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?
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.
If you have cash and while driving home you deposit the money at the bank you have 4,000 US$, if you go all Visa you have 3,855 dollars.
You get 155 dollars for spending 10 minutes more on the way home.
Even if you manage to get half of that rate, you get 75 dollars for 10 minutes.
Before, you probably worked (once detracted costs) for 10% net of the 4,000 dollars i.e. 400 dollars for 8 to 10 hours of (hard) work or 40-50 dollars per hour (and the average small restaurant cook/owner rarely can make that much).
> If you have cash and while driving home you deposit the money at the bank you have 4,000 US$
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?
>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.
AFAIK this is a reason supermarkets give cashback, as it reduces their cash processing costs (and isn't charged at the normal rate by the CC providers). Is this true?
Don't know, but I do know a lot of supermarkets used to offer their employees to cash their paychecks in the store - probably for the same reason, to reduce deposits.
Excellent point. And this does seem to be the case:
> 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. Foreign gold or silver coins are not legal tender for debts.
