> On average, each cash-using household pays $149 to card-using households and each card-using household receives $1,133 from cash users every year. Because credit card spending and rewards are positively correlated with household income, the payment instrument transfer also induces a regressive transfer from low-income to high-income households in general.

[1] https://www.bostonfed.org/publications/public-policy-discuss...

I'd be surprised if the cost adds up to 2% of the cost of all goods, but it's still there.

> And if you're someone without access to great cards, then you still pay the same price in stores but you get no cash back, high APR, low credit limits, and crazy late fees.

That's an entirely different discussion, and completely misses out on debit cards (no APR, typically includes some form of rewards), when the bad cards should be used to build a good credit history, not as a daily driver.

Fraud. While you may have an individual pay for $10-$500 in goods with counterfeit currency(rare), you'll definitely encounter $10-$5000 purchases with stolen card numbers. This means you not only lose the sale income, but you get charged a fee because there was a filing against you (charge-back).

Depending on your line of business, this can be as high as %0.66.

https://www.ns8.com/en/solutions/case-studies/industry-repor...

Not that much. Which is why all-cash businesses invariantly offer stuff cheaper.

I do think there's a right to privacy, and I do hope it's difficult to gather political will for taking away rights.

I mean, it's much easier for a tax inspector to simply go to the store, when it's busy, and wait for the slip up (when the clerk accepts money but does not use the register).

But in my opinion this was rare even before. And in really small operations, they don't have a register anyway. (Or take the gamble and don't use it.)

There's no reason why it shouldn't.

> I mean, it's much easier for a tax inspector to simply go to the store, when it's busy, and wait for the slip up (when the clerk accepts money but does not use the register).

Why would a lowly clerk break the law for his multi-millionaire employer? And why would a customer do business with a company that didn't provide receipts?

That's not how it works. The fraud happens further up the food chain. However, if the taxman knows exactly how much money came in from customers by monitoring the cash register, he knows how much to expect in taxes from that business.

> But in my opinion this was rare even before.

Perhaps in your country. A few years ago whistleblower protections and a reward system were enacted here. So anyone who dobs in a company that's been evading taxes gets a percentage (IIRC 10%) of the unpaid taxes subsequently recovered. Since then there's been a string of highly-publicised cases of the taxman coming down on tax evaders. They recover taxes and squeeze more out of them in penalties and fines, and the whistleblower (probably some low-paid bean counter in the company) get's a huge lump of cash for his troubles.

Anyway, as a result of these events, now the taxman monitors the tax registers of large companies that accept cash. Certain categories of commerce and small businesses are exempt.

On the topic of criminal behavior, it's also worth noting that doing business cash-only makes you a more tempting target for robbery; if you did almost all of your transactions via credit or debit cards, you'd have very little in the till for someone to steal.

Since old habits die hard, these small businesses used to under report income despite the trail of evidence left by credit card processors. So, IRS came in and imposed a rule on these processors: send us a copy of payments paid to Mr Small Business X--and that copy is called 1099-K. This is like W2, 1099-MISC, 1099-INT.

Basically, the tax man wants records from the third parties, since self-reported ones are mostly under reported.

Some processors charge merchants for this reporting services to the IRS which further drives up Merchant Services cost.

I know people who work in hospitality. Employee theft is endemic. Via both cash and card.

Back in the 90's, my parents were making a purchase with a card, and the cashier told them that the machine was down, so he had to take a copy of the card to run it later. A quick swipe of their card throughv something that impressed it on carbon paper and off they went.

Not long after, police showed up at their door informing them that said cashier's apartment had been raided and a whole stack of copies of cards had been found; for every one he made for the store he kept one for himself.

Mind you, this was before ubiquitous cell phones, internet access, and way before chips in cards for encryption. Whether a similar tactic could work now I have no idea.

Customer A has an open tab, customer B pays with cash, put B's drink on A's tab and pocket the cash.

Only if you don't fall behind on payments and start paying the card their exorbitant interest, as most people end up doing.

(I always have money in other accounts for emergencies, but this keeps day-to-day spending in check.)

https://www.cardpaymentoptions.com/fee-sweep/debit-fees-expl...

These numbers align with my experience when working for a processor in the US.

The debit cards have different regulations which as far as I understand, don't exist (ie, it's like the old credit card contracts where they didn't allow you to charge a separate price for cash transactions). This is only my assumption.

There was no discussion on what regulations we had to follow for our merchants when it came to bank network transactions(the deals are brokered on a per bank basis, you can see which networks your card supports by looking at the back of the card for instance). Because of the segregated nature of the debit networks, they have less clout than visa or mastercard.

The consumer-friendly thing to do is to charge proper rates for things with higher processing fees, like credit cards, and not subsidize them by punishing everyone else.

I'm not sure I'm following. The reason you'd do it is because you want to pay for a small purchase with your debit card. Like if you run into a gas station and buy a soda and a bag of chips but don't have cash on you.

>That regulation is in place purely because of political bribery by the credit card industry.

It's in place because it was determined that people shouldn't be subjected to a minimum purchase amount for paying with their own money through their debit card. (As opposed to paying with borrowed money through a credit card.)

>The consumer-friendly thing to do is to charge proper rates for things with higher processing fees, like credit cards, and not subsidize them by punishing everyone else.

Again, I'm not following. We're talking about minimum purchase amounts. What's punishing someone else?

I've seen it done at gas stations (of all things), but never anywhere else.

And you don’t want to. Adding another set of prices and complication isn’t worth it to the business owner.

My 2c

https://www.cardfellow.com/blog/cash-discount-eliminate-proc...

Interchange fees to the issuing banks start around 1.5% while Visa's volume assessment is only 0.13%.

But they get a tiny slice on an ungodly amount of transactions, so it adds up.

And to boot, you pay a yearly fee for those non-interest-bearing funds to sit around!

$0.25 and 2% is much less than the fees for Bitcoin, even cheaper than the ethereum gas.

If you only want to compare to cash, the cost of one bad employee greatly exceeds 2%, then employees needing to transfer money to and from a safe, and the guards and trucks required to transport that money.

At best it's a 3 party system between the Gateway (Auth), Acquirer (person actually paying the merchant), and the card brand. I don't think it's uncommon for their to be middle-men between the acquirer and merchant.

So something is only taxation if the money is wasted in your view?

Sometimes I wonder if half the problems we have in this century stem from our eagerness to slap labels onto things instead of just letting them be themselves.