
Visa to Pay Restaurants to Stop Taking Cash - prostoalex
https://www.wsj.com/articles/visa-takes-war-on-cash-to-restaurants-1499853601?mod=e2fb
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phil21
I'm curious how this would work in a sit-down resturant, if the server doesn't
explicitly state this (or require payment) prior to ordering.

Once the food is ordered and consumed, you are then presented with a check.
This is now a debt.

Vendors certainly are not required to accept cash during a transaction, but
you are absolutely required to accept cash if someone is settling a debt.

Might be an interesting case at some point.

This is simply ignoring Visa trying to enact their merchant discount tax on
every transaction within the US economy though. This road (lack of anonymous
and free means of payment) ends in tears.

~~~
justboxing
> This is now a debt.

This exactly. That's why I always pay cash, incl. tips. A charge on a credit
card is essentially a loan from the Credit Card Company at the agreed upon
interest rate. So I'm not comfortable taking out a loan to pay for my food --
granted you don't pay any interest if you pay your bills in full on time, but
still it just feels wrong.

I also pay cash because I want the wait staff to get the entire tip amount I
leave -- usually generous around 25% to 30% minimum. Because I was told by
several waiters (mostly at Indian / Pakistani restaurants here in San
Francisco) that if the tip is left on the card, that they never see it ever *
.

[ * A waiter friend at Dosa on Fillmore told me this is illegal and that I
should report it. Who do I report it to? And will they really take action? In
a couple of Indian restaurants in downtown, the wait staff doesn't get the
cash tip either. 1 waiter friend discouraged me from leaving any tip because
they don't get a single penny. I tried to insert some cash in his pocket and
he got scared. I think the owners forbid them from taking any cash from
customers even if it's tip ]

~~~
samsonradu
There is also the option of having a Visa Debit Card and just pay from your
own deposit account. Is that uncommon in the US?

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URSpider94
It's not that common in the US, because most financial advisors strongly
recommend against it. If someone steals your debit card, they can clean out
your bank account. You will probably get the money back, but you will be broke
in the mean time. If you pay with a credit card and it gets stolen, the debt
is frozen while they clean up the mess.

This is because: a. Almost all US merchants take all VISA or MC branded cards,
while in Europe many vendors will only take debit cards because of lower fees.

b. The USA doesn't have chip-and-PIN, so it's laughably easy to use a stolen
bank card. At least now with EMV and signature, someone has to actually go
through the trouble of stealing your card instead of just cloning it. But
there are still a ton of merchants that are just using mag swipe ...

~~~
blacksmith_tb
I would think many, possibly most urban dwellers in the US are using debit
cards to pay for food, coffees, etc. And chip-and-pin rollout has been going
on for the last two years, most US cardholders now have chipped cards, but
maybe half of merchants have updated their POSes to support dipping instead of
swiping.

~~~
URSpider94
That's chip and signature, not chip and PIN. If you get physical possession of
someone's card, you can scribble whatever you want on the receipt and you are
good to go.

Europe uses chip and PIN, where you have to enter a numeric code at the time
of each transaction that is used to unlock the card. So, you need PIN and
card, the traditional what you have / what you know.

A lot of European banks even issue EMV readers that connect to your PC for
online shopping and banking.

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grandalf
I dealt with this issue as a young boy when trying to pay for some candy at
the local bodega with a large sack of pennies. The clerk simply refused my
business.

I was outraged and asked some lawyers in my family to look into it. Turns out
the business had no obligation to accept the transaction. "Legal Tender" means
that the currency may be legally used as currency, not that it must be
accepted when offered/tendered.

~~~
dragonwriter
There is a difference between accepting a purchase transaction offered and
accepting payment for a debt which has been occurred. The former is a matter
of whether a contract is formed at immediately fulfilled and the latter of
whether an existing contract is violated in a manner that the State will
concern itself with.

Restaurants sometimes operate in the former mode (fast-food and fast-casual)
and sometimes in the latter (full table service).

~~~
grandalf
I've never thought of it that way before in terms of a contract. Very
interesting.

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gregw134
Let's hope visa doesn't convince society that getting rid of cash is the
future. Not only would that be a terrible blow to privacy, it would entrench
the need to pay Visa or another credit card company 2% of every transaction.

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Spivak
Nah, let Visa destroy themselves with terrible business decisions. If they
successfully eliminate cash then the logical step is to create a nationalized
payment processor.

~~~
dragonwriter
Exactly; when banknotes displace coin as the main payment mechanism, it wasn't
long till government extended their monopoly to banknotes.

So, yeah, I can see VISA inadvertently hastening the day when everyone pays
with their Federal Reserve Card.

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justboxing
This won't fly. Lot of mom'n'pops restaurants prefer cash so they can under-
report their income and save on tax. In fact, quite a few restaurants that
I've been to in San Francisco take only cash.

Ex: Udipi on Valencia near Dosa has a big board at door and at counter that
says in caps "CASH ONLY"

~~~
dragonwriter
> Lot of mom'n'pops restaurants prefer cash so they can under-report their
> income and save on tax.

Or just avoid paying the private tax on card processing.

~~~
sofaofthedamned
Plenty of chinese takeaways in the UK that only accept cash. The one near me
doesn't put it in the till, it's taken to the back, and asking for a receipt
infuriates them. There's plenty of reasons to take cash only over and above CC
charges.

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Alex3917
Wouldn't this have the effect of preventing many minorities from dining at
certain restaurants? E.g.:

[http://www.creditcards.com/credit-card-news/race-age-
gender-...](http://www.creditcards.com/credit-card-news/race-age-gender-
statistics.php)

~~~
dragonwriter
That's actually a reason some restaurants might sign up for it; it's racial
discrimination they can get away with.

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giggles_giggles
Isn't it illegal for a merchant to refuse US currency in the US?

~~~
Sohcahtoa82
At the point of sale, no. For a debt, yes.

If you go to a store or a fast-food restaurant where you pay before being able
to take the goods, then they can legally refuse to accept cash.

But at a full service restaurant, once your food has been delivered to you and
you have eaten it, your bill to the restaurant is considered a debt. They
legally MUST take cash in this case.

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code_duck
As a retail merchant, I'd never want to intentionally restrict accepted
payment methods. It's bound to lose you some sales, period. I don't think
$10,000 would even be worth it for a food business.

I'm more used to encountering the opposite - establishments that, sometimes
unexpectedly, only accept cash. If an ATM of my bank isn't nearby, usually the
only option is to use a 3rd party ATM, which incurs fees that usually total
10-30%.

The one time I've found t difficult to have only cash and not a credit card is
when driving in remote areas at night. You may encounter gas stations that are
closed, but have pumps on for card transactions, but no way to pay with cash.

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_0ffh
I guess this move would be outright illegal in at least some countries. Cash
is legal tender, nearly everywhere. In some countries that means if you're
selling something to someone in person, you have to accept it as a payment
method.

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martinald
This is becoming increasingly common in the UK. A lot of popup stores only
take card (contactless).

I very rarely see people using cash these days - so it's a lot of hassle to
collect and process cash for a small % of customers that do use it.

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EGreg
Bristol Pounds!

~~~
sofaofthedamned
Haha. I live near there in Cheltenham and have read quite a bit about the BP.
Do people actually use it, what's the acceptance rate, and is it a good thing?

~~~
EGreg
Well from what I heard, it helps keep money circulating within the economy.
When you pay someone in BP you are in a sense investing in Bristol's continued
vibrancy.

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spiralpolitik
Adding a cash handling charge to any cash users would remove the incentive to
use cash. In Europe and Canada chip and pin reduced the use of cash
significantly. Contactless and mobile payment options like Apple Pay is the
next nail in the coffin.

Merchant's like it (not have to transfer large sums of cash to the back,
significantly reduced risk of fraud), Government's like it (easier to ensure
that the correct tax is being paid on transactions) and Consumers like it
(don't have to carry cash).

The US is significantly behind in this area which is why credit cards getting
cloned and used at physical stores is still an issue.

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seiferteric
Aren't restaurants already paying visa by way of transaction fees? Unless the
amount visa is giving back is > the amount in transaction fees, what is the
incentive?

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URSpider94
Cash has costs too. You have to track it, it gets stolen, you have to write
out deposit slips and drive it to the bank every night. Banks also charge for
treasury services, I.e. Processing your cash deposits and keeping you stocked
with coins and small bills.

I've never seen a full accounting, but I wouldn't be surprised if a fully
cash-free business actually had better overall costs, even with the card fee
taken into account.

~~~
jaclaz
Ler's make a practical example. We are talking here of (smallish) restaurants.

You get 4,000 dollars in cash, after having prepared and sold in your
restaurant 100 meals at 40 US$ each on average.

Visa (or other card processor+ all the fees) will get (example taken from
here): [https://www.paypal.com/us/webapps/mpp/brc/demystifying-
credi...](https://www.paypal.com/us/webapps/mpp/brc/demystifying-credit-card-
processor-fees)

3%+0.25 US$/transaction.

That is 0.03 _4000+0.25_ 100=120+25=145 dollars

If you have cash and while driving home you deposit the money at the bank you
have 4,000 US$, if you go all Visa you have 3,855 dollars.

You get 155 dollars for spending 10 minutes more on the way home.

Even if you manage to get half of that rate, you get 75 dollars for 10
minutes.

Before, you probably worked (once detracted costs) for 10% net of the 4,000
dollars i.e. 400 dollars for 8 to 10 hours of (hard) work or 40-50 dollars per
hour (and the average small restaurant cook/owner rarely can make that much).

~~~
prostoalex
> If you have cash and while driving home you deposit the money at the bank
> you have 4,000 US$

This is an ideal world calculation that also assumes the owner working in and
out every day, no hired managers, no shift workers, no sick or vacation time
for the owner.

How are you making sure you have enough coins and dollar bills to cover
change? How is the cost calculation impacted if a rogue employee steals, a
robber demands all cash, or if sketchy customer passes a counterfeit bill?

~~~
jaclaz
>This is an ideal world calculation that also assumes the owner working in and
out every day, no hired managers, no shift workers, no sick or vacation time
for the owner. The ideal part is only in the "average" income of 4,000 US$
each day, the model is that of a typical small restaurant.

>How are you making sure you have enough coins and dollar bills to cover
change? Exactly how it has been done, for the past roguhly 5,000 years money
has been in use.

>How is the cost calculation impacted if a rogue employee steals, a robber
demands all cash, or if sketchy customer passes a counterfeit bill? They are
called enterprise risks, they date back to before the money was even invented.
You fire the rogue employer, you have a robbery - maybe - once in 30 or 40
years of activity, you get one, maybe two counterfeit 50 dollar bills a year.

What I wanted to show is only that the 2-3% a credit card transaction costs
easily represents in small activities 20% of the net (before taxes) income the
activity produces for the owner/worker.

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boomboomsubban
From what I can tell, Visa is offering an essay contest food establishments
can enter on why their store would benefit from going cashless. Then they
"pledge" to go cashless and get the money. Hard to say for sure when the site
for it says "details coming" and every article is using the same press
release.

So, an ad campaign saying "credit cards are better than cash."

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TearsInTheRain
Ugh the libertarian in me just died a little inside.

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rdtsc
So that shady servers can take away your card, copy the numbers including the
3 digit extra "security" code and then use it to buy things online with it.

At least if restaurants had those portable scanner machine like they do in
other countries, but they don't here in US usually.

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oval-atom
VISA would have to make it worth while to compensate for unreported cash
sales.

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heimatau
I don't like this idea one bit. We have a digital cash solution (crypto-
currency) but there are too many hurdles to implement it (USA probably doesn't
want to give up their de-facto status as the world's reserve currency
and...it's ability to change it's value with the flip of a switch [i.e. Fed's
recent QE programs]).

I'm not sure how society will grapple with this (cashless society) but I hope
we simplify crypto to make it as simple as cash.

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prostoalex
What's the cost of a single BTC transaction in today's dollars?

~~~
heimatau
Too much, imho.

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snakeanus
Some people just hate privacy and not depending on 3rd party companies, huh?

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ryandrake
From the small snippet of the article I can actually read without the paywall,
it looks like Visa is not offering to pay restaurants--it's offering to
upgrade their payment systems for them (which have some dollar value).

I'd love to know: 1. Why on Earth a restaurant would willingly turn down a
customer who has cash in hand and is willing to pay, and 2. How on Earth Visa
is going to verify that the restaurant doesn't take cash.

For 1. many restaurants I've been to love cash and give you the stink eye when
you pull out a card (because fees). The incentives seem to not make sense. For
2. is Visa actually going to send spies into restaurants and have them offer
cash and see if the owner bites? I don't know this just all seems like crazy-
land.

~~~
prostoalex
> 1\. Why on Earth a restaurant would willingly turn down a customer who has
> cash in hand and is willing to pay

There's a risk of employees stealing cash, a risk of being robbed, the cost to
store and bank the cash (purchasing the safe, depositing the cash in the bank
account, making sure the restaurant has the right coins and bills to make
change), the risk of accepting counterfeited cash. Those risks and costs
widely among the restaurants, of course.

From the article: "Michael Ryan, the co-owner and co-founder, said he never
ordered cash drawers or a safe. By not having to count cash, visit a bank or
order change, Mr. Ryan estimates, the manager on duty saves about 23 hours a
week."

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jaclaz
>From the article: "Michael Ryan, the co-owner and co-founder, said he never
ordered cash drawers or a safe. By not having to count cash, visit a bank or
order change, Mr. Ryan estimates, the manager on duty saves about 23 hours a
week."

Still from the article: "Some merchants have already stopped taking cash. New
York City-based 2nd City, a Filipino taqueria, hasn’t accepted cash since it
opened its doors in 2016."

The owner and co-founder has seemingly more than a whopping whole year of
experience in the field.

How much does he pay in transaction fees per week in order to save the
(calculated/estimated) 23 hours of work?

As a testimonial, I would like to have someone who managed a restaurant for
10-20 years and then in 2016 decided to go "no cash".

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circadiam
Paywall removed [https://outline.com/6gJU6n](https://outline.com/6gJU6n)

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DoctorBit
Please stop linking to pay walled articles.

