In the old days, those armoured vans used to have to go to stores every single day at peak times (Xmas, etc.). Plus you've got to pay for bags of change to be delivered. You've got to pay for a safe, insurance for your safe, plus a hard limit that safe is allowed to hold. If you're going to go over you need to request an on demand pickup from the cash people. You've got to have people in store collecting the cash, accounting it, trying to catch embezzlement, the cost of embezzlement, etc.
All those costs were added on to the cost of goods.
I used to work in the industry in the 90s, can't remember what any of that cost now, but I reckon it's comparable to the card merchant fees.
Yes, the present duopoly is taking the piss with their fees, but accepting cash is also expensive.
Credit cards, on the other hand, can easily run you 30% on a $5 transaction here in the US, due to the unjustifiable fixed + percentage structure. Maybe it’s a little better in Canada.
- dealing with fake notes,
- mistakes in handling notes and change (mistaking a ten for a twenty, etc.)
- theft from the store (not just mugging on the way to the safety deposit box)
- employee theft,
- reduced transaction capacity; cash transactions can take much longer (customers finding the cash, employee counting it, employee making can age)
- requirement to ‘cash up‘ at the end of the day (I.e. ensure the till takings match stock sold)
- occasional trips to the bank to get change (which must be during bank working hours)
For an independent guitar store some may not be relevant, but for some businesses they could be significant.
Are you sure it's 30%? Credit card fees are usually in the order of 3% + minimum fixed charge. Stripe is 2.9% + 30 cents.
There are some extra charges for manually entered cards, international cards, etc. but even if you max that out it's still only 11.2%, not 30%.
A quick Google and found Danske UK's small business fees, 80p per £100 (or 0.8%). Without all the other costs associated that I mentioned that your boss took a lot of risks not handling. Obviously stores that 90% of transactions actually happen in can't take those risks.
And that 30% for a $5 is totally made up, that's not the fees charged.
I'm not from the US or Canada, but UK, so the first Google result is Square's fee that say 1.4% + 25p, so on £5 that's 32p, or about 6%.
Obviously that's for small transactions.
https://squareup.com/help/gb/en/article/5068-what-are-square...
Obviously bigger chains won't be paying anywhere near that much.
My point was cash has processing fees, and gave people some context for that.
I think it’s easy to treat a factor of 20x as just another number. But at a certain point quantity is its own quality: the difference between 6% and 0.3% is so large that the second one might as well be zero.
it is also much easier to spend $250.99 on a credit card than to count out 13 sheets of paper and 9 coins. People went from spending the cash in their pocket to cash in their bank account, increasing demand for products.
I hate how so many just don't have the game theory of commerce in the forefront of their minds. It's always "Boy this stuff sure is super convenient," and "nevermind those crusty privacy kooks over there!"
No they didn't. In the olden days, you would get your paycheque, cash the whole thing, and then spend that money until next paycheque. That's no different to having your pay go directly to your account, and then spending directly out of your account by card.