Cities are making it illegal, as they should. It's not always meant in bad faith, but it's also a form of gentrification that hurts the poor and unbanked by removing yet another service from them.
I personally never use anything but cards since I have many of the high reward credit cards. But I've also had family members with tax liens or other problems that didn't allow them to get a bank account, that relied on family to pay bills, order things online for them, etc.
I saw one of those “mind blown!” sorts of posts on Facebook the other day that I haven’t been able to really reconcile in my head because it both makes sense and doesn’t make sense.
The gist was that if everybody is paying with credit cards, $50 will eventually whittle down to $0 because AmEx, et. Al. got $50 worth of fees after so many transactions (accountant pays grocer who pays dentist who pays hygienist who pays daycare, etc.). On one hand, what a huge waste of money. On the other hand, I as the consumer typically don’t get a discount for paying with cash, so why shouldn’t I take advantage of the “free” and secure payment option available to me?
This feels plausible but I think it is really nonsense.
Processing fees are not unique to cash. Banks charge cash processing fees to businesses too, and have for ever. Most shops will deposit all the cash received at the end of the day - perhaps every few days - with a bank.
That's true- everyone with a checking account pays a "fee", even if that's in the form of "allowing the bank to loan your money out to make more money"... except for maybe USAA. Their checking accounts are free, no account minimums, and they even pay a little bit in interest. Not just anyone can get a USAA checking account though so I guess that doesn't really count.
So long as you don't use a brick and mortar bank, most banks have interest providing checking accounts, although rates vary wildly.
Savings accounts in particular are egregiously terrible at brick and mortar banks. I made more in interest payments in my first month at Ally than I did in the ten years I had my child hood savings account at Bank of America.
TMobile Money was fighting Ally pretty hard when rates were rising and had me switching money back and forth for a little while. Goldman Sachs traditionally fought with Ally. Doctor of Credit has large lists of smaller banks with favorable rates. It's just the traditional large brick and mortar banks rip off customers who just assume having money in a savings account is a good thing to do.
I wasn’t aware T-mobile had a bank. You’re absolutely right about savings accounts, it took me a while to explain to my wife how you lose money using the traditional ones.
Those cash processing fees would only apply if the cash was repeatedly deposited and withdrawn, and probably only by businesses. The hygienist can probably deposit cash for free, I don't think I've ever paid a fee into a consumer bank account.
Taxes will do the same, though. Employers have to payroll taxes, employees have to pay income taxes. The $50 will eventually all bleed back to the government.
The $50 in fee is paid to the employee at AmEx (99%+ of it), then the last % is paid into dividends and such, which people will use to buy grocery etc. In that way, the loop closes and why the point doesn’t make sense.
The fees get distributed elsewhere geographically, and never make it back into the local economy. Sure, the money doesn't disappear, but the locals are worse off for it.
This is the crux here. And this is what I tell people who are so insistent on highways and cars too - the productivity of your local economy is siphoned off because local coffee shops can’t afford to compete with Starbucks drive throughs so the capital leaves your local economy.
Where I live a Starbucks was opened across the street from a local coffee shop and the Starbucks closed because it couldn’t compete. This is in a walkable neighborhood. Once you get to the ‘burbs and highways it’s all Starbucks.
Those transactions are usually taxed too. And in my experience cash discounts come from off the books transactions, ie tax evasion. Handling cash in business has a non zero cost too.
credit cards are pure evil. And yet I have 2. What's worse is that they raise the cost at stores, payed for by people who don't pay them off on time. I'm no socialist, but that's certainly not progressive.
It’s about getting robbed for drug money. The irony being that our huge population of visibly unhoused in our neighborhood (unlikely to have bank accounts) also correlates to the problem of being robbed for cash..leading to businesses not taking cash anymore for safety reasons.
In civilized countries they solved this decades ago by allowing the postal service to offer simple bank accounts.
It's totally a fake problem that untrustworthy people can't be trusted in modern times with bank accounts. The risk is check bouncing. People don't "need" checks anymore though to function in the cashless world.
We already have prepaid card accounts that don't allow you to spend money you don't have. The only catch is that they're run as profiteering machines which extract fees at every turn.
I guess what I'm saying is, let USPS run an operation (like Green Dot, Vanilla, etc.) but with a fee structure based on the true cost of the service only. And the government should give Visa and Mastercard the choice of:
1. antitrust suit to break them up.
2. the USPS cards will be a V/MC, and V/MC will give them very deeply discounted interchange rates
3. a new independent USPS card network with low fees will be built AND commercialized for any issuer to use, and a regulation that anyone who accepts V/MC must also accept that network.
Checks aren't a thing in most of the world. Opening a bank account is hard because of know-your-customer laws.
The civilised solution to this is very simple: cash! Until you get you bearings and have a bank account opened, just use cash.
Tourist in a country where your debit or credit cards don't reliably work or come with extra fees? Cash!
Buying a second-hand piece of furniture from someone else, and don't feel the need to expose more information than necessary? Cash!
Electronic payment system goes down while you are in the queue at the supermarket? No problem, because you always carry a little cash for backup. (I've had this happen to me several times.)
Cash is the ultimate fallback in civilized society, and worth protecting.
It’s very hard to get denied a checking account, even with walking away from multiple accounts with negative balances. I’d bet they didn’t try hard enough or this is a lie.
In Germany a free account is a right, but recent immigrants often struggle because banks require a registered address, a residence permit, or a biometric passport.
A recent immigrant from countries that don't issue biometric passports (like India) might struggle to open a bank account. I had to devote a lot of time to finding loopholes for my readers.
America has a substantial underclass of undocumented migrants who would presumably not be interested in getting their KYC info and employment details put in a big database.
The status of such migrants is (AIUI) a fraught issue politically, and I'm not sure you can resolve the issues of the unbanked without resolving it.
OK but it is an issue. How about solve that decades old problem before turning people away and insisting that whatever payment processor take some 2-5% of your purchase. It's a complete digression of technology.
This. I am a legal immigrant and have the papers and job to open an account. Some of my relatives aren't so fortunate so I have opened accounts in my name which they use as theirs. It get convoluted and I would rather I didn't have to do this but you are right it is a form of gentrification.
Even legal immigrants struggle with this. It's hard to open a bank account during your first few months in a country, as you might not fulfill the basic requirements set by banks.
At least it's a serious issue in Germany, especially for Indians whose passport is not accepted by many authentication services.
> hurts the poor and unbanked by removing yet another service from them.
There are plenty of much poorer countries where cash has pretty much died out.
Imagine driving along in some mountainous, rural area in China. You stop at a little roadside shop in the middle of nowhere. You pull out your paper Renminbi bills to pay, and the shopkeeper looks at you like you're crazy. Everyone uses their smartphone to pay for everything, and yes, everyone has a smartphone.
If it's possible to transition entirely to digital payment in a country that was part of the Third World just one generation ago, it should be possible in the US.
Let’s not for a split second pretend that many if any of the people complaining in this thread are doing so for this reason. At best their reasoning is verging on a conspiracy theory, at worst it’s just a typical old American man aversion to not using cash.
I agree with you that businesses should accept cash for the reason that you’ve noted. The underlying problem is fuelled by the almost unique dysfunction of American bureaucracies. This is in cases where the systems aren’t maliciously designed to lock people out.
So I've started carrying cash because in NYC, most places now have 3-5% "Cash Discount which is already applied to the price" which means a 5% fee for using your card.
https://www.nssh.com/2020/04/philadelphias-ban-on-cashless-s...
I personally never use anything but cards since I have many of the high reward credit cards. But I've also had family members with tax liens or other problems that didn't allow them to get a bank account, that relied on family to pay bills, order things online for them, etc.