Merchant's cost of accepting cash

[Bitcoin++]

How much does it cost the merchant to accept cash?

It takes time to count notes and coins, and to give back change.
Counterfeits might be a problem.
Money needs to be counted at the end of the day, which takes time.
Employees may steal a little a bit as the sum seldom adds up anyway.
Money needs to be transported to the bank securely, which isn't cheap.
Cash pays no interest until deposited in bank.
Other costs as well?
How much does this all add up to?

My local supermarket has a lcd monitor at each counter where it shows the price (among other info). It could very easily also display a bitcoin QR code. Assuming zero confirmations is secure enough, it would take only seconds to make a payment. The supermarket could exchange bitcoins to euros several times a day, and only face fees and spread which adds up to 1% or so. Would a payment in bitcoin be more lucrative for the supermarket than cash?

[phillipsjk]

Bitcoin's dirty little secret is that it is not ready for mass adoption. With the 1MB block limit, that apparently works out to about 7  transactions per second world-wide. If it got really big really fast: it would replace wire transfers, not credit cards/cash.

[hilariousandco]

I've never actually thought about it this way, but I guess you're right. Theft from tills by employees is a big problem. Counterfeiting is also a massive issue which Bitcoin solves too. I think it's only natural that digital payments in some form will replace coins and notes, but I guess half of cash transactions are actually done electronically with either bank transfers or credit/debit cards as well anyway.

[twiifm]

Well they can't refuse cash so they have to accept it if that's what the customer wants to pay.

How can employees steal if the they use cash registers?  If the receipts don't balance out then the employee has to pay out of pocket.  This was common when I used to work as waiter.

Most businesses don't care about interest.  They usually just have checking account.  They need cashflow for payroll, supplies, pay vendors, etc..

[hilariousandco]

Well they can't refuse cash so they have to accept it if that's what the customer wants to pay.

How can employees steal if the they use cash registers?  If the receipts don't balance out then the employee has to pay out of pocket.  This was common when I used to work as waiter.

Easy. Never actually put it through the till or cancel the last transaction. And a lot of places will change cashiers several times without kittying up so you wouldn't know who was dipping in the till.

[ranlo]

Well they can't refuse cash so they have to accept it if that's what the customer wants to pay.

How can employees steal if the they use cash registers?  If the receipts don't balance out then the employee has to pay out of pocket.  This was common when I used to work as waiter.

Easy. Never actually put it through the till or cancel the last transaction. And a lot of places will change cashiers several times without kittying up so you wouldn't know who was dipping in the till.

There are also things like discounts. For example, Wal-Mart does price matching (as do more stores). Want $10? Ring up your $20 item and price-match it to $10. Boom, free money.

The same thing can happen with Bitcoin as well though, really.

(Also, I'm not condoning theft!)

[Foxpup]

Well they can't refuse cash so they have to accept it if that's what the customer wants to pay.

This is not true in most countries.

[hilariousandco]

Well they can't refuse cash so they have to accept it if that's what the customer wants to pay.

How can employees steal if the they use cash registers?  If the receipts don't balance out then the employee has to pay out of pocket.  This was common when I used to work as waiter.

Easy. Never actually put it through the till or cancel the last transaction. And a lot of places will change cashiers several times without kittying up so you wouldn't know who was dipping in the till.

There are also things like discounts. For example, Wal-Mart does price matching (as do more stores). Want $10? Ring up your $20 item and price-match it to $10. Boom, free money.

The same thing can happen with Bitcoin as well though, really.

(Also, I'm not condoning theft!)

True, but don't staff normally have to get permission from a supervisor or manager to do a price match? I think that's how it works over here, otherwise stuff like this will happen.

[ranlo]

Well they can't refuse cash so they have to accept it if that's what the customer wants to pay.

How can employees steal if the they use cash registers?  If the receipts don't balance out then the employee has to pay out of pocket.  This was common when I used to work as waiter.

Easy. Never actually put it through the till or cancel the last transaction. And a lot of places will change cashiers several times without kittying up so you wouldn't know who was dipping in the till.

There are also things like discounts. For example, Wal-Mart does price matching (as do more stores). Want $10? Ring up your $20 item and price-match it to $10. Boom, free money.

The same thing can happen with Bitcoin as well though, really.

(Also, I'm not condoning theft!)

True, but don't staff normally have to get permission from a supervisor or manager to do a price match? I think that's how it works over here, otherwise stuff like this will happen.

Not locally for sure. In fact, stores that offer other types of discounts usually don't need permission from anyone either. Sometimes they'll be like "I just need to see your ID card (senior, military, whatever) so the camera can see that I looked" before they do it, but most stores do price matching with no problems.

Also, with the comment about stores having to accept all money, that's true in the US. Here it is "legal tender" and they can't even deny paying in change (I think there was a rule about like 100 pennies being the cap on those or something, but I'm not 100% sure about this one). The general idea here is that if it's cash, it has to be accepted.

[Peter R]

Well they can't refuse cash so they have to accept it if that's what the customer wants to pay.

This is not true in most countries.

Correct.  Anyone can open a store in the US that sells, for example, ice cream and not accept cash.  In fact, they don't even have to accept US dollars in any form.  They could only accept bitcoin for their ice cream if that's what they chose to do.  

The only time someone in the US is required to accept USD is for the settlement of debts.  For example, if the store owner gave Bobby an ice cream coin because he didn't have any bitcoins, Bobby could legally settle the debt in dollars.  

[Bitcoin++]

Well they can't refuse cash so they have to accept it if that's what the customer wants to pay.

True. In some countries it may be illegal to refuse cash. In countries where it is legal to refuse cash it is still in most circumstances foolish to refuse it. You may lose a customer otherwise. For the same reason most merchants accept credit card despite the cost.

I just wonder what the percentage cost is for cash as payment. For bitcoin it is the time value of ~10 second (compared to maybe 40 seconds with cash), a tiny fee (for buyer only), the exchange rate risk and the exchange to fiat (~1%).

[ranlo]

Well they can't refuse cash so they have to accept it if that's what the customer wants to pay.

True. In some countries it may be illegal to refuse cash. In countries where it is legal to refuse cash it is still in most circumstances foolish to refuse it. You may lose a customer otherwise. For the same reason most merchants accept credit card despite the cost.

I just wonder what the percentage cost is for cash as payment. For bitcoin it is the time value of ~10 second (compared to maybe 40 seconds with cash), a tiny fee (for buyer only), the exchange rate risk and the exchange to fiat (~1%).

I think it's hard to determine the percentage cost because there are different factors. For example:

1) The risk of holding on to cash (think about theft/robberies/loss/etc.)
2) The transferring of funds (which may require a security team, Brinks, etc.)
3) The removal of funds (I am not sure what happens if a business gets tainted funds but I am assuming they are just confiscated and counted as a loss?)
4) Counterfeit money (which would really be part of #3 but figured I'd toss it in there)
5) Miscounts of change (I can't count the number of times someone has given too much/too little change)

All of these have their costs associated with them.

[Bitcoin++]

I agree. But I'd be surprised if big retailers don't have analyzed these costs.

For example one cashier handles $3,000 a day according to the receipts but only $2,998 is counted at the end of the day. $0.50 is declined by the bank as counterfeit. During one hour, twenty minutes is spent handling cash which would have been reduced to ten minutes with credit card payments and to seven minutes with bitcoin. These are wild numbers I came up with. Would just like to see such an analysis from a real company.

[ranlo]

I agree. But I'd be surprised if big retailers don't have analyzed these costs.

For example one cashier handles $3,000 a day according to the receipts but only $2,998 is counted at the end of the day. $0.50 is declined by the bank as counterfeit. During one hour, twenty minutes is spent handling cash which would have been reduced to ten minutes with credit card payments and to seven minutes with bitcoin. These are wild numbers I came up with. Would just like to see such an analysis from a real company.

It's a great idea, but I don't think we're going to get any real answers here. That may be something that the community would have to push for. Like an "how about we SHOW you how much money/time you'll save by offering Bitcoin as a payment method?" I just don't see a lot of stores doing that on their own. At least not yet.

[Elwar]

The IRS will steal your money (more than just via taxes) if you deal mainly in cash.

http://www.washingtonpost.com/opinions/george-f-will-the-heavy-hand-of-the-irs/2014/04/30/7a56ca9e-cfc5-11e3-a6b1-45c4dffb85a6_story.html

Because 35 percent of Schott’s Supermarket’s receipts are in cash, Terry and Sandy make frequent trips to the bank to avoid tempting actual criminals by having large sums at the store. Besides, their insurance policy covers no cash loss in excess of $10,000.

In 2010 and 2012, IRS agents visited the store and examined Terry’s and Sandy’s conduct. In 2012, the IRS notified them that it identified “no violations” of banking laws. But on Jan. 22, 2013, Terry and Sandy discovered that the IRS had obtained a secret warrant and emptied the store’s bank account.

[hilariousandco]

What exactly is a 'secret warrant'? They just took the money and emptied the entire bank account without serving them a warrant or actually telling them about it?

[Elwar]

What exactly is a 'secret warrant'? They just took the money and emptied the entire bank account without serving them a warrant or actually telling them about it?

It is necessary to fight terrorists. Because...terrorists.

[hilariousandco]

What exactly is a 'secret warrant'? They just took the money and emptied the entire bank account without serving them a warrant or actually telling them about it?

It is necessary to fight terrorists. Because...terrorists.

Ah one of them kinda deals. Surely they were not meant to be exploited or used in such a fashion, especially on American soil? I thought it was still illegal for that sort of stuff?

[zimmah]

How much does it cost the merchant to accept cash?

It takes time to count notes and coins, and to give back change.
Counterfeits might be a problem.
Money needs to be counted at the end of the day, which takes time.
Employees may steal a little a bit as the sum seldom adds up anyway.
Money needs to be transported to the bank securely, which isn't cheap.
Cash pays no interest until deposited in bank.
Other costs as well?
How much does this all add up to?

My local supermarket has a lcd monitor at each counter where it shows the price (among other info). It could very easily also display a bitcoin QR code. Assuming zero confirmations is secure enough, it would take only seconds to make a payment. The supermarket could exchange bitcoins to euros several times a day, and only face fees and spread which adds up to 1% or so. Would a payment in bitcoin be more lucrative for the supermarket than cash?

banks charge a high price for accepting cash
having cash in your registers increases the changes of armed robbery

[murraypaul]

How much does it cost the merchant to accept cash?
[...]My local supermarket has a lcd monitor at each counter where it shows the price (among other info). It could very easily also display a bitcoin QR code.

Supermarkets I go to have very simple two or three line LCD price displays.
They couldn't display a QR code.
So you'd have a significant investment cost to replace them with terminals that could. And, of course, of developing, testing and validating the software.
You'd also have the issue of ensuring that you had sufficient phone network coverage at the tills for all major networks, otherwise people wouldn't be able to pay.
You might save on per-transaction costs, but there would be significant up-front costs.
At the moment, would there be enough Bitcoin transactions to recoup those costs?
Plus, are people currently paying in cash likely to be those who would switch to paying digitally? Isn't it more likely to be those customers who are already paying with debit or credit cards?