I use a credit card for 95%+ of my transactions. At the same time, I'm scared of a cashless future. As the article mentions, cash transactions are one of the last vestiges of privacy that we have. A future where the US looks like China, where all of your transactions are visible, is not something I want to see.
Additionally, cash is an equalizer for the unbanked/underbanked. Financial institutions take advantage of and punish their least profitable customers. Those who can barely afford overdraft fees, monthly checking account fees, etc. are the only ones who are forced to pay them.
Yes, blockchain technologies can solve some of these problems, but there will always be those who are outside of the banking system, lose/don't have a smartphone, etc. Greenbacks are tangible to the person standing in line to cash a paycheck at Western Union - Ethereum isn't.
It's ridiculous on the face of it (especially as they suggest Ethereum), but there are in fact blockchains that preserve the anonymity of the people involved in the transaction. I'm a little sad these distinctions aren't more well-known.
In my country banks can't refuse clients for a standard checking account. Besides how in gods name can someone even function in an advanced economy without a bank account?
People have been paying with plastic since the late 80s. Its free, safe and its easier for the tax man to collect. I used to work night shifts in retail. You don't want to deal with cash.
To echo what others have said, cashless systems -- especially in fast food chains -- are a quick way to discriminate against a whole population of the underbanked. I was in Dos Toros (burrito chain mentioned early in the article) about a month ago, and the woman in line ahead of me didn't have a card. She got so embarrassed at the register despite having ample cash to pay for her meal. I paid for her with my card, she paid me in cash, and all was fine, but no one walked away from that experience feeling good about it. It was such a unnecessary emotional stress on the woman. I feel weird returning to Dos Toros knowing this policy is creating these experiences for customers.
I feel weird spending at places like this at all. Not just because of what it does to other people, but also how it modifies my own behavior. What if it had been me? I can't leave the house with just a twenty in my pocket? That's not good enough?
I have to stop, wait, find my wallet, make sure it has a card with a balance on it, know what that balance is, make sure the card isn't damaged (demagnetized, scuffed chip contacts, curled up in the heat of the clothes drier), and if I don't have this singleton plastic token that I cannot easily replace or trade, I can't go to certain places?
Just because your cash register is an iPad, doesn't mean you can't handle real money too. What's really going on? Why would a restaurant prefer anything over cash? In my experience, food service normally loves cash, because they can report it differently. Tips are quasi-off-the-books, within a certain margin. So there must be some kind of motive to hook into a payment provider.
If farmers markets, bake sales and lemonade stands can handle a simple cash box, any restaurant certainly can.
But really, we know Dos Toros is a franchise with more than just an iPad for a register, so for sure they're doing something with customer data behind the scenes. Although how much is that worth to a burrito joint? Perhaps it's free payment processing in exchange for exclusive cashless operations plus a data agreement.
> Why would a restaurant prefer anything over cash?
Because there is a dramatic reduction in costs from going completely cashless. You don't have to pay for security for cash-on-hand. You don't have to pay for an armored car to transport cash to a bank. If you don't want to pay for an armored car, you don't have to pay (and trust) an employee to do it for you, else paying with your time by doing it yourself. You can serve more customers in less time because you no longer have to make change with each transaction, and you no longer have the cognitive load of ensuring that the bank gives you enough change and in the correct amount on each bank trip so that you can make change for your customers. Because you don't need to trust your employees with cash anymore, you have reduced the risk associated with the hiring of an individual employee, which makes it easier to hire ex-convicts - and in many areas, that (unfortunately) makes it dramatically easier to hire people, period.
Sure, these costs are balanced out by the formal costs associated with card processing fees and no longer being able to partially hide income from the taxman. But the flip side is the improvement in trust between management and labor, which overall ought to make cashless businesses better workplaces.
Every now and then this will backfire on the business. For instance, what happens if the system goes down?
I was recently in a cashless place that suddenly lost internet access as the cashier(?) was ringing up my food. With no way to charge me I was given my lunch for free and everyone in the line behind me was forced to wait.
The mastercard network was down recently (maestro cards also operate on it), which did really bad things to basically everything that accepted only plastic. Of course you know in the abstract that this full plastic stuff is a bad idea (it's so obvious), but it's very sobering still to see this in practice.
In my experience, a good rule of thumb is that anything the wait staff argues for only has one actual reason - more money for them. Anything else is a smokescreen.
> I have to stop, wait, find my wallet, make sure it has a card with a balance on it, make the card isn't damaged (demagnetized, scuffed chip contacts, curled up in the heat of the clothes drier), know what that balance is, and if I don't have this singleton plastic token that I cannot easily replace or trade, I can't go to certain places?
This is a gross exaggeration.
> I have to stop, wait, find my wallet
Because you just cram bills in your pocket. No. You'll have to get your wallet regardless. And your wallet hold more than just your credit cards, it holds your license and any other bits you'll need when out and about. Don't act like the wallet exists solely to facilitate credit cards.
> make sure it has a card with a balance on it
This is entirely a different problem. And one that is on you. This is something I don't think about. If you are juggling that many cards, especially ones where you've reached the limit or don't have funds in the account to cover an expense you plan on, that just sounds like poor money management. Your option in a cash-based society would be simple starvation.
> make the card isn't damaged (demagnetized, scuffed chip contacts, curled up in the heat of the clothes drier)
Are you that careless? Also, cash can be damaged by washing machines and such as well. I've never really had to worry about whether or not my card is damaged.
> know what that balance is
Probably the only salient point in that entire block of nonsense. You'd need to kind of remember your balance if you use it daily. But then again, when I was poor, that number was always in my head. And it's not like it would be much different than a checkbook if you wanted to keep track.
> and if I don't have this singleton plastic token that I cannot easily replace or trade, I can't go to certain places?
And? There are all sorts of tokens that restrict your ability to go places that you aren't complaining about.
> food service normally loves cash, because they can report it differently. Tips are quasi-off-the-books
You don't need your liscense (or other id), if you're not driving. (Often, it's a good idea to have, but it's not required for citizens in the US).
Another thing is I can give $20 to a reasonably responsible child and ask them to fetch me a burrito. It's not a good idea to do that with a credit or debit card; I would have authorized them, but if challenged they may not be able to complete the transaction and may have trouble bringing my card back.
You're giving good-faith rebuttals to arguments that weren't offered in good faith. Nobody actually has trouble leaving the house with their wallet. That's not a real problem that intellectually average people actually have.
But if you had a wallet, would you consider it a herculean task to "take it with you"?
That's who he's "treating... as if they're degenerates or below intellectually average", people who think "bringing a wallet" is this massive undertaking that requires a paragraph to describe.
In Denmark and Sweden it is simple: you are likely to have your phone with you, and thats enough. MobilePay and Swish respectively are wildly popular solutions.
mobilepay is pretty ridiculous for a foreigner to use actually. You are required to have both a danish bank account and danish telephone number in order to use it. For this reason alone, it can never take off entirely. Until there comes a way that one can use their home account in a foreign country (with fees) like a card, then it will never reach the same levels of adoption.
In the US this isn't reliable. I just got a new phone and learned the hard way it doesn't support NFC, and even if it did a lot of merchants disabled their NFC readers waiting for more merchant-friendly rails to reach the market.
What card-only establishments really need is what cash-only bars and diners have had for years: an on-premises method of conversion. It would effectively be a reverse ATM, that you could feed cash and get a prepaid card (minus, of course, an ATM fee).
If something like this doesn’t exist, it seems like a good startup opportunity.
It doesn’t look like it went anywhere, online info on the company is scant apart from a few press releases.
Basically you’re just talking about offering a physical cash-friendly terminal to the digital economy. Maybe someone should try that angle. Counterfeit and money laundering will be huge issues. It’s hard to anonymously launder money at scale with storebought prepaid cards, because of the humans in the sales loop (which also allow non-money-laundering transactions to happen anonymously). A workable compromise might be to require a SSN/PIN combo at the reverse ATM.
As for counterfeit: sophisticated scanners? I think many banks allow you to deposit cash or checks at their larger, bank-branded ATMs. Perhaps that technology is available. You’ll probably just end up buying “counterfeit insurance” and then try to get whatever tech will drive your premiums down.
All good points. If the install market for these is fast-casual restaurants, it's probably not unreasonable to cap them at something like $20 per transaction. While the cards should be reloadable, they could probably also have limits for both carried balance and reload frequency, and the presence of human staff at restaurants should also deter money-laundering activity.
That would just add an extra step to cash transactions, if you plan on allowing people to buy gift cards with cash. The whole point of the policy from the business’s perspective is to cut costs around handling cash.
The question to me is, why does this population exist in such great numbers? I understand not having good credit, but having access to a checking account with a debit card doesn't seem like it should be insurmountable.
The last checking account I opened just took $5 to open the account (technically a "membership" fee at a credit union). No any proof of employment, income, ar assets was needed [0], and I left with a debit card that day. Total time involvement was maybe 15 minutes.
[0] I just re-checked and all that is needed is SSN, Government ID, and the initial deposit (as low as $5, can be paid with cash, debit, credit, or check)
They did run a credit check though, and if you don't have a high enough credit score, they won't give you a debit card - they'll only give you an ATM card.
Also, what could be called credit-union deserts. Lots of people don't have access to a credit union, and the large banks charge huge fees on poor people (see "the high cost of being poor"[0]). Past that, some of the above poor people have had terrible experiences with banks and want nothing to do with them. It easily adds up to that ~10% mentioned in the article.
Many bank accounts are really expensive if you can't manage to reach the free tier. One of my local banks will take $6/month if you don't leave $100 in there. And if you're having trouble leaving $100 in your account, it can be pretty easy for a delayed transaction to trigger an overdraft, and then you've got even bigger fees. Do that enough times and either you'll swear off banks, or they'll blacklist you in chexsystems or both.
Some banks are doing these Pre-paid-ish cards now. I know Chase has Liquid, other banks may call it something else. For the most part, it functions mostly like a debit card backed by an actual checking account. But the requirements are far lower. They don't give a flying fuck who you are. You can even get checks to access the funds on the card.
And for like 90% of the time, you'll never realize you don't actually have a checking account. You won't realize that your money isn't technically backed by the bank. Then that 10% of the time will make your life inconvenient.
So I'd say that access to a card-based payment method doesn't seem insurmountable. But an actual checking account could still be out of the reach of some people.
I also opened an account at a credit union less than a year ago. $5 was enough for a checking and saving account, though I had to wait a few days for my debit card to be mailed. I needed proof of residence and ID, but no proof of income.
This does not remedy privacy issues, but in general is more democratic way of doing things. Card payment cap also effectively killed cashback cards and premium credit cards that largerly favour rich.
True, they try to compensate by pulling some other shitties. Like the old "Do you want to pay in your home currency?" crap.
Worst are ATMs, which offer you to "conveniently guarantee a fixed exchange rate", which can be over 10% of the amount retrieved and - needless to say - which you should never accept.
They do the same for US cards. EU regulation states that you need to at least give this choice for a consumer, and they cannot force you to take bad exchange rate. If I recall correctly EU might have given a slap on the wrist for AirBnB, as an US company, for not complying with this and forcing to pick bad USD rate. (I do not have source now, on mobile). So overall I think we can agree EU system with regulation is vastly better and less crooked for anybody else expect card issuers and payment processors.
Once upon a time the customer was always right. A business was supposed to serve the customer's needs and did what was necessary to achieve that. Now the business can insert multiple middlemen with commissions and transaction fees and the damn customers can just fall into line. Sharpish please, and no complaints or we'll close your account.
Do we not see a problem travelling down this road? Or do we have to return to barter and hacksilver to decide perhaps cash was useful?
Like the bit says, even when the phrase was becoming popularized, people saw the inherent flaw in it.
The customer is right, within reason.
You are complaining about a cashless business, one that won't accept the minted currency of the nation.
Which could be a fair complaint.
But if we are to hold to the maxim that the customer is always right, then if I insist on paying in bits of string, then I'm right. If I insist that the value of what I'm taking is far less than you think, then I'm right. At some point, you have to admit that there is a line.
And businesses don't want to insert middlemen, they're dealing with them just like we are. But they're getting to the point where the cost of dealing with those middlemen are less than or equal to dealing with hard cash.
Like most adages and slogans it's the core idea that matters, not to take it so literally as to ignore fraud or allow payment in string. The idea being the business should try and meet the customer's needs.
Businesses do want to insert middlemen where they can externalise something else. Either to move another cost or process to the customer or to reduce staff. We've seen the near abolition of customer service by adopting customer service departments that move the activity onto dedicated, and lowly paid staff or outsourced entirely.
For most of the fifty years since Visa started businesses have been expected to take credit cards, even though they cost more to process for all that time. In the UK business could not charge extra for taking cards. The second cash costs more it's OK to abandon it and go Visa/MC only?
Yes, it seems they do want to insert middlemen. Visa of course are encouraging this.
> The idea being the business should try and meet the customer's needs.
But they're choosing their customers with this action. If you can't buy stuff from them, you are not a customer.
> For most of the fifty years since Visa started businesses have been expected to take credit cards, even though they cost more to process for all that time.
Because those were the customers who were spending the money. They didn't have to, they chose to. I mean, it wasn't that long ago that fast food establishments refused to take them. That is a recent change.
There are plenty of legitimate reasons for a business to not want to take cash (employee time in cash handling likely adds at least 5% in payroll overhead, theft can also be an issue in retail at least).
You may want to pay in bitcoin, nickels, or with bushels of corn, but that doesn't mean any of them are practical or desirable for the business owner on the other end.
Having to deal with the elderly or disabled adds overhead from employee time or premises adaptations. All that changes is the disenfranchised group. All should be considered discrimination. Maybe it's the European perspective but I welcomed it when the UK required all premises to be wheelchair accessible, even though I am able bodied. I'd equally welcome making accepting the country's currency mandatory as I don't believe society should be excluding any significant groups.
Another reductio ad absurdum? Like I replied to bena before you, with well known adages and slogans it's the core idea that matters, not to take it so literally as to permit payment in corn. Corn is not the currency in general use, cash is. Do you take every slogan and adage entirely literally?
In encountering dozens, perhaps hundreds of uses of the very well worn cliche "customer is always right" only once has the conversation or article suffered because it did not fully spell out, in legally precise language, all and every possible exception to the generality that everyone knows is but a convenient generalisation. Some customers may be committing fraud, other customers will abuse the privilege, shares may go down as well as up.
Most find that a useful shorthand in achieving concise and clear discussion, that helps to avoid overly formal and long grandiose Victorian circumlocution, without finding it vague waffle. Something I am eternally thankful for.
We could have an equally lengthy, fruitless and absurd discussion picking holes in Rackspace's "fanatical" support and Amazon's many slogans including "customer obsessed" and "most customer-centric company" because they do'nt spell out all exceptions, limitations and exclusions to the clearly generalised slogan at full length with legal precision.
> You are giving an "invitation to treat". An invitation the establishment may decline
Quite, and yet you write "What if all I have is corn? I'm a customer." You're not yet a customer and you're not offering legal tender or any other form of recognised currency. Which is why it is clearly absurd and takes the discussion away from the actual topic in TFA - the rise, and potential discrimination, of cashless.
At no point did I dispute any electronic payments are exchanging money. That again is clearly absurd. What I did say is the form may inconvenience me (even if it becomes endemic) and I dislike it becoming required. As the article points out 7.5% in the US are unbanked. 12% aren't on the net.
That's a far larger and problematic discrimination than "no hats". I won't be discriminated against, just inconvenienced. Which is why I mentioned, in another comment, I would encourage requiring businesses to accept legal tender (subject to any legislated limitations on paying large amounts in small change that many countries already limit).
Legal tender is currently cash but an equally valid solution would be a state or central bank run fee-free, privacy respecting eCurrency as it could be easily made universal, separate from the banking system, and legal tender. Who knows it might turn out cheaper to run than mints producing coins and notes. In other words something outside the duopoly of MC and Visa that doesn't require a bank or abandonment of privacy to buy a pair of jeans. Then require businesses to accept that legal tender.
Until such point as all businesses have achieved cashless and there is no choice in the matter left, for anyone. That's the stated endpoint of this game. Why do you think Visa are offering $10k prizes for businesses that can go fully cashless? It's not for the customers.
I would make a point of not supporting such a business but if I'm in a minority and cashless catches on...
Which is why we need legislation to prevent exclusion of significant minorities be they the disabled or poorer people. I'm more than comfortable for businesses that wish to trade on the high street to be required to fit a ramp to their doorway, inductive coils for hearing aids, and required to take cash.
If we end up cashless it will be the poor and elderly who will have the most difficulty. Even now, well over 10 years after the switch, it's reasonably common to see elderly folks in supermarket or bank struggling with chip and PIN.
The thing we're dealing with here isn't Visa, it's the businesses themselves. They've reached a point where dealing with Visa is cheaper than dealing with cash.
One thing that Neuromancer had, but we never got, was credsticks.
I want a fee-free electronic wallet that is anonymous.
Also, we really need a law saying that the credit card companies (and others in the toolchain) can't use our data for anything but payment processing. I'm sick of being tracked by my transactions.
Well, it's easy to write "credsticks" into a novel, but rather hard to actually implement them. How would they work? The closest thing we have are probably physical Bitcoins, but there you need to trust the issuer not to have a copy of the private keys.
Of course you can rationalize that 3% is a reasonable cost and approximately a wash compared to the expense of dealing with cash. But if you're a small coffe house, and sell a $3.00 coffee, and are paying a typical 2.9% + $0.30 per charge, that $0.30 is ten percent of your sale. That's a huge cost.
Transaction fees need to come way down for plastic to beat cash on small sales.
that's for paypal/square, which usually mean card not present, low volume and flat (fee) rate. bigger merchants usually go with a payment processor that offers interchange+, which significantly reduces the fees. a quick check of https://www.adyen.com/pricing/full-list?navItem=northamerica says that visa cards only pay $0.12 + interchange (1 or 2%).
>Interchange++ consists of the following components:
>Interchange fee charged by the banks who issued the card
>Scheme fee charged by the card schemes
>Applicable acquirer markup
More than likely, you'll pay $0.12 + 1.7% interchange on average for card fees + 1.x% in Adyen's fees if you're a small business.
It takes serious volume to get steep discounts, and the entire industry is full of snakes. If your business does enough volume, keep shopping around and pitting people against each other.
I recently renegotiated our rate down to interchange + 2 basis points. (0.02%) along with very reasonable terminal fees, the whole process took several months.
My advice? Focus on growing before optimizing these things.
True. Especially if you are an owner and cashier at the said business.
But no so if the cashier is your employee. Keeping track of all small deals and ensuring most of them reaches your bank account and not your employee pocket might appear even bigger problem.
I know some small dining places where profits 3x skyrocketed since they introduced cards payments (in such places most of the profit comes from small things with crazy margins, such as tea or coffee)
Banks and cc companies aren’t pushing this because of money, it’s because of data. The fees are honestly just icing on top, and often, even a legacy that you can completely avoid at some companies.
The largest bank in our country let’s you link you can card (we have a national card that’s both a debit and a credit card in one without really being either), regardless of what bank you use, and they let you use it for free. You can instantly and feelers send money to anyone with the app, you can also use it like Apple/google pay completely feeless. Small business can get a free recipient thingie but larger business have to pay the bank for usage, so for them it works like a regular digital payment system.
Anyway, the real currency is data. The cash register scanner tracks every individual item you buy, the time, the location and so on and because this app is universal, our largest bank knows a lot more about our habbits than google does.
It’s the same for CC companies. They know what you buy at the pharmacy, they know how much alcohol you buy and so on.
Sorry for the bad English, I’m not even sure what stuff like the scanner at cash registers is called in my own language so it’s hard to translate to English.
They do have plans which include a fixed per-transaction fee on top of a (lower) percentage, but for a coffee shop I'd guess it's worth paying the higher percentage instead.
Which is why it's so surprising that it took so long for Albertsons to get on the Apple Pay bandwagon, which costs less per transaction than traditional swipes or chip+PIN.
Having seen the FB+Google interpretation of privacy, and the few times Venmo with their public feed have cropped up here, I'll be one of the last to abandon cash. I use it for most things that aren't online.
That's despite my whole career being in tech and once thinking such views were the preserve of the tinfoil hat wearers.
Most of the upsides are for the companies, the potential downsides are for the consumers. I don't much like that balance for a tiny bit more convenience.
I don't really understand the american need for a credit card.
In germany, I pay almost everything either in cash or via bank transfer, usually pull. I got a prepaid card a while ago, mostly to pay for american services (seriously, I only ever pay to american corporations with it). My debit card (EC card) is almost universal and directly connected to the bank account, no credit needed.
CC is barely supported, EC is a lot better in terms of coverage. Even then I usually apologize when using the card for anything below 100€ or so at my local supermarket.
I don't see much reason to go CC or EC fully, I always keep some cash in my wallet, not too much but enough to hold me over for a week. If I need more I go to the Bank's ATM and get more. Easy.
Cash-free payment would also be fairly illegal, a business must accept cash payments (though a limit of 50 coins is there, notes are unrestricted) for any purchase in person (online businesses don't have to IIRC).
It's a cultural and market network effect thing. A lot of Americans use debit card instead of credit card that can quickly accrue interest charges if not fully paid off every month. But plenty of people carry high interest debt. The average American who carries a balance owes 15000 USD. USA has high adoption of credit card network. In most places, debit cards are only accepted as Visa/MC not the low fee inter-bank network such as PLUS or STAR or NYCE.
Then there's consumer credit history/score. Americans like to buy houses (it's de facto subsidized by the government through implicitly government guaranteed 30 year fixed rate loans). A high credit score can mean the difference of tens of thousands of dollars over the term of the mortgage. If you have no credit history, you get the worse possible rate. Housing choice determines school district, and therefore whether your children get a good excellent so-so or bad education. House prices are highly correlated with school quality - public schools are free but you have to be able to afford residency. The worse neighborhoods have shootings at night, rampant drug abuse and gangs, burglary/robbery, lack of jobs/grocery stores/medical service/non-convenience retail.
Credit score usage has metastasized into many more facets of life than originally intended. Even if you want to only rent housing, the landlord will check your credit. Good landlords only reject for evictions or out of control debt that suggests you cannot afford rent, but some decide based off score e.g. if your score is below 20th percentile you will not get approved. You cannot get electricity/water/natural gas turned on without a credit check unless you place a large security deposit. Some companies will not hire you if you have bad credit! Those with bad credit have to pay up to double for car insurance.
Of course many people like to spend beyond their means. But even responsible people put themselves at a disadvantage by not participating in the credit system.
Yeah. Luckily I've managed to eradicate all of my "bad" debt and get my credit score to fluctuate between 830 - 850.
It makes a lot of things much smoother overall. Basically, no one questions me once they run the credit check. And if they do, it's more like "Are you sure you don't want another? Something else?"
Contrast that with some people I know who have sub-700 scores. Things are just that much more of a hassle. We were comparing car notes and stuff. And my (now) wife was talking about the company handling her auto loan and I was asking where she got her car because I usually get the loan through the manufacturer's credit house (i.e. if I buy a Honda, I'm paying Honda financial). And she got her car through a dealer, but they had to do a little more work to find her the most favorable loan. Basically people are eager to give me a recurring bill while they're a little more reticent to deal with her.
And it's mostly because she has little to no credit history. I advised her: get a credit card with as high a limit as you can and then just forget about it. I have a $15,000 limit card that I just never use. It exists mainly so my overall use is a lower percentage. I don't think she's ever had a credit card. And I think her previous vehicles were purchased through less direct channels or legally purchased by someone else that she paid for (like her mother got the loan, but she paid it). I think this may be her first vehicle that she's purchased at a dealer.
Credit cards are an excellent tool as long as you don't accrue debt with them.
I get 1.5%-2% cash back with everything purchased with it. I'd be losing money by using a debit card instead. Not to mention the $500 they gave me just for signing up for it.
I also don't to worry about when I get paid. I might only have $100 left in my checking account when I need to buy groceries if the day I get paid falls at a weird time. I don't have to worry about that sort of thing with a credit card, although it is much less of an issue now that I actually have savings than it was when I was in college.
If someone steals my debit card or my cash and uses it, my money is gone. My bank would probably refund me the stolen money if my debit card was used fraudulently, but until that happens I'm still out however much of my own money.
If they steal my credit card, who cares? I'll call the bank and cancel it and in the mean time, none of my actual money has been touched.
> If I need more I go to the Bank's ATM and get more. Easy.
Not having to go to an ATM is even easier than having to go to an ATM.
You basically count up reasons why I don't use credit cards.
Cashback almost always is connected with some form of datamining. The 500$ bonus is usually paid back in form of hidden fees somewhere. No money is free.
I don't want to spend money I don't have, ever. And regarding if my card gets stolen, European EC cards are very safe. They aren't CCs where you can just start grabbing cash, you need the pin too and the banks are very aggressive on putting temporary blocks on any transactions (as part of EC, any totally blocked transactions are billed instead and fully transparent for you).
Going to the ATM is easy and it means I have a very good feeling of my weekly and monthly spendings just by looking at how often and how much I use the ATM.
In the US, credit card transactions are reversed in case of fraud (no questions asked, super easy), but if someone lifts your pin and empties your bank account over debit, you’re on your own. This actually makes it more dangerous to use debit vs running it as credit.
Also while you don’t want to take on debt you can’t pay, there’s nothing too complex about debt and credit. Businesses all largely do their accounting like that, and if you really zoom out, all money is a system of debt and credit: the $20 note in my pocket is credit from my company, since I gave them my labor, they owed me. My company in turn was owed by one of its customers for services my company offered. The customer might have gotten money from their company, and so on.
Absolutely. I meant to make that point when I said “In the US...” since the parent poster said they didn’t understand why Americans favor CC over debit cards. I thus gave the reasoning. Had we in America been given the same given circumstances as in Germany I’m sure we would be using debit.
I like how you use the law as a reason despite the law already restricting how you can pay.
The U.S. used to have coinage limits as well, but tied to dollar amounts rather than total coins, but those were stricken to make all coinage legal tender.
Which is even funnier when you think about it. Because originally coinage was the tender. It was stamped and minted precious metals of a certain weight.
Bills were basically receipts or scrip that represented those metals. Essentially a token saying "Dude, it's cool, I do really have this money somewhere". And now the big hubaloo is the switch to electronic payments and people are freaking out because it's not real because it's not paper, which also isn't real. Just a representation of credit you have that's backed by the government that issued the bill.
And I wouldn't say it's a need, it's more of a convenience. Instead of mucking about with bills and coins, counting out change, etc, I just swipe or insert. No need to keep anything organized, etc. No need to pop off and find an ATM every week. And I'm not saying it's an earth-shattering difference. It's more like the convenience of going out to eat rather than cooking for the night. But in this case, I'm doing it almost every night.
And I kind of went through the same phases you're describing. When debit cards were becoming ubiquitous, you'd use them for the "big" things. Going out to a "proper" restaurant, stuff that cost more than the cash in your wallet, etc. And yeah, it was like "Ugh, I'm buying a soda with my card, awkward. Sorry". When the first fast food places installed card readers it was like "This is weird. Buying a Big Mac with a card."
But now, the situation is nearly flipped. It's more like when I go through the drive through, if we have to do the cash passing game, I feel bad. The card is simple. Hand one thing over, get it back with a slip of paper.
> MasterCard is analysing transaction data to help marketers direct targeted advertising at consumers, after launching a controversial initiative to make money from its vast database of retail purchases.
Using cash is currently the only way to opt out of this kind of tracking. Being credit card-only is also being anti-consumer-privacy.
I think the federal government should start using FDIC as a stick here. It could be fairly straightforward: if you want to be an FDIC member, you must offer basic banking. In particular, you must offer anyone who is legally in the US a free checking account. The terms must be more or less standardized. No arbitration clause, no limit on class-action lawsuits, no check deposit fees, no in-network ATM fees, no under-minimum fees, no overdraft fees. If a bank wants to participate, it should be required to offer banking.
Eh. They do offer banking. But banks make their money investing your money.
Also, I think "no overdraft fees" is just as wrong as overly punitive overdraft fees. If there were no overdraft fees, credit cards and small loans just wouldn't be a thing. Just overdraft your account and treat it as an interest free loan.
When you overdraft, you are no longer dealing with your money. You're dealing with someone else's money.
Not if I write a check. And from what I recall, when you make a purchase, they don't check against your projected balance at that time, but your actual balance.
So if I have $100 in my account and a pending debit of $50, if I try to make a purchase of $60, it'll get approved because I have $100 in my account.
Now, there are potential things it could do, like treat pending debits like cleared debits. I mean, when I check my balance on my app, it shows the balance with the pending transactions accounted for.
And that does prevent overdrafts from ATMs and debit cards, but there are other debits to the account that could cause overdraft.
It's practically a no-win scenario. If I have an automatic payment to my electric company and I don't have the funds in my account to pay it, I'm fucked no matter which way you look at it. Either I overdraft or my electricity gets shut off due to non-payment.
Banks don't have to accept overdrafts on checks either. That's what happened when someone says that a check "bounced". The person you wrote the check to won't be pleased because they don't get their money, but the account won't get overdrafted.
Allowing overdrafts because of pending debits is also just a decision that the bank makes. They don't have to do that.
I mean, when you really look at it, banks aren't really up to speed with the speed of information these days.
A lot of these things that shouldn't be issues are issues because they're still operating as if there are still people who are managing most of this and physical checks and credit slips are being passed around.
None of these scenarios require them to allow overdrafts. Even operating by passing physical checks around does not make allowing overdrafts necessary.
Refusing to honor checks drawn against accounts with insufficient funds has been around for ages, even when everything actually was managed by passing around physical checks.
> That’s not really relevant. If a bank wants to offer, in plain English, a credit service in which overdrafts turn into loans, fine. But part of the problem with the unbanked/underbanked is that people can be quite justifiably worried that the bank will take away their money by nickel-and-diming them.
Anyone should be able to open a bank account without a credit check or abusive fees. A checking account is not credit. Allowing overdrafts to become abusing loads is credit, under terms that could easily be seen as usurious.
Here's a weird question. Why hasn't the U.S. Government made an electronic cash platform with zero transaction fees yet? This should be something that falls under the treasury, it would help cut down on fraud and provide a backbone for small businesses and large businesses alike. Being able to pay debts is basic infrastructure for an economy and transaction fees are a giant tax on small businesses and large businesses alike.
In Italy the national post service (which also doubles as a bank) offers dirt cheap Visa Electron debit cards called Postepay (no recurring fee, 5€ una tantum for the card, 1€ fee everytime you deposit money into the card), and the minimum age for requesting one is 14. This fostered some competition from other banks which started to offer products with similar prices and even more features (like the ability to send or receive wire transfers).
The national student card (which can be used to obtain discounts at museums and other cultural places) now also doubles up as a Postepay, so now basically every kid owns a free debit card that can use physically or online as he wants.
Something like this can really speed up card's adoption while avoiding discrimination and in fact this is what I've seen since I was a kid and I had to borrow my dad's card: now all my little cousins own their own little yellow debit card in their name and even use it often in their daily life.
However, lobbyists from Visa and MasterCard would saddle the program with all sorts of concessions to incumbent payment processors that would make the program cumbersome to use, stifle adoption, and ultimately reinforce their dominant positions.
So it seems like the backbone exists and gets used heavily. The next step would be a way for person to person transfers of money and person to business, business to person, etc. It seems like business to business already does, the major piece left out is a consumer account. i.e. there's no card you can use to directly send money from your account to your kid at college. Everything still requires some company as an intermediary.
- Most (or maybe all) beggars accept mobile payment by WeChat and/or AliPay
- I cannot recall any time in the past year where a shop, fruit stall or street vendor could not accept mobile payment
- There is a high-end food court nearby where none of the restaurants accept cash. If you can't pay by card/mobile, you need to go to a special counter on the ground floor, and exchange cash for some type of voucher
- My haircuts cost 40 RMB (about 6 USD). I tried to pay with a 100 RMB note, expecting a 50 and a 10 in change, of which I would give the 10 back as a tip. The barber struggled to find the right change, as it's so uncommon for people to pay with cash. So I paid via WeChat, and handed him some extra cash for a tip.
My barber takes cash only. It's caught me out a few times. He has a mobile phone, not sure why he's not set up with Square or something similar I'd think he'd make up for the costs with more business.
My barber has a location next to several ATMs. I cannot see imagine a situation where he would start accepting cards. I never see anyone come in for a haircut, ask if they take cards, and then walk out and not come back because they don’t.
This article burys the lede -- from the last paragraph:
Take the overdraft fee, a punishment for desperate or careless customers that netted banks $15 billion in 2016. As many as half of overdraft fees aren’t assessed at an ATM, where customers can see their balance, but at the point of sale—debit card transactions at the counters of shops and restaurants. And the majority of overdraft fees, the Consumer Financial Protection Bureau reported in 2014, came on transactions of $24 or under. Not people stretching to make a big purchase, in other words. Just trying to get lunch.
Those fees are a big source of revenue for the banks. Nothing about convenience for the customer.
At least with my bank, if you don’t have the available cash on your card and you don’t have enough in a linked savings account to cover a transaction, you will be declined when you try to pay.
Do they still do the thing where they structure debits to maximize penalties?
Say you have $100 in your account and 5 pending transactions: $6, $12, $1, $30, and $95. In that chronological order. The bank clears the $95 first, then the $6 which overdrafts you, then the rest, overdrafting you 3 more times. Whereas if they processed chronologically, you'd only overdraft the $95.
Regardless, the person whose account it is does bear some responsibility for overdrafting, even for lunch.
My bank actually orders transactions to make it so that I avoid the overdraft fees. If I get paid one day and also make a debit that would overdraft my account if the payment didn't clear first, they will place the payment first then the debit.
That's good of them. I mean, that's just good customer service and they'll probably keep you as a customer for far longer by not nickel and diming you at every chance.
I just prefer cash because it's easier to keep me to a weekly budget. And, because it's weekly, I'm not walking around with a terribly big wad (I'm not crazy).
The privacy benefits of cash are a bonus as far as I'm concerned.
I travel to the US regularly, trying to use a foreign credit card there (especially to buy gas - what is my zip code?) is a real pain - unlike the rest of the western world the US is far from being able to go cashless
It was a little strange, I was in Stockholm for two weeks and would have not have seen a single paper bill except for the glance I caught of one as a older man got in an argument with a bar owner, who "made it right" by quickly handing him back some cash.
From your postal code "A#A#A#", it becomes "###00" at the pump. Near the border, most pumps will have this as a sign on them. But I was recently in Florida and that worked fine for paying at the pump.
Cash does not have downtime, and it can be used by anyone.
Now, someone making a business choice to refuse legal tender does not speak to the robustness of said tender, only their choices.
As long as things are good, payment systems running, networks up, that choice can be compelling. When those things are not true, the fall back is what?
Not do business?
Queue transactions and exchange the info needed?
Refer customer elsewhere?
People making cash not work is different from cash not always working.
I agree with you as well, in that "always" needs qualification. Fair enough.
Either way, I will very seriously reconsider most purchases where cash is not an option. It is likely I don't need whatever it is.
Before they were structured as "convenience fees". You could buy with a card, but they'd charge a small fee that was either a percentage of the total or a flat rate.
Minimum purchase amounts were way more common when debit cards were becoming a thing.
Basically, you'll find these things mostly in poorer places nowadays where even the store/restaurant owners are struggling and those card fees add up.
I noticed the “credit cards only” sign at Dos Toros for the first time yesterday. One of the things the sign says is cashless allows “more time for coaching” which I hope means training their employees? Coaching seemed like a strange word choice.
Additionally, cash is an equalizer for the unbanked/underbanked. Financial institutions take advantage of and punish their least profitable customers. Those who can barely afford overdraft fees, monthly checking account fees, etc. are the only ones who are forced to pay them.
Yes, blockchain technologies can solve some of these problems, but there will always be those who are outside of the banking system, lose/don't have a smartphone, etc. Greenbacks are tangible to the person standing in line to cash a paycheck at Western Union - Ethereum isn't.