Days gone by decades of credit card processing growth were because it made it easier and quicker for us to purchase everyday products. Going back to cash entirely disregards this value proposition, both for us and the businesses we shop on.
In a recent March 16th Wa Post article by Michelle Singletary it was suggested that consumers respond to the Durbin Amendment in the Dodd-Frank Restoring American Financial Stability Act by “What if we just went back to using cash? Better yet, why don’t all begin to negotiate more for any lower price on our purchases if we pay out in cash. ”
On the surface this particular makes perfect sense. Those horrible banks won’t be charging a penny for bank card processing interchange, the swipe charge on a merchant account. So because the merchant won’t pay their service provider account services fees – voila, we the consumer can negotiate a lesser price and reap the “benefit! ” Regretfully, nothing could be more from the truth. The past decades of credit card processing growth were because it made it easier and quicker for all of us to purchase everyday items. Going back in order to cash entirely disregards this worth proposition, both for us and the businesses we shop at.
Just think in our challenge today to obtain the cash. How is that money going to leap in to our wallet? Certainly we can get into a branch, stand in line, and obtain cash from our accounts. Of course this is a time consuming and frustrating task, especially if God forbid, we take out a lot of money and have to complete the government forms because you know, we’re still in the middle of the fruitless 50-year war on medicines. So no problem, I’ll just utilize the cash machine. And I can, to get small amounts, but many times with lines. And I still need to drive to get to one. God forbid if I utilize a convenient Out Of Network ATM Money Machine! Then poof, on average We have just spent about $7 to $8 to get my cash! Difficult the desired outcome to pay more. And what about my personal safety issue? Is not going to I be more exposed carrying larger amounts of cash? So I just is not going to carry a large amount, right? Wrong! I am not going to accept NOT being able to purchase something because I don’t have enough cash on me.
Then there is the problem to SPEND the cash. How many times are you currently at a store where they had posted NO ACCEPTANCE of hundred buck bills, or even fifty dollar expenses? I have and I’ve complained about this every time. But even if those expenses are accepted, it routinely requires me longer to pay with cash, and receive change in cash, then swiping my cards. And I always notice how the line at the rear of me grows longer when I am fiddling though my pockets to find the correct amount of change to pay the clerk, much like it does if I ever sit there at the checkout endeavoring to write a check.
In a study done years ago by Ipsos Insight plus Peppercoin, they determined that our wish to use credit card processing for little payments was growing and becoming a more common method of paying, especially for low priced goods and services. Not less. And only 7 percent of their survey respondents who does not use credit card processing with regard to small payments found it simpler, or preferred to use cash, rather than processing a debit or credit card through a credit card machine. Ninety three percent preferred the faster, simpler debit and credit card processing technique.
But enough about you and We, what about all of the merchant account “savings” the businesses will reap by not really paying for the credit card processing fees? True enough, if we pay with cash rather than a card, no seller account service fees will be evaluated. But don’t ever think the merchant is getting a “free ride” by taking cash for payments instead of processing payments with a credit card machine! The number one source of business losses has always been due to employee theft, over fifty percent. Cash is easily stolen in many different ways, credit card processing revenue is not.
And exactly what happens to a business’s total daily sales when the line slows up? I actually don’t know about you, but We routinely walk away from a store when there is a big line. Fewer sales mean lower total profits for me to “negotiate” over. And If I don’t have enough cash on me, I can’t also buy the things that I want to buy. Certainly that will LOWER a business’s revenue, not increase them. It is nicely proven that having credit card digesting increases the average size of a purchase, compared to cash only, because of this very point.
But it doesn’t end right now there for the business. Every day the business needs to close out its till.
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Which means counting the money, listing the inspections and credit cards processed, and writing up a deposit slip. Using a merchant account, the credit cards prepared are totaled in a batch instantly through the credit card machine, and can become listed on the deposit in a few seconds. Counting cash, especially if it doesn’t add up the very first time, takes much, much longer, and period really is money. And the cost of consuming cash doesn’t stop there. Because the amount of cash on hand grows, so does the security risk for all of us, often times along with deadly consequences. Which then raises the difficulties of implementing security measures like drop safes, secure enclosures, guards and surveillance systems, the list associated with cash related expenses goes on and.
And the Dodd-Frank Restoring American Financial Stability Act now allows businesses to decline accepting credit and free e cards for purchase amounts of their choosing, below $10. 00. So now a business can stop losing money by taking a debit card to pay for a pack associated with gum and having all of the income eaten up by the merchant account services fees.
Consumers will not benefit by using cash only. Consumers plus merchants alike will be disappointed in order to regress to “cash only. inch This wild and wacky idea of eliminating credit card processing is totally an error.