
VISA offers restaurants $10,000 to stop accepting cash - lando2319
http://www.slate.com/blogs/moneybox/2017/07/13/visa_challenge_offers_small_businesses_10_000_to_eliminate_cash_rely_on.html
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sandGorgon
For those who are interested in these kind of things, you should check out UPI
API built by the government of India. With a singular goal - to kill Visa and
MasterCard and make digital payments free in India.

The ultimate goal is to tax on consumption - tax payer base in the world's
fastest growing economy is abysmally small. So the economists kind of gave up
there and leapfrogged into building a digital economy : make all transactions
free and charge GST on consumption.

The API is brilliant - recurring charges, refunds, text message payments, etc
- basically all the venture funded startups in the US are all free in India.

~~~
vit05
That looks really interesting. But, the government will hold a lot of
information about their citizen, how they will use that? I do not know if
something like this could be replicated in every country.

~~~
sanxiyn
The government already holds a lot of information about their citizen. I think
this worry is particularly American and not shared by most people.

You ask, how they will use that? They don't much use what they already have,
so the best guess is that there will be no use. Which is pity, since it can be
used for a lot of good. But I guess you would say it is lucky, since it can be
used for a lot of bad.

~~~
mkagenius
> But I guess you would say it is lucky, since it can be used for a lot of
> bad.

"whatever can be used for bad will be used for bad" \- murphy's law

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marak830
For those interested from an executive chef. 10k? That's a shitty deal for the
restaurant.

You have two things off the top of my head that are working against that: a)
cash sales are easy. Really, if it's a small purchase they will prefer to buy
I cash.

B)if it's a large purchase that the customer wants to pay in cash, (and
assuming the restaurant does a lot of large tables/bookings), they can delete
it from the system and avoid tax.

B) sounds shit I know, but it happens. I have seen it on multiple continents,
over my professional life (17 years atm).

So what is 10k with a. 2-5% charge? A drop in the water.

Restaurants run on(best case) 25% costing. To put this into context the way we
are taught is:

33% cost worst case. 33 food, 33 labour and overhead, 33 profit. Never works
out like that (in a bad way), but that's your base.

Execitutuce chef's aim doe 25% to cover the losses in the other
sectors(overstaff etc).

So a standard non-chain restaurant that charges $15 for a meal is looking at
$5 "profit" worst case per meal.

If they are running at peak at all times with no downtime or overbook or
refund due to screw up.

Which is great. Would be lovely. Never happens that way though. Not every day
is busy, and people don't book(allowing restaurants to staff up).

Skipping all the intermediate parts, what little profit they make a cc takes a
percentile off the top.

Doesn't seem like much to most people but for an indiatey that knife edge,
those cc charges can add up.

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raverbashing
> Big interchange fees enable credit card companies to offer sweet rewards to
> big-spending consumers and get paid by the banks that issue the cards—at the
> expense of small businesses and customers.

> Swipe fees at a cafe become part of the price of a cup of coffee,
> principally to the detriment of cash customers and “vanilla” cardholders who
> aren’t earning airline miles when they get their caffeine fix.

And that's why I avoid card transactions at "Mom & Pop" stores

Yes, It's good to remember those "cashbacks" and miles are not free, they came
from somewhere

~~~
viraptor
I'm assuming that all the stores for which accepting card payment makes a
difference already adjusted their prices (in one way or another) to cover it.
By using cash you're just paying more to offset the card fees. A lot of small
places I know tell you to pay the card fee extra instead - and that's a pretty
cool solution.

The card fees are not the main source of income as far as I understand: it's
the interest and other fees that really bring in the big money.

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blackguardx
$10,000 is only about one year of credit card transaction fees at $500,000 in
revenue per year.

There is a cash only brewpub chain in Colorado (Mountain Sun) that easily
pulls in millions per year. Everyone complains about it being cash only, but
the places are so packed that it is a no brainer for the owner. 2% is big
bite, especially in the restaurant business.

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mrep
$10,000 / 30 cent transaction fee comes out to a net positive for the credit
card companies after 33,334 transactions (not included the average 3%
additional fee).

If we assume a modest 100 credit card transactions per day for high
transaction industries like restaurants and food trucks, the 30 cent fee will
return the $10,000 of revenue in 333 days not including the percentage fee.

There is a reason restaurants/food trucks/gas stations... charge an extra fee
for using credit cards on transactions below a certain price. It's cause
credit card companies charge an arm and a leg for each transaction.

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petters
But isn't cash legal tender in the US? If you have just eaten at restaurant,
you have a debt to it. I thought they had to accept cash then?

~~~
enkid
Swipe before you buy or they refuse service.

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posguy
A cashless society in the United States would be quite a surprise. With the
pain that prepaid cards are to use and reload for those that aren't well
heeled, combined with the pure, unbridled hatred that businesses have for the
merchant services industry in general, it will be a long time before cash is
not encouraged as a form of payment at most businesses.

~~~
kayoone
Meanwhile in Germany I feel we are a decade behind the US when it comes to
accepting electronic payments. In Berlin there are so many Bars/restaurants
that are "cash only" when the next ATM (that is a partner of your bank,
otherwise you pay a 5 EUR fee to withdraw) is blocks away... It's beyond
annoying

~~~
posguy
Cash in most cases is better for the business, hence why its so popular.

~~~
thg
Cash is the only unrestricted currency in Germany. Law demands that they have
to accept it.

~~~
germanier
No, law does not demand that. You have to accept it to settle existing debt
but that's it. For new customers you can demand any payment method you want.
If they don't like it they are free to not form a contract. A cashless
restaurant would be legal. They are just rare because of customer preference.
But just look at online shops: they generally don't allow you to pay cash.

~~~
thg
[https://www.gesetze-im-internet.de/bbankg/__14.html](https://www.gesetze-im-
internet.de/bbankg/__14.html)

" _Auf Euro lautende Banknoten sind das einzige unbeschränkte gesetzliche
Zahlungsmittel._ "

Online shops allow you to pay cash through payment on delivery (Nachnahme).

~~~
germanier
As I said, this law does not mean that you have to accept cash for every
transaction. It is often repeated but that does not make it true. Requiring a
specific form of payment is well within the freedom of contract.

And Nachname is not offered by every shop, probably not even the majority. If
it's offered the usually for a steep surcharge. And while we are at it: Try
paying your car tax in cash to the government and you will find it to be
absolutely impossible.

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Frondo
Man, when I read about how the swipe fees for credit cards remain so high
(3%!!), even decades after the infrastructure's been built out and can chug
along in maintenance mode, I just think.. where's the market solution to this?
Where's the upstart processor that charges 1%, still make bank because it's
just 1s and 0s now, and exert real competitive pressure on Visa and MC?

~~~
omarchowdhury
Charging 1% for existing payment network card transactions would put them out
of business real fast when the wholesale cost to processors is more than 1%.

~~~
myroon5
Do you have a source for this?

~~~
omarchowdhury
[https://usa.visa.com/content/dam/VCOM/download/merchants/vis...](https://usa.visa.com/content/dam/VCOM/download/merchants/visa-
usa-interchange-reimbursement-fees.pdf)

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excalibur
This. Note. Is. Legal. Tender. For. All. Debts. Public. And. Private. Which of
these words does Visa not understand?

~~~
Sleeep
It's actually you who doesn't understand.

There's already thousands of businesses where your dollar bills are unwelcome
(try sending an envelope full of $100s to Amazon for your next order if you
don't believe me).

[https://www.treasury.gov/resource-
center/faqs/Currency/Pages...](https://www.treasury.gov/resource-
center/faqs/Currency/Pages/legal-tender.aspx)

>The pertinent portion of law that applies to your question is the Coinage Act
of 1965, specifically Section 31 U.S.C. 5103, entitled "Legal tender," which
states: "United States coins and currency (including Federal reserve notes and
circulating notes of Federal reserve banks and national banks) are legal
tender for all debts, public charges, taxes, and dues."

>This statute means that all United States money as identified above are a
valid and legal offer of payment for debts when tendered to a creditor. There
is, however, no Federal statute mandating that a private business, a person or
an organization must accept currency or coins as for payment for goods and/or
services. Private businesses are free to develop their own policies on whether
or not to accept cash unless there is a State law which says otherwise. For
example, a bus line may prohibit payment of fares in pennies or dollar bills.
In addition, movie theaters, convenience stores and gas stations may refuse to
accept large denomination currency (usually notes above $20) as a matter of
policy.

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kijin
Is this even legal? Cash is legal tender for all debts, public and private.

Whenever I order food and services at a real restaurant (not a fast-food joint
where I must pay up front), I incur a debt with the expectation that I will
settle it as I leave. Can the restaurant legally refuse to accept cash as
settlement for my debt, as long as I'm not using cash in a blatantly
unreasonable way such as paying $250 in dollar bills?

~~~
vmarsy
It seems that it would not be legal, unless announced upfront :
[http://www.news-
leader.com/story/news/watchdog/2014/12/24/as...](http://www.news-
leader.com/story/news/watchdog/2014/12/24/ask-watchdog-can-business-refuse-
cash/20883777/)

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kartan
I live in Sweden, and this is very common. Handling cash is inefficient for
everyone involved.

The big downside is that people that didn't adapted , usually older citizens,
find themselves in a worse situation. This is still more obvious in situations
like the buses where you can't even buy a ticket as you need to buy it in
advance. If you don't have one, you need to buy the ticket on your mobile
device, and this is not easy for everyone in society.

So it is mostly a good thing, with more efficient transactions, but it is not
heaven.

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Animats
This will slow things down at some places such as 7-11 and Starbucks. It bugs
me when I'm in line behind someone using a credit card and an affinity card.
There's all this waiting, and pointing and clicking, and signing. Plus the
additional delays caused by cloud-hosted point of sale systems. A cash sale
takes about ten seconds.

~~~
awjr
These days in the UK you simply touch your card to the reader, no PIN, no
signature. It is definitely quicker than cash. Only works for under £30, above
that value you have to put your PIN in.

~~~
viraptor
> Only works for under £30

This is set by the bank. In most cases you can adjust the limit. I remember
Lloyds allowed you to do that.

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snakeanus
I would prefer it if restaurants started accepting cryptocurrencies. I don't
really enjoy the fact that paying with a credit card lets both visa and my
bank to know where I eat.

Not to mention that credit cards are a giant pain in general, "this
transaction was declined".

~~~
kartan
> I would prefer it if restaurants started accepting cryptocurrencies.

That's a completely different problem with completely different implications.
Doesn't matter if you pay with cash or credit card, dollars are still dollars
and are regulated by the Federal Reserve.

To change to cryoptocurrencies is to leave the dollar. So it is not about how
you transfer money, but about which currency you work with.

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jaclaz
Similar discussion/topic:
[https://news.ycombinator.com/item?id=14755034](https://news.ycombinator.com/item?id=14755034)

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Jazgot
This is bribe, and should be treated like this.

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lngnmn
Anti-monopoly and human rights guys should perhaps take a look into this.

