I’m not an expert in this area and this is based mostly upon memory. But I’m of an age where I remember the introduction of ATMs into my communities. Cash used to be cheaper, even if you took it out of a different bank’s machine. Nowadays, I pay more than $5 on any withdrawal from a machine that isn’t affiliated with my bank. I live in a small city with around 200,000 people. I’m only aware of seven machines in my city that are affiliated with my bank.
So, if I decide to get cash, I have to decide in advance. Or I’m at risk of paying 5% to get my own $100 out of my bank. Or, I can pay with a card for $0 for unlimited transactions.
When I look at that cost attached to cash, I’m reminded of research about how spending digital doesn’t impact people the same way as spending cash. At the risk of sounding conspiratorial, do you think this might be a marketing campaign?
Obviously I don’t know, but if I knew people spent more on cards than with cash, and if consumer debt made me rich, I’d do everything I could to convince people to use cards.
Edit - I think this is the first time I’ve ever gone on a “when I was young, things were cheaper and better” rant. Aging beats the alternative but that’s the only good thing about it. :)
> Nowadays, I pay more than $5 on any withdrawal from a machine that isn’t affiliated with my bank.
That's borderline criminal. Look for a better bank, there's no reason to be hit with such fees.
I have accounts at four banks and none of them charge me fees for getting cash out of a different banks ATM. The ATM will show a default message that it is charging a fee, but it never actually gets charged.
I believe there is some limit to how many withdrawals a month they'll do for free, but I've never reached it (and I mostly use cash for privacy).
Hey friend! Thanks for writing such a friendly, helpful reply.
You’re 100% right that I need a new bank. I spent more than an hour on the phone this morning with them and by the end, cryptocurrency was looking pretty good…
I’m going to do an experiment and actually take cash out of some different banks’ machines then check my account and see how much I actually paid. That’s a neat idea - if I don’t actually get charged the fees, that completely changes the game.
> I’m at risk of paying 5% to get my own $100 out of my bank. Or, I can pay with a card for $0 for unlimited transactions.
But isn't that actually pretty comparable? You don't see the few percent extra you're paying with the credit card because it gets hidden in the price. It's probably not all that different than what you're paying to get cash from an out-of-network ATM (I just get cash back at POS).
To be fair, usually the cash buyer also gets screwed into paying for the convenience of everyone else using credit cards. For a while that was actually written into the merchant agreement, to favor credit card usage and ensure hefty profits for Visa & MC.
I agree with what you’re saying but just wanted to interject with a weird bit of Canadianism. I’ve never found a good way to describe this to non Canadians so if this doesn’t make sense, it’s me.
(This is very pedantic.)
When I pay with a card, I actually have a couple of options. We use the terms ‘debit’ and ‘credit’. I can pull out a credit card and pay for something with someone else’s money. Or pull out a debit card and pay with my own. Debit comes directly out of my bank account and they’re physically different cards, with different chips, PIN numbers etc.
The experiences are identical for me, but dramatically different for poor merchants. The cards are almost identical, but if I use my credit card the merchant gets toasted. If I use my debit card, they’re only lightly browned.
So, long story short but you’re right. It’s the same. I don’t notice because merchants have to pass on the cost.
This analysis ignores the cost to the merchant of handling cash.
I don't know how high it is. I've seen various numbers thrown around but it's hard to tell what's accurate and what's not. What is clear, however, is that the cost is non-zero.
I can give you a bit of data that is roughly thirty years old. When I was a youngster, I had a job at Subway. I was freakishly nerdy and good at math, so I ended up doing cash most of my shifts. If it went well, it took me twenty minutes. Most of my coworkers spent double that time.
If we split the difference (30 minutes) and factor in my big hourly wage ($7 an hour), it’s at around $3.50 a business day per location. That’s not huge money, but still works out to close to $1,300 a year for one location. Multiple that by a few million and it’s a serious cost.
Thanks for the insight! I imagine there must be other costs, such as secure storage and transportation of cash? Also a bank might impose handling fees? (The latter in particular is pure guesswork on my part.)
So, if I decide to get cash, I have to decide in advance. Or I’m at risk of paying 5% to get my own $100 out of my bank. Or, I can pay with a card for $0 for unlimited transactions.
When I look at that cost attached to cash, I’m reminded of research about how spending digital doesn’t impact people the same way as spending cash. At the risk of sounding conspiratorial, do you think this might be a marketing campaign?
Obviously I don’t know, but if I knew people spent more on cards than with cash, and if consumer debt made me rich, I’d do everything I could to convince people to use cards.
Edit - I think this is the first time I’ve ever gone on a “when I was young, things were cheaper and better” rant. Aging beats the alternative but that’s the only good thing about it. :)