
Despite many usurpers, cash is still king - gasull
http://www.economist.com/news/finance-and-economics/21669964-despite-many-usurpers-cash-still-king-money-everything?fsrc=scn/tw/te/pe/ed/moneyforeverything
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ThePhysicist
In the age of corporate and government surveillance, cash has many advantages:

* It can be accepted without the help of technology

* It can be stowed away in a secure place (in contrast to money on bank accounts, which can "evaporate" in case of a bank failure)

* It is very hard to trace and provides a good level of anonymity

* It can be sent through the mail or transported physically form one place to another

And on the less serious side:

* It can be piled up into a giant mountain and burned

* It can be rolled into nice wads and used as props in ganster movies (ever seen a gangster wave around his black Amex in a film?)

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organsnyder
You're missing the most significant advantage to most merchants (in the US, at
least): It can be exchanged without incurring any transaction fees. While
large businesses see cash management as a not-insignificant expense, small
businesses—especially sole proprietors—often don't see the additional effort
and risk of handling cash as worse than the 3% they'd lose to transaction
fees.

~~~
m3rc
Yeah I used to never carry cash, until I started eating at a couple local
restaurants that only accept cash

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Spooky23
My wife and I moved to cash for just about all in person transactions about a
year ago. We use a credit card for gas and online shopping. It's amazingly
convenient.

Right now, I'm on vacation. You know what's great? When I return I'll have
zero bills coming in.

There's no advantage to having cash in the bank. It's pretty easy to secure
cash, and even my "high yield" savings account yields 0.75%. I've saved 2x
that by not spending as much.

~~~
ComputerGuru
If you used a debit card, you wouldn't have any bills coming in either,
though...

~~~
Spooky23
I'm not comfortable with a debit card. With a credit card, if the account is
compromised, AMEX has a problem. If my debit card is compromised, my
mortgage/utilities/taxes/etc will bounce until I discover and report the
fraud.

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douche
Maybe they have gotten better since I stopped using debit cards, but I'd
always end up with multiple charges, usually a pre-authorization charge and
then the real charge. As a broke college-kid who never had much money in the
bank, the debit card putting a $100 charge in on my checking account when I
bought $40 of gas, and not cleared up for several days, fucked me over a few
times. Then you pay a $25 over-draft fee to the bank, and whatever charge the
entity you were trying to pay charges for late or bounced checks.

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coldpie
Cash has no overhead, no transaction fees. I use cash for local businesses
because that 3-5% matters. I don't think Visa and Co need that money as much
as my local businesses do. When buying from huge businesses, I'll use plastic
because it's more convenient and they can take the hit.

Cash is also largely untraceable and does not leave transaction records with
my name on it. Sometimes I buy things that I don't want people to know that
I've bought.

These, especially the latter, are two things I'm not really willing to
compromise on. Some people dream of a cashless economy, but I would not like
it.

~~~
tjlivesey
Cash can actually be fairly expensive for businesses to handle. It needs to be
insured, transported and often banks will charge fees for depositing cash into
a business bank account. Depending on the specific circumstances, it can
actually be as, if not more, expensive to process than cards.

~~~
coldpie
And yet, my local liquor store gives a 1% discount if you use cash (no, this
doesn't violate the CC merchant agreement), a local diner doesn't even accept
credit/debit cards, and the owner of another restaurant immediately went for
cash when I asked if they cared. I don't buy it.

~~~
tjlivesey
I'd venture a guess that that the liquor store and the restaurant do this for
"accounting purposes" and the diner is living in the 80s. As I say though, I'm
sure it varies based on specific situations, my experience is based on working
with small business owners based in the UK.

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bluedino
I live in a lower-income area (rustbelt USA) with a lot of small shops, and
very few of them take a debit card. Those that do have a small ATM on-site.

Buying gasoline? 4 cents discount for paying cash. Chinese takeout? Sorry no
check no credit card. Party store? Better be paying in cash. Heck the shady
automotive shop I had my truck worked on last month only took cash. Crazy.

~~~
coldpie
Not so crazy when you factor in the ~3% transaction fee that the merchant has
to pay to the payment processor. That's $3 out of every $100 out of pocket.
When you're a small company on the edge of profitability, that 3% matters a
whole lot.

~~~
dogma1138
3% for a debit transaction? that's insane, in the UK it's 0.2%+1p per
transaction capped at 50p....

~~~
toomuchtodo
We're working on it in the states.

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kcorbitt
I can't find any sources on the internet in English to corroborate this, but a
Swedish friend told me a few years ago that they passed a law requiring all
merchants to accept debit/credit cards for any transaction. Anecdotally, when
I visited last month I found that to be the case everywhere I went, even in
smaller shops and with small purchases. If that _is_ the case, it could
explain in part why their trend line for cash reserves looks so different than
everyone else's on the graph.

Here's a bit more information on payment types in Sweden:
[http://www.bloomberg.com/news/articles/2013-10-27/stockholm-...](http://www.bloomberg.com/news/articles/2013-10-27/stockholm-
s-homeless-accept-cards-as-cash-no-longer-king)

~~~
GFischer
I've seen a lot of proposals from governments wanting to eliminate cash (to
enable negative interest rates which I think are an awful idea, to negate tax
evasion, to avoid money laundering, etc.).

Either they don't realize that something else (or several somethings) would
inmediately take over as cash equivalents, or they don't care as long as it's
illegal.

An interesting article talked about the use of Tide detergent as currency:

[http://nymag.com/news/features/tide-detergent-
drugs-2013-1/](http://nymag.com/news/features/tide-detergent-drugs-2013-1/)

~~~
spacecowboy_lon
I think Sweden and Norway have suggested that to stimulate the economy they
implement negative interest rates ie take money from savers

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zo1
That already happens with inflation. Additionally, "stimulating the economy"
is one of the main reason for it that people will accept.

So, putting a negative interest rate would simply add to the rate of
inflation.

~~~
spacecowboy_lon
Yes but having it spelled out on your bank statement as a direct charge is
quite diferent

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gorena
Using cash is throwing away money. I get up to 6% back on some transactions.
Not to mention the ability to chargeback if necessary.

~~~
JonFish85
I guess if you look at it at a glance, it's throwing away "up to 6%". But at
the end of the day, you're paying for it somehow, whether it's via higher
prices charged by the merchant to cover their swipe/interchange fees, by
exposing your payment history, or by late fees & interest if you don't pay it
off immediately.

~~~
eloff
Yes, but that's independent of your actions. Anywhere credit cards are
accepted, you're paying a hidden credit card tax on anything you buy, because
merchants will raise prices to cover the fees. But if you don't use your card,
you're paying the tax still, but getting nothing back.

~~~
csense
You have to have a large number of individuals cooperate (agree not to use
credit cards) in order to gain a group benefit (lower prices because the
merchant isn't paying transaction fees). Any one person can defect (use a
credit card) to get their cash back, for personal benefit to the detriment of
the group.

If I was a merchant, I'd solve the problem by passing on the credit card fee
to consumers who use the card (or equivalently, offer cash discount, if my
marketing department tells me consumers hate surcharges but love bargains).

