The past decades of credit card processing growth were because it made it easier and quicker for us to purchase everyday items. Going back to cash entirely disregards this value proposition, both for us and the businesses we shop at.
In a recent March 16th Washington 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, let’s all begin to negotiate more for a lower price on our purchases if we pay in cash.”
On the surface this makes perfect sense. Those horrible banks won’t be charging a penny for credit card processing interchange, the swipe fee on a merchant account. So because the merchant won’t pay their merchant account services fees – voila, we the consumer can negotiate a lower price and reap the “benefit!” Regretfully, nothing could be further from the truth. The past decades of credit card processing growth were because it made it easier and quicker for us to purchase everyday items. Going back to cash entirely disregards this value proposition, both for us and the businesses we shop at.
Just think of our challenge today to obtain the cash. How is that money going to leap into our wallet? Certainly we can go into a branch, stand in line, and get cash from our accounts. Of course that’s 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 a fruitless 50-year war on drugs. So no problem, I’ll just use the cash machine. And I can, for small amounts, but many times with lines. And I still need to drive to get to one. God forbid if I use a convenient Out Of Network ATM Cash Machine! Then poof, on average I’ve just spent about $7 to $8 to get my cash! It’s not the desired outcome to pay more. And what about my personal safety issue? Won’t I be more exposed carrying larger amounts of cash? So I just won’t carry a large amount, right? Wrong! I’m not going to accept NOT being able to purchase something because I don’t have enough cash on me. High Risk Credit Card Processing
Then there is the challenge to SPEND the cash. How many times have you been at a store where they had posted NO ACCEPTANCE of hundred dollar bills, or even fifty dollar bills? I have and I’ve complained about it every time. But even if those bills are accepted, it routinely takes me longer to pay with cash, and receive change in cash, then swiping my cards. And I always notice how the line behind me grows longer when I’m fiddling though my pockets to get the correct amount of change to pay the clerk, much like it does if I ever sit there at the checkout trying to write a check.
In a study done years ago by Ipsos Insight and Peppercoin, they determined that our desire to use credit card processing for small payments was growing and becoming a more common method of paying, especially for low priced goods and services. Not less. And only seven percent of their survey respondents who would not use credit card processing for small payments found it easier, or preferred to use cash, instead of processing a debit or credit card through a credit card machine. Ninety three percent preferred the faster, easier debit and credit card processing method.