Cashless society

[Value Collector]

I don't necessarily agree that Cash costs are largely fixed. In the case of large corporations yes, in the case of small business not necessarily. If you are a small business and you only take in for example $1000 of cash per week (because most people are paying by card) then the owner is most likely not going to pay Arma-Guard to come and collect the cash as its not worth it, he can just take the money to the bank himself once per week. However if the same business was taking in $20,000 of cash per week they would likely pay Arma-Guard to come and collect it.

There are also many small business paying staff (international students, backpackers, etc) in cash or the owners salary in cash so they don't even have to bank the cash.

What I mean is they are largely fixed, eg that business taking in $1000 a week probably spends about $50 a week in labour handling it, doing the banking etc, so around 5%, but adding $1 of sales in cash doesn’t increase that $50 really.

If they double the cash to $2000, they probably still do the same bank run and change run, so still spend only $50 in labour, so the costs drop to 2.5%

In this case they may put up a sign saying “we prefer cash” because they want to put as many transactions into that $50 cost base as possible.

But yes if you increase the amount of cash significantly the cost will rise up to a new higher fixed base.

—————

But at some point if the volume of cash sales decreases, that $50 bank run or $500 armed guard becomes 30% or 50% of cost, so they might go cashless.

 

[Value Collector]

Even worse is self ordering kiosks, self serve checkouts, etc. That totally removes human interaction from the experience.

A few weeks ago I was at a shoe store and they had a self serve kiosk where you could order in stock that they didn't have on the shelf or was out of stock etc instead of the traditional way of speaking to a staff member and them placing the order for you.

I think in the next ten years for example you could see in shops like Bunnings that they will have self serve map kiosks like a Westfield does except the map will direct to the exact aisle and bay that the item you are looking for is in (instead of asking a staff member).

All of this does increase productivity but it makes people lonelier. I think eventually when flying drone technology improves and the regulation catches up, people will just order stuff from the internet and it will be delivered to their house for free via drones within 2 - 3 hours and so a lot of traditional retail stores will die off.

Especially this will accelerate in another 50 years time when virtual reality is fully rolled out. Imagine people being able to virtually shop in a virtual store and see and touch all the merchandise, try on clothes etc. Then business wouldn't need to pay rent to have a physical shop front and would just deliver the product via drones to people's houses.

You can already do that in Bunnings, if I am looking for a product I generally pull out my phone, search the Bunnings website and it tells me the isle and bay it’s in, it’s normally quicker than walking around trying to find a staff member, and it frees up staff to look after other customers with harder questions.

So I can check if it’s in stock, and where exactly it is even before I walk into the store. And I can click on the map if needed.

 

[JohnDe]

I don't necessarily agree that Cash costs are largely fixed. In the case of large corporations yes, in the case of small business not necessarily. If you are a small business and you only take in for example $1000 of cash per week (because most people are paying by card) then the owner is most likely not going to pay Arma-Guard to come and collect the cash as its not worth it, he can just take the money to the bank himself once per week. However if the same business was taking in $20,000 of cash per week they would likely pay Arma-Guard to come and collect it.

There are also many small business paying staff (international students, backpackers, etc) in cash or the owners salary in cash so they don't even have to bank the cash.

Exactly.

I can use my business as an example. The last time we banked cash weekly was pre-Covid, and money was counted and organised at the end of the week, taken to the bank at the same time as some other chores were required.

Now banking is done once every several months, and we don't bank all the cash. Some is kept and given as bonuses to the staff, some for purchases, and some as a backup.

I can't put a figure on what it costs my business to do the banking, because it is my own labour and I use the time to have a break to socialise and for mental health.

Modern society and technology are turning us into slaves. Any reason to get out of the workplace for a little while is a good time and is only a small cost of the business but a great benefit to the people.

 

[Smurf1976]

Most businesses would be closed in that situation, and ATM’s won’t be working anyway.

Also, can I just point out, you don’t need the internet working on your phone or watch to make digital purchases, it works even if you have your device in airplane mode.

I've experienced an extended power failure in the relatively recent past, 2022, here in Australia.

In short - supermarket open with limited power from a generator but cash payment only since no communications was working.

Small shops generally shut.

This guy has a bit to say here:

 

[Value Collector]

I've experienced an extended power failure in the relatively recent past, 2022, here in Australia.

In short - supermarket open with limited power from a generator but cash payment only since no communications was working.

Small shops generally shut.

This guy has a bit to say here:

The guys cynically inspired videos are entertaining, but of course he is incorrect because Armed guards etc have been charging fees to businesses for years to assist in the moving and handling of cash, and banks used to charge a lot more in bank fees for businesses when they had to process more cash, my company account is now free, provided I don’t deposit cash and cheques regularly.

So the “fees” that digital systems charge are largely just offsetting other costs businesses pay,

It’s a bit like Netflix charges a fee to access there services, but we don’t pay block buster video rentals stores anymore.

 

[moXJO]

The guys cynically inspired videos are entertaining, but of course he is incorrect because Armed guards etc have been charging fees to businesses for years to assist in the moving and handling of cash, and banks used to charge a lot more in bank fees for businesses when they had to process more cash, my company account is now free, provided I don’t deposit cash and cheques regularly.

So the “fees” that digital systems charge are largely just offsetting other costs businesses pay,

It’s a bit like Netflix charges a fee to access there services, but we don’t pay block buster video rentals stores anymore.

Not everyone used armed guards. That was mainly large business.

Your previous answer to $50 note attracting fees from guards is wrong. The point was a $50 note can float around without any fees attached for a long time.
Every time you tap with digital it's fees for both customer and business owners.

 

[Value Collector]

Not everyone used armed guards. That was mainly large business.

Your previous answer to $50 note attracting fees from guards is wrong. The point was a $50 note can float around without any fees attached for a long time.
Every time you tap with digital it's fees for both customer and business owners.

Everyone attracts some costs, whether it’s paying armed guards or using their own time/labour. The point is the cost of doing digital transactions offsets some of this other costs, even if that is just freeing up the business owner to get home sooner and spend some time with their kids.

In response to your second paragraph, it’s the same, all businesses are attracting some sort of cost for handling cash, on top of that there is the costs that are absorbed by others that are technically subsiding their transactions like cash wearing out and being replaced, expecting customers to go out of their way to ATM’s etc, using bank services that are provided free but are essentially subsided by other customers etc etc.

The $50 note never actually floats around cost free, except in fantasy land.

 

[moXJO]

Everyone attracts some costs, whether it’s paying armed guards or using their own time/labour. The point is the cost of doing digital transactions offsets some of this other costs, even if that is just freeing up the business owner to get home sooner and spend some time with their kids.

In response to your second paragraph, it’s the same, all businesses are attracting some sort of cost for handling cash, on top of that there is the costs that are absorbed by others that are technically subsiding their transactions like cash wearing out and being replaced, expecting customers to go out of their way to ATM’s etc, using bank services that are provided free but are essentially subsided by other customers etc etc.

The $50 note never actually floats around cost free, except in fantasy land.

I'm talking as an individual unit. As far as I'm concerned it's fee free till logged.

Fee from atm.
Guy buys goods.
Shop gives to customer as change.
Customer pays tradie.
Tradie buys lunch.
Shop owner buys stock.
And so on.

Digital
Buy goods *fee
Shop owner receives money *fee
The end.

 

[Value Collector]

I'm talking as an individual unit. As far as I'm concerned it's fee free till logged.

Fee from atm.
Guy buys goods.
Shop gives to customer as change.
Customer pays tradie.
Tradie buys lunch.
Shop owner buys stock.
And so on.

Digital
Buy goods *fee
Shop owner receives money *fee
The end.

That’s still a fantasy situation, each step of that way each business is incurring costs to process those cash transactions along the way on the net cash they collect each day.

There is no part of a modern economy where any decent percentage of cash is circulated in that way with out going to the bank regularly to help move the cash to outside suppliers etc

 

[qldfrog]

Not everyone used armed guards. That was mainly large business.

Your previous answer to $50 note attracting fees from guards is wrong. The point was a $50 note can float around without any fees attached for a long time.
Every time you tap with digital it's fees for both customer and business owners.

Well sometimes not directly to customer but obviously, you pay for it in pricing.
The fact is every 50$ spent not only get 10% sucked by government but also 1% by the bank systems.
And in a loop....

 

[moXJO]

That’s still a fantasy situation, each step of that way each business is incurring costs to process those cash transactions along the way on the net cash they collect each day.

There is no part of a modern economy where any decent percentage of cash is circulated in that way with out going to the bank regularly to help move the cash to outside suppliers etc

Not on that particular $50.
It also happens all the time.
The cost is on cash processed not circulated.
If digital wasn't profitable for banks they wouldn't be doing it.
What fees are you attributing to cash flowing through, as opposed to not being charged with the same transaction on digital?
The examples I gave were local small business.

Well sometimes not directly to customer but obviously, you pay for it in pricing.
The fact is every 50$ spent not only get 10% sucked by government but also 1% by the bank systems.
And in a loop....

That's debatable on cash.

 

[Value Collector]

Not on that particular $50.
It also happens all the time.
The cost is on cash processed not circulated.
If digital wasn't profitable for banks they wouldn't be doing it.
What fees are you attributing to cash flowing through, as opposed to not being charged with the same transaction on digital?
The examples I gave were local small business.

That's debatable on cash.

Ok, your fantasy works if you limit your thinking to that one $50 note, but only because you are ignoring the fact that for that to work there has to be a large volume of other sales/transactions that are generating the revenue that covers all the costs that require the cash to leave the local community, that require the funds to be banked either manually or digitally.

For example

1. As a minimum 10% of each sale needs to go into the banking system to pay the GST, which can’t be paid in cash.

2. The good purchased and ingredients in the tradies lunch are not produced locally, so funds need to be banked at some stage to make the payments to suppliers etc.

this cash loop with no frictional handling costs you talk about is pure fantasy, every transaction includes a portion that needs to flow outside the local community and requires the banking system.

To the extent it could exist you are talking about tax dodgers involved in extremely limited areas of the economy, not any decent portion of the real economy.

 

[Value Collector]

Well sometimes not directly to customer but obviously, you pay for it in pricing.
The fact is every 50$ spent not only get 10% sucked by government but also 1% by the bank systems.
And in a loop....

Agreed, cash handling is just a cost of business that most places have built into the price, to the point that some places feel they need to charge extra for digital transactions it’s either because

1. they are playing a game to try and increase cash sales to make the most of their already high fixed costs involved in processing cash sales.

2. They are a struggling business and want to save every penny so aren’t valuing their time.

Or

3. They simply want to have a large amount of cash sales from which they can skip tax on.

 

[moXJO]

Ok, your fantasy works if you limit your thinking to that one $50 note, but only because you are ignoring the fact that for that to work there has to be a large volume of other sales/transactions that are generating the revenue that covers all the costs that require the cash to leave the local community, that require the funds to be banked either manually or digitally.

For example

1. As a minimum 10% of each sale needs to go into the banking system to pay the GST, which can’t be paid in cash.

2. The good purchased and ingredients in the tradies lunch are not produced locally, so funds need to be banked at some stage to make the payments to suppliers etc.

this cash loop with no frictional handling costs you talk about is pure fantasy, every transaction includes a portion that needs to flow outside the local community and requires the banking system.

To the extent it could exist you are talking about tax dodgers involved in extremely limited areas of the economy, not any decent portion of the real economy.

Moving the posts.
All the costs you mentioned apply to digital.
Plus the cost of using your own money. The $50 note is not charged a fee just to enter/leave the till. Digital on the other hand is paying both ways.

 

[Value Collector]

Moving the posts.
All the costs you mentioned apply to digital.
Plus the cost of using your own money. The $50 note is not charged a fee just to enter/leave the till. Digital on the other hand is paying both ways.

Look if you accept $1000 of digital payments you probably pay around $10 and the money is put directly in your account, with cash it probably takes at least $10 of your or your staffs labour probably $50 or maybe more to get it in your bank where it’s available to pay your bills.

That $50 note that you don’t bank only seems like it doesn’t have a fee, but just because you choose not to bank that $50 note doesn’t mean you don’t have to bank the other $950 to pay your bills, so not banking the $50 note has not reduced your fixed cash handling costs, you are going to the bank whether you bank $950 or $1000, because you need the money in the bank to pay the majority of your bills eg tax, rent, wages, super, electricity, cost of goods sold etc etc etc.

You are silly if you don’t understand that accepting and handling cash isn’t free.

 

[Smurf1976]

Agreed, cash handling is just a cost of business that most places have built into the price, to the point that some places feel they need to charge extra for digital transactions it’s either because

4. As a matter of principle they're not keen on banks clipping the ticket via fees.

They'd rather pay someone to count cash than boost the profits of whichever bank.

 

[qldfrog]

And obviously cash is the only way you can resell goods on gumtree or FB Market Place as we are discovering after downsizing..but that is only for peons..no second hand market in Disneyland..

 

[Value Collector]

They'd rather pay someone to count cash than boost the profits of whichever bank.

Yeah, I guess there is some people that use candles because they don’t want to pay an electric bill.

At the end of the day, digital payments are a valuable service, and rational people don’t mind paying for it. Even if they do complain about the price, they wouldn’t want to lose the system. A bit like people that complain about fuel prices, but wouldn’t want a horse.

 

[Value Collector]

And obviously cash is the only way you can resell goods on gumtree or FB Market Place as we are discovering after downsizing..but that is only for peons..no second hand market in Disneyland..

Hahaha, so you haven’t heard of Payid? Venmo? PayPal ? Or the many other digital person to person ways to pay?

Apple even has a new person to person payments system using Apple Cash, in their message app.

https://support.apple.com/en-us/105013

 

[JohnDe]

I'm talking as an individual unit. As far as I'm concerned it's fee free till logged.

Fee from atm.
Guy buys goods.
Shop gives to customer as change.
Customer pays tradie.
Tradie buys lunch.
Shop owner buys stock.
And so on.

Digital
Buy goods *fee
Shop owner receives money *fee
The end.

You are correct.

Using my business as an example -

It costs nothing to accept a cash payment, there are no bank fees, and we do not add any handling charges. The money is counted during normal business hours when there is a quiet period, and banking is done when I or someone else has other chores to do, taking advantage of a break away from the hectic business cycle.

On the other hand, is the cashless system. the bank charges the business different fees for different cards, and a fee for the EFTPOS facility. The bank also charges the customer a fee, either for the transaction or for the service. On top of that the business has an ongoing cost of thermal paper roles, electricity, and back up services such as a UPS (backup power supply), and so on.

A $50 note does not lose any of its value other than from inflation, businesses and banks do not snip a piece of the note each time it is handled.

A $50 cashless transaction will lose the customer a few cents every time it goes around the economy. A customer pays by eftpos and a charge is added, the business uses that to pay for an expense and another charge is added, and round it goes.

I am sure that one day, when very few people use cash, businesses will be forced to add a charge. But for now, and for small to medium business, cash costs less to handle than electronic funds.

Payment Costs in Australia Cash appears to be the lowest cost payment method for the small transaction sizes for which it is commonly used. An important cost advantage is that cash payments are quicker to process than other payment methods. The cost of a cash payment rises with the value of the transaction so that cash becomes more costly than EFTPOS for payments of moderate value. ​

The financial institutions and some businesses especially large corporations are fleecing everyone, and the blind are being sold sunglasses.

Card surcharges​

Payments the ban applies to​

This ban on excessive payment surcharges applies to:​

• Eftpos: debit and prepaid
• MasterCard: credit, debit and prepaid
• Visa: credit, debit and prepaid.

Payments the ban doesn't apply to​

The ban doesn't apply to:​

• BPAY
• PayPal
• Diners Club
• American Express cards issued directly by American Express
• taxi fares, whatever the payment type.