Comment by AnthonyMouse
2 years ago
> High volume merchants should be able to find a markup in the fractions of a percent.
And this is why small businesses are more likely to offer cash discounts than larger ones.
2 years ago
> High volume merchants should be able to find a markup in the fractions of a percent.
And this is why small businesses are more likely to offer cash discounts than larger ones.
5 years ago HSBC were charging us, a micro-business (2 employees, not software) about the same for cash handling as we paid for debit card processing.
If small businesses give discounts for cash it's because they're committing tax fraud, I presume.
Cash handling is typically in the neighborhood of 0.2%-0.3%, so you were apparently overpaying:
https://www.nerdwallet.com/article/banking/business-checking...
And that's assuming you're depositing all of your revenue. If your business allows you to pay some of your suppliers in cash, you could have >50% of your revenue in cash and never pay a bank for cash handling because you're immediately spending it on business expenses rather than depositing it.
> If small businesses give discounts for cash it's because they're committing tax fraud, I presume.
I have seen governments charge a convenience fee for credit card processing. Is the government committing tax fraud?
> Cash handling is typically in the neighborhood of 0.2%-0.3%, so you were apparently overpaying […]
This is not universal, and banks in different countries charge different cash collections fees. The cash collection fees are also structured, e.g. whether the daily collection is required, or every other day, or once a week.
It does not end there.
Many banks still require the business to sort collected coins into separate money bags according to the coin denomination, e.g $1 coins go into one bag, $0.50 coins go into their own bag. Coin bags have a weight limit, 2 or 3 kg, which means that the business has to weigh the money bag up before handing it over, or it will not be accepted.
Now that we are done with material things, we also have to consider all things immaterial that the cash handling entails.
Before the money bag is handed over, the collected cash has to be counted and reconciled against the cash register records on premises, otherwise it will create annoying and time consuming to fix discrepancies in the accounting system. If a staff has accidentally mislaid a note or a few coins, amounts won't reconcile and incur a cash collection delay as the armoured truck can't wait for the reconciliation to complete. Which may consequently increase the risk of leaving cash in the shop overnight with all expected consequences of a potential burglary and losing the cash.
That is just some of the peculiarities of how cash is handled, and I am not sure whether cash handling turns out to be cheaper for an average business with a substantial number of cash payments a day.
Electronic payments, on the other hand do not have any of those shortcomings, vastly reduce the margin for human errors, automate the reconciliation and accounting and reduce the risk (i.e. no money is kept in the shop overnight).
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