That security is easy to see. The cyber security and fraud protections on credit card networks are expensive and not visible.

True. But there is no way in hell you can stop people paying with their smartphone or plastic card so those costs are fixed.

An anecdote: during COVID people had to use shopping carts in the supermarket (social distancin). Those trolleys needed a 1 euro coin inserted in them to unlock. Chaos ensued because many customers were not carrying cash- let alone coins.

The cost is not so much about paying armored trucks, but most banks don't want to deal with small businesses that deal with cash.

In the UK the banks are happy to deal with businesses paying cash, but there are fees, and if your holding cash on premises then you’ll need insurance, which means you’ll need a safe…

The reason supermarkets offered cash back was that this allowed them to massively reduce the amount of cash held on site and thus reduce their insurance costs.

Large chains, large businesses have no problems accepting cash, nor do they have problems depositing cash with banks. Even if a mega bank, say, Chase/Bank of America in the states, doesn't want to deal with cash deposits from a large retailer, the latter can indirectly 'own' a credit union or another small bank that accepts cash deposits, as this bank can still follow AML regulations. Big banks consider cash deposits/withdrawals and money order deposits to be a big headache, and also back office costs for enforcing AML can be reduced by not dealing with cash/money orders (in other words, any untraceable monetary instruments).

> The reason supermarkets offered cash back was that this allowed them to massively reduce the amount of cash held on site and thus reduce their insurance costs.

But wouldn’t this increase the amount of cash you need on hand to ensure you can make change and now give cash back?

Nah. Cash back is all comparatively large notes (£5, £10, £20) and it’s mostly smaller stuff you need for making change. It vastly reduced the amount of cash they needed on site, though it didn’t really help with the need for coins to make change with.

I’m not sure they even offer cash back these days, it has been so long since I asked, and the number of cash transactions has dropped massively over the last few years.

I swear money handling cost will be reduced by one simple thing that some countries like Canada and Ireland have done (and can be improved): ditch the smaller coin denominations (and maybe add higher denomination coins like $2 like EU and UK have)

Anything under 10 cents gets rounded down/up accordingly

It doesn't matter. Minting and transporting it, even in your pocket costs more than you'll ever get in dealing a more "precise" denomination

That's an awful idea. Especially the "down/up" part.

Well it's actually 5 cents and it works absolutely fine.

They ditched pennies in Canada and round the cent. Works fine.

This already happens with cents. Your tax frequently comes out to a fraction of a cent, and it gets rounded to the nearest cent.

The US used to have a half-penny coin. It stopped being minted in 1857.

The purchasing power of the half-penny at the time was about as much as a quarter has today.

It wouldn't be crazy to get rid of all coins worth less than 25¢ and round all purchases to the nearest quarter.

Obligatory CGP Grey: https://youtu.be/y5UT04p5f7U

That doesn’t stop theft by employees or robberies.

You don't have to tell me that ;) https://news.ycombinator.com/item?id=9563474

This is so much cheaper per dollar than people think. Certainly cheaper than credit card fees once you're over a certain volume, unless you are in a very high-crime area. Even then, thieves will often steal off the shelves instead of out of the cash register because that's a much smaller crime. Small businesses get the short end of the stick on cash management, again, because they may not be.

Eh, my experience is that dealing with cash is much more expensive than people think (to be fair, most people think it's "free" since there are no direct fees). At some places I've worked in the past, it's been like almost the only responsibility of a manager working full time. Making sure everything is in order, watch over workers, training them on all procedures, going to the bank to buy change, counting tills all the time, etc etc. Sooo many man hours going into this.

So many people overlook the cost of being able to "make change" an arbitrary amount of time with (nearly) arbitrary denominations.

Think about the last time you bought some for $1.27 and paid with a $20 and they took it without blinking.

I live in a developing country where there are still a ton of small mom & pop shops that aren't willing to eat the cost of that externality. So it isn't uncommon to go to one of them and they'll go "sorry, I can't make change for that bill size". Then you suddenly have the hassle of needing to drive to another store or getting change somewhere else or whatever.

In practice you adapt: the ATM only spits out big bills so you make a purchase somewhere to start breaking them up. Go buy a soda at an international chain instead of the local corner store. That kind of thing.

But it is still a cost we all pay, since "making change" isn't free.

I thought this was a story put out by card companies. I hear it (the implication it’s the same or more) a lot but often unsubstantiated

I don't need fleets in my small business so I'm maybe not your target market but for us it's significantly cheaper to deal with cash than cc fees. We spend about 2-3 hours of person time handling cash per week. Compared to the cost of our cc fees I would prefer to be all cash.