fletcher/Microsites/Cost%20of%20Cash/CostofCashStudyFinal.pdf](http://fletcher.tufts.edu/CostofCash/~/media/Fletcher/Microsites/Cost%20of%20Cash/CostofCashStudyFinal.pdf) ), which pegs the cost to US businesses at $55B/yr. ---
**Author:** ![Grrr](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/grrr/32/146_2.png) [@Grrr](https://boards.straightdope.com/u/Grrr)\ **Post date:** [July 15, 2014, 11:52am UTC](https://boards.straightdope.com/t/what-is-the-cost-of-handling-cash/693151/2 "2014-07-15T11:52:36Z")
Eh, I’m pretty sure the only cost cash cost you that CCs don’t, is the gas spent driving from the business to the bank to make the nightly deposits. Registers still have to be closed out and balanced at the end of the day. The actual counting of the cash is negligible. ---
**Author:** ![Kevbo](https://avatars.discourse-cdn.com/v4/letter/k/e47774/32.png) [@Kevbo](https://boards.straightdope.com/u/Kevbo)\ **Post date:** [July 15, 2014, 12:17pm UTC](https://boards.straightdope.com/t/what-is-the-cost-of-handling-cash/693151/3 "2014-07-15T12:17:12Z")
When I worked retail, in a large department store, it took about 5 minutes to count the change bank into the drawer, and about 15 minutes to count out the days receipts, and the change bank for the next day. This then went to the secure cash room, where two dedicated employees counted it again, and attempted to sort out discrepancies…no idea how long that took. Busy registers would get cash pulls that took about a minute. An armored car service was hired to transport the cash. IME it takes as long to verify a CC as it does to make change, so I don’t think you gain much there. ---
**Author:** ![Habeed](https://avatars.discourse-cdn.com/v4/letter/h/a587f6/32.png) [@Habeed](https://boards.straightdope.com/u/Habeed)\ **Post date:** [July 15, 2014, 12:37pm UTC](https://boards.straightdope.com/t/what-is-the-cost-of-handling-cash/693151/4 "2014-07-15T12:37:01Z")
It’s not just the employee labor to count the cash. Every dollar you bring in, there’s a nonzero risk that someone will steal it before it reaches the bank. Employee theft, thieves, robbers, and so on. Most businesses probably purchase insurance against this. The insurance premiums cost a nonzero amount of money. In addition, the armored cars that come to pick up the cash must charge a substantial fee. I don’t know what these numbers actually come out to be, on average (in a high crime area you would expect them to be more expensive), but they could easily be comparable to the 3% the credit card companies take. ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [July 15, 2014, 1:36pm UTC](https://boards.straightdope.com/t/what-is-the-cost-of-handling-cash/693151/5 "2014-07-15T13:36:38Z")
[Here](http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/6968143/Is-a-cashless-society-on-the-cards.html)’s an article from The Telegraph saying that the consulting firm McKinsey estimates the cost to retailers at 1.3% of the purchase price. I’ll bet that this something that Visa, Mastercard and their competitors have extensively studied, especially as they determine their transaction fees. ---
**Author:** ![Habeed](https://avatars.discourse-cdn.com/v4/letter/h/a587f6/32.png) [@Habeed](https://boards.straightdope.com/u/Habeed)\ **Post date:** [July 15, 2014, 1:48pm UTC](https://boards.straightdope.com/t/what-is-the-cost-of-handling-cash/693151/6 "2014-07-15T13:48:58Z")
Wait, so every credit card costs at _least_ 3%, versus 1.3% for cash. What about chargebacks? If a customer uses a stolen credit card, or fraudulently claims the card was stolen, doesn’t the merchant get stiffed for 100% of the bill when that happens? Does that raise that 3% even higher? (and it would be really bad for a small business, where a single transaction is actually a significant portion of the business’s receipts) What does the chargeback insurance cost? Edit : [Riskified - We approve more legitimate transactions for increased revenue. | Shopify App Store](http://apps.shopify.com/riskified) I’m uncertain which fee is the relevant one, but it looks to be **another** 2% on top of the 3% the credit card company eats. This means that for low margin transactions, the lions share of the profit is actually going to the credit card companies and not the business. ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [July 15, 2014, 2:16pm UTC](https://boards.straightdope.com/t/what-is-the-cost-of-handling-cash/693151/7 "2014-07-15T14:16:51Z")
But if a retailer doesn’t accept credit cards, what percentage of potential sales does he/she lose? Some people do not carry cash. Some people prefer to use credit cards. So some people will not buy anything at the merchant if they can’t use a credit card. As I said, I’ll bet that this something that Visa and Mastercard have studied extensively, as they determine their transaction fees. ---
**Author:** ![sbunny8](https://avatars.discourse-cdn.com/v4/letter/s/c77e96/32.png) [@sbunny8](https://boards.straightdope.com/u/sbunny8)\ **Post date:** [July 15, 2014, 2:24pm UTC](https://boards.straightdope.com/t/what-is-the-cost-of-handling-cash/693151/8 "2014-07-15T14:24:32Z")
Speaking as a business owner, I’ll admit that I never sat down and thought about the disadvantages of cash. I agree that it takes time to count (including an occasional screw-up like a $15 discrepancy between what’s in the drawer and what’s supposed to be in the drawer, and we spend an hour trying to figure out how and why it happened), and yes you have to physically drive to the bank to deposit it, and there’s a chance that it can get stolen. But consider these advantages. When a customer pays by check, the money isn’t actually credited to my account until after midnight. When they pay by credit card, we often don’t get the money until day after tomorrow. But when they pay by cash and we take it to the bank, the money is credited to our account instantly. Also, checks can bounce and credit card payments can be disputed but not so with cash. I’ll admit counterfeiting is a possibility but I’ve never seen a counterfeit bill in my entire life whereas we get bounced checks at least once a year, sometimes once a month. BTW, you might think checks don’t have to be taken to the bank, we can just use the online deposit feature, but that takes time too and there’s a limit to how many checks you can deposit remotely each month. We end up having to take checks to the bank anyway about half the time. So, here goes my attempt to quantify the costs for taking in $100,000: CREDIT CARDS Money is delayed 1-2 days. cost = $75 Processing fees. cost = $2,750 disputes & charge backs. cost = $100 ESTIMATED COST 2.9% CHECKS Money is delayed until after midnight. cost = $50 extra time spent waiting for customer to write checks. cost = $100 bounced checks = $600 time spent going to the bank. cost = $1,200 ESTIMATED COST 2.0% CASH extra time spent counting & reconciling the cash drawer. cost = $3,700 time spent going to the bank. cost = $2,400 “shrinkage” due to theft, etc. cost = $100 ESTIMATED COST 6.2% Wow, I wasn’t expecting the numbers to turn out that high. Huh, maybe I should reconsider taking cash. But what’s the alternative? If we cut down the amount of cash we take in each day by half, that wouldn’t save much because we’d still have to count the drawer and go to the bank. All that would do it increase the ratio of the cost by having the same expense for a smaller benefit. Maybe if we took less cash and only went to the bank once a week… Let’s see how the numbers change. CASH extra time spent counting & reconciling the cash drawer. cost = $2,500 time spent going to the bank. cost = $480 “shrinkage” due to theft, etc. cost = $50 ESTIMATED COST 6.1% not much improvement there. ---
**Author:** ![jtur88](https://avatars.discourse-cdn.com/v4/letter/j/e9c0ed/32.png) [@jtur88](https://boards.straightdope.com/u/jtur88)\ **Post date:** [July 15, 2014, 2:40pm UTC](https://boards.straightdope.com/t/what-is-the-cost-of-handling-cash/693151/9 "2014-07-15T14:40:16Z")
It’s the cost of doing business. It’s like asking why Walmart should have merchandise hung on hooks in bubble packs with price tags on it, and plow the snow in the parking lot, when they can tell the customers to go on line and order it and have it shipped by UPS. If the retailer wants to do point of sale business, they have to pay the cost of doing business. ---
**Author:** ![md2000](https://avatars.discourse-cdn.com/v4/letter/m/73ab20/32.png) [@md2000](https://boards.straightdope.com/u/md2000)\ **Post date:** [July 15, 2014, 3:03pm UTC](https://boards.straightdope.com/t/what-is-the-cost-of-handling-cash/693151/10 "2014-07-15T15:03:30Z")
Is the cost of counting and reconciling really that high? $2500 on $100,000 is pretty high. 25 cash days a month, $100 to count $4,000? Assuming cashiers get $10/hour, that’s 10 hours to count the cash. Even a $20/hr manager, 5 hours a day counting cash? $4,000 nowadays (thanks to bank machines) is going to be mostly $20 bills, maybe a bunch of $50 bills - unless you have a business that sells a lot of low-cost product. But even McDonalds probably needs to buy $1 and $5 bills (another cost, BTW) because of all the $20 bank machine bills out there. Your typical drive-up McD’s probably generates about $10,000 a day, $300,000 a month… but then, even there maybe 2/3 is debit and credit sales. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [July 15, 2014, 3:12pm UTC](https://boards.straightdope.com/t/what-is-the-cost-of-handling-cash/693151/11 "2014-07-15T15:12:48Z")
> [@jtur88](#): > > It’s like asking why Walmart… What is? Are you addressing the OP, which does not ask any “why” questions, or a different post? ---
**Author:** ![Kevbo](https://avatars.discourse-cdn.com/v4/letter/k/e47774/32.png) [@Kevbo](https://boards.straightdope.com/u/Kevbo)\ **Post date:** [July 15, 2014, 3:34pm UTC](https://boards.straightdope.com/t/what-is-the-cost-of-handling-cash/693151/12 "2014-07-15T15:34:21Z")
Thanks for starting this thread. I use my REI Visa card a LOT, because I get a 1% premium. (Free shoes, basically) I did feel a little bad that I was hurting the merchants. Now, not so much. ---
**Author:** ![Kent\_Clark](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/kent_clark/32/105_2.png) [@Kent\_Clark](https://boards.straightdope.com/u/Kent_Clark)\ **Post date:** [July 15, 2014, 3:39pm UTC](https://boards.straightdope.com/t/what-is-the-cost-of-handling-cash/693151/13 "2014-07-15T15:39:14Z")
> [@Habeed](#): > > It’s not just the employee labor to count the cash. Every dollar you bring in, there’s a nonzero risk that someone will steal it before it reaches the bank. Employee theft, thieves, robbers, and so on. I thought about that, but it seems to me that most robbers don’t stop to think that they may be holding up a business that may not have any cash on hand. Does aqnyone have any figures on how much cash is stolen vs. thefts by shoplifting and employee “shrinkage?” ---
**Author:** ![Exapno\_Mapcase](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/exapno_mapcase/32/1051_2.png) [@Exapno\_Mapcase](https://boards.straightdope.com/u/Exapno_Mapcase)\ **Post date:** [July 15, 2014, 3:57pm UTC](https://boards.straightdope.com/t/what-is-the-cost-of-handling-cash/693151/14 "2014-07-15T15:57:34Z")
[Pots of marijuana cash cause security concerns](http://www.usatoday.com/story/news/nation/2014/07/13/marijuana-cash-flow-colorado/12271369/) > [@](#): > > Welcome to the rear guard of Colorado’s rapidly expanding legal marijuana industry, where eager users pour millions of dollars — most of it in small bills — into buying pot, hashish, and marijuana-infused foods and drinks. All that cash adds up, and there are few places to put it: Federal regulations, which still classify pot as an illegal drug, make it difficult for marijuana producers to deposit their profits into traditional bank accounts. … > > “And banks don’t even want to deal with it. You have a quarter-of-a-million dollars in cash show up all at once. The counting time alone is going to take an hour.” ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [July 15, 2014, 4:05pm UTC](https://boards.straightdope.com/t/what-is-the-cost-of-handling-cash/693151/15 "2014-07-15T16:05:18Z")
Many banks charge to deposit a lot of cash. Then there’s the paperwork. If you normally have a lot of cash, your insurance rates go up, also. ---
**Author:** ![Tim\_T-Bonham.net](https://avatars.discourse-cdn.com/v4/letter/t/46a35a/32.png) [@Tim\_T-Bonham.net](https://boards.straightdope.com/u/Tim_T-Bonham.net)\ **Post date:** [July 15, 2014, 11:10pm UTC](https://boards.straightdope.com/t/what-is-the-cost-of-handling-cash/693151/16 "2014-07-15T23:10:51Z")
> [@md2000](#): > > Is the cost of counting and reconciling really that high? > $2500 on $100,000 is pretty high. > 25 cash days a month, $100 to count $4,000? > Assuming cashiers get $10/hour, that’s 10 hours to count the cash. > Even a $20/hr manager, 5 hours a day counting cash? > > $4,000 nowadays (thanks to bank machines) is going to be mostly $20 bills, maybe a bunch of $50 bills - unless you have a business that sells a lot of low-cost product. But even McDonalds probably needs to buy $1 and $5 bills (another cost, BTW) because of all the $20 bank machine bills out there. Your typical drive-up McD’s probably generates about $10,000 a day, $300,000 a month… but then, even there maybe 2/3 is debit and credit sales. I too think that your calculations for handling cash seem really high. Especially your counting/reconciling time. If it’s really taking that long, you ought to buy a currency counter. They only cost around $500, and can count the bills almost instantly. Similar, even cheaper machines are available for coins, if you get a lot if them. Also, look into the amount of time you spend reconciling. Many businesses (and banks) have a procedure for this: If the discrepancy is less than $5, don’t spend more than 10 minutes trying to reconcile it. If it’s under #10, don’t spend more than 15 minutes. Etc. There is no point to spending more (in payroll costs for the workers’ time) than the amount the drawer is out of balance. ---
**Author:** ![sbunny8](https://avatars.discourse-cdn.com/v4/letter/s/c77e96/32.png) [@sbunny8](https://boards.straightdope.com/u/sbunny8)\ **Post date:** [July 16, 2014, 4:00am UTC](https://boards.straightdope.com/t/what-is-the-cost-of-handling-cash/693151/17 "2014-07-16T04:00:37Z")
> [@md2000](#): > > Is the cost of counting and reconciling really that high? > $2500 on $100,000 is pretty high. > 25 cash days a month, $100 to count $4,000? > Assuming cashiers get $10/hour, that’s 10 hours to count the cash. > Even a $20/hr manager, 5 hours a day counting cash? Perhaps I should have explained a bit more. You are inferring that I meant $100,000 in a month which means $4,000 per day. That’s not what I meant. I meant $100,000 in a year which means roughly $300 per day. Cash is not our primary form of payment. On a good day, we may have $1,500 in total sales but only $400 of it in cash. On a really bad day we might have less than $50 in cash. Regardless, it takes 10-20 minutes to count it and make sure that the totals agree with what’s supposed to be there, but then about once a week there’s some kind of screw-up where the totals DON’T agree and we pull our hair for an hour trying to figure out where it went wrong. The most frustrating is when the register tape says one number, the POS says another number, and the amount actually in the drawer doesn’t agree with either of them. Still, perhaps I was being pessimistic, assuming that both the manager and the assistant manager are involved in the reconciling of the cash drawer. In reality, there are plenty of days when it’s handled by the manager alone. ---
**Author:** ![Habeed](https://avatars.discourse-cdn.com/v4/letter/h/a587f6/32.png) [@Habeed](https://boards.straightdope.com/u/Habeed)\ **Post date:** [July 16, 2014, 2:19pm UTC](https://boards.straightdope.com/t/what-is-the-cost-of-handling-cash/693151/18 "2014-07-16T14:19:55Z")
I don’t know if “$100” for theft is accurate or not. If a robber comes in with a gun, or some thieves sneak in at night, you lose all the cash on hand. So if you take in $100k of cash a year, going to the bank once a week, then you have about 2k on hand. So if robbers/thieves/filching employees show up once every 5 years, you lose 2k of 500k, or 0.4%. Hmm. Not significant at all. If an armed robber comes it, it actually does make sense to pay them as fast as possible. It really isn’t worth your life. ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [July 16, 2014, 2:28pm UTC](https://boards.straightdope.com/t/what-is-the-cost-of-handling-cash/693151/19 "2014-07-16T14:28:03Z")
**sbunny** , don’t you also have to reconcile credit card receipts with transaction totals? You don’t seem to have accounted for that (though obviously it’s not going to take as long as counting down a cash drawer.) My totally anecdotal contribution: when I ran a small retail store (though one selling relatively large-ticket items), cash processing took about 40 minutes. All other closing procedures combined (other than sweeping) took about 30, including reconciling credit receipts (~10 minutes). Admittedly, this was located on Disney property and we accepted “Disney Dollars” and took more travelers’ checks than most businesses. ---
**Author:** ![ALOHA\_HATER](https://avatars.discourse-cdn.com/v4/letter/a/76d3ee/32.png) [@ALOHA\_HATER](https://boards.straightdope.com/u/ALOHA_HATER)\ **Post date:** [July 16, 2014, 10:38pm UTC](https://boards.straightdope.com/t/what-is-the-cost-of-handling-cash/693151/20 "2014-07-16T22:38:32Z")
> [@sbunny8](#): > > On a good day, we may have $1,500 in total sales but only $400 of it in cash. On a really bad day we might have less than $50 in cash. Regardless, it takes 10-20 minutes to count it and make sure that the totals agree with what’s supposed to be there, but then about once a week there’s some kind of screw-up where the totals DON’T agree and we pull our hair for an hour trying to figure out where it went wrong. If it takes you 10-20 minutes to count a $400 drawer, and an hour to find offages, you’ve got a procedures problem. With a ten-key and a spreadsheet it should take no more than five minutes to count a drawer with many times more money than that. [Next page](https://boards.straightdope.com/t/what-is-the-cost-of-handling-cash/693151.md?page=2)