"Cash only"--why?

[TheFoodTutor]

Under current law (as part of the Patriot Act-seriously), every credit card account must be personally guaranteed by somebody.

This is true. I recently set up a new credit account to buy some furniture, and the gentleman setting up my account read me this part of the Patriot Act over the phone. I found it somewhat horrifying to realize how many different types of employees of stores and banks are now acting as officers against terrorism. That's a really invasive law.

I have noticed that most of the businesses that I frequent accept credit cards, but a good number do not accept Discover, which I find mildly troublesome, because it's my card of choice, since I get hundreds of dollars in cash back benefits every year. I even get cash back on the purchases I make for my small business.

Holly, what do you mean by a "no-show customer?" How can one be a customer if s/he doesn't show up in the first place? Does that mean, Customers are always right, even if they don't show up for their reservations and don't call to cancel?

Yeah, that's a really good point. Until you've stood at the front door, and turned away hungry people with cash in their hands because you're holding a table for someone who has never spent a dime in your restaurant, and possibly never will, you don't know how incredibly taxing it is on a restaurant to take reservations. Some restaurants lose hundreds and sometimes thousands of dollars in potential business every single night because of reservations that no-show. That's a pretty expensive bit of "hospitality," Holly. How much money are you willing to lose to be hospitable?

[auntdot]

I have heard of people, actually do not know of any, ahem, who own cash only businesses, including restaurants.

They do very nicely, thank you.

And they keep a number of books scrupulously, I am sure.

Also we grew up in NYC.

And there were many popular restaurants that only took cash.

The people who owned the places were very clean, so tidy in fact that they would actually launder the money.

[Mayhaw Man]

Oh Brooks, you're such a populist.  You must be from Louisiana...

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I come by it naturally, a long line of them, in fact (see W. Brooks Oliver) (or his daddy for that matter)

[sockii]

I have noticed that most of the businesses that I frequent accept credit cards, but a good number do not accept Discover, which I find mildly troublesome, because it's my card of choice, since I get hundreds of dollars in cash back benefits every year. I even get cash back on the purchases I make for my small business.

*You* get cash back, but the business taking that Discover card gets charged more per transaction for Discover than by Visa/MC/Amex. Which is why a lot of businesses won't take them. At least that was the case when I first opened up my charge processing account...I was discouraged (by the CC processing company, no less) not to sign up for accepting Discover unless I expected to be doing very high volume sales.

[FistFullaRoux]

Just a note that Waffle House (a popular chain with a lot of locations) does not accept credit cards. The vast majority of the locations do not acccept checks. This is a chain running on prety much a cash only basis. And thriving.

Cash is real. Checks can be forged or fake. Credit cards can be stolen or otherwise invalid. Cash will always be accepted.

And the customer is always right. Unless the customer is dead wrong, and the business cares so little about said customer that they will tell him that he is wrong.

[FistFullaRoux]

I have noticed that most of the businesses that I frequent accept credit cards, but a good number do not accept Discover, which I find mildly troublesome, because it's my card of choice, since I get hundreds of dollars in cash back benefits every year. I even get cash back on the purchases I make for my small business.

*You* get cash back, but the business taking that Discover card gets charged more per transaction for Discover than by Visa/MC/Amex. Which is why a lot of businesses won't take them. At least that was the case when I first opened up my charge processing account...I was discouraged (by the CC processing company, no less) not to sign up for accepting Discover unless I expected to be doing very high volume sales.

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And as another aside, Sam's Club only accepts Discover. They stopped taking Visa/MC/Amex a while back. And Wal Mart (of which Sam's is part) IIRC issues their own Visa cards. Strangeness.

[Miami Danny]

Margins, people. They are thin. Credit card fees are EXORBITANT! Why? Because people are bombarded every day, exhorted, really, by the banks to use their ATM/Credit cards for everything. Therefore, it's very hard to NOT take credit cards, and can only be done by a very small business or a known quantity (e.g., Peter Luger's). Pay with cash when you can and help out the small businessperson!

[Holly Moore]

Holly, what do you mean by a "no-show customer?" How can one be a customer if s/he doesn't show up in the first place? Does that mean, Customers are always right, even if they don't show up for their reservations and don't call to cancel?

Yeah, that's a really good point. Until you've stood at the front door, and turned away hungry people with cash in their hands because you're holding a table for someone who has never spent a dime in your restaurant, and possibly never will, you don't know how incredibly taxing it is on a restaurant to take reservations. Some restaurants lose hundreds and sometimes thousands of dollars in potential business every single night because of reservations that no-show. That's a pretty expensive bit of "hospitality," Holly. How much money are you willing to lose to be hospitable?

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OK, no show reservation maker.

Owned a restaurant on the second floor, one flight up. In its heyday we were so popular that, at times, we had a line down the stairs. We averaged over three turns on a Saturday - our record was over five turns - though in that case two turns were after theatre desserts and coffee. And we took reservations. So I've walked a mile in those reservation book juggling shoes.

We had no shows but only held a table for 10 minutes unless the reservation maker called. And we had enough pop-ins that we were still able to keep our tables nicely filled. It wasn't totally efficient from a greedy, green eye shade point of view. Sometimes tables sat empty for five or ten minutes on a busy night because we were holding them for the reservation. That's the amount of money I was willing to lose to be hospitable. I can not imagine running a restaurant our level of cuisine (casual neighborhood) or higher without accepting reservations. Just plain rude.

And since the majority of places do accept reservations, it must not be that bad of a business decision.

I feel the same about credit cards. You build the cost into the menu price. First I don't want to lose tables because we don't accept credit cards. Second many businesses require their employees to use credit cards. And third it is my job to make life easy for my customers and that doesn't include forcing them to leave their associates or family hostage while they run out to the ATM machine.

Hospitality.

[rjwong]

Holly, thank you for the clarification.

As for reservations, one of my favorite restaurants does both. They set aside one-half of their tables for reservations and the other half for walk-ins. With that type of arrangement, they're able to accommodate both groups of customers. Mind you, this restaurant does a huge volume (500 on a slow night), and this is a high-end prime rib place and they are definitely into hospitality.

From your restaurant experience at the medium to high-end scale, what percentage of revenue is generated from credit cards as opposed to cash? And pardon me for asking an obvious question, did your restaurant accept cash? Was that rare, I mean the entire bill paid in cash, not just the tip?

[Holly Moore]

Holly, thank you for the clarification.

As for reservations, one of my favorite restaurants does both. They set aside one-half of their tables for reservations and the other half for walk-ins. With that type of arrangement, they're able to accommodate both groups of customers. Mind you, this restaurant does a huge volume (500 on a slow night), and this is a high-end prime rib place and they are definitely into hospitality.

From your restaurant experience at the medium to high-end scale, what percentage of revenue is generated from credit cards as opposed to cash? And pardon me for asking an obvious question, did your restaurant accept cash? Was that rare, I mean the entire bill paid in cash, not just the tip?

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My restaurant was on the medium and not the high end of the scale. Credit cards ran about 75 percent of our sales. Cash? We loved cash. I still do.

[Miami Danny]

And I feel the same about credit cards.  You build the cost into the menu price.  First I don't want to lose tables because we don't accept credit cards.  Second many businesses require their employees to use credit cards.  And third it is my job to make life easy for my customers and that doesn't include forcing them to leave their associates or family hostage while they run out to the ATM machine. 

Hospitality.

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Of course, every expense is built into the price. But if you want to save your restaurant-owning friends an expense that might go to better serving YOU than the banks, pay cash. People stopped carrying cash because with cards you can't get robbed of your cash. Guess what? ID theft and cloning of credit cards is a thousand times more likely to hurt you than losing some cash. If you wallet is stolen, you might lose a couple of dollars. If your CC #'s are stolen, it could be thousands. BTW, the most common way for your CC #'s to get cloned is at a restaurant. Cash is King!

[designchick88]

And I feel the same about credit cards.  You build the cost into the menu price.  First I don't want to lose tables because we don't accept credit cards.  Second many businesses require their employees to use credit cards.  And third it is my job to make life easy for my customers and that doesn't include forcing them to leave their associates or family hostage while they run out to the ATM machine. 

Hospitality.

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Of course, every expense is built into the price. But if you want to save your restaurant-owning friends an expense that might go to better serving YOU than the banks, pay cash. People stopped carrying cash because with cards you can't get robbed of your cash. Guess what? ID theft and cloning of credit cards is a thousand times more likely to hurt you than losing some cash. If you wallet is stolen, you might lose a couple of dollars. If your CC #'s are stolen, it could be thousands. BTW, the most common way for your CC #'s to get cloned is at a restaurant. Cash is King!

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Sorry. Cash is not king for me.

I rarely ever carry it. I hate it. I hate counting it, I hate small bills, I hate loose change. I hate that it's hard to keep track of what you spent it on. Whereas when I use my debit card, at the end of the month I can download all my transactions into Quicken and see exactly how we spent our money that month.

I am one of those people who feels that a. the sooner we get to cashless society, the better; b. if someone at a restaurant is ripping off my credit card, that's the restaurant's responsibility to rectify - not mine; and c. if a business doesn't take credit cards, they're not getting my business. If someone rips off my credit card, according to my bank's rules I'm only responsible for $50 of the fraudulent charges (and the one time DH had his debit card number stolen, the amount of the charge was $50 and the bank wrote it off anyway). If I am carrying $500 in cash because that's the day I'm buying groceries, picking up the dry cleaning, paying the electric bill and going out to eat, and my wallet gets stolen, that $500 is gone - period. There's no way to get it back. No thanks. I'll stick to credit/debit cards.

[origamicrane]

Sorry. Cash is not king for me.

I rarely ever carry it. I hate it. I hate counting it, I hate small bills, I hate loose change. I hate that it's hard to keep track of what you spent it on. Whereas when I use my debit card, at the end of the month I can download all my transactions into Quicken and see exactly how we spent our money that month.

I am one of those people who feels that a. the sooner we get to cashless society, the better; b. if someone at a restaurant is ripping off my credit card, that's the restaurant's responsibility to rectify - not mine; and c. if a business doesn't take credit cards, they're not getting my business. If someone rips off my credit card, according to my bank's rules I'm only responsible for $50 of the fraudulent charges (and the one time DH had his debit card number stolen, the amount of the charge was $50 and the bank wrote it off anyway). If I am carrying $500 in cash because that's the day I'm buying groceries, picking up the dry cleaning, paying the electric bill and going out to eat, and my wallet gets stolen, that $500 is gone - period. There's no way to get it back. No thanks. I'll stick to credit/debit cards.

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hmmm... your response tells me two things

you have never run your own business and you have not thought through the economics of credit cards.

(please do not take offence this is just an observation)

I think that all the people that say cash is king basically understand that cash is equal to a 100% cash, where as credit is only worth 95% cash.

Why should I as a proprietor allow the banks to skim 5% of my turnover?

The banks do not protect me as a proprietor either, as a business we can only do so many checks if someone comes in with a stolen or forged card and the machine clears their purchase.

I lose the money, it comes out of my pocket if the bank refuse to pay me and my lose gets transferred to my customers in terms of price rises or me reducing the quantity or the quality of my food.

And you as a customer should realise that that 5% transaction charge is transferred directly to you.

You are paying 5% more for everything you buy!!!

So not only are the banks making money out of the transaction they are then charging you interest if you don't clear your balance at the end of the month.

So you are more likely to be paying 6-10% more then what you ought to be for everything!!!!

So do you still think that 1% cash back on your purchases is still a good deal?

And are you saying that it better to lose your credit card then your cash?

Well if someone steals your card and uses it

yes you are only liable for $50

but you will have the hassle of cancelling you card waiting a week for your new card to arrive, time spent reporting the lost card and dealing with the credit card company.

Credit card fraud is one of the biggest crimes hundreds of millions are lost every year to the banks. Where do you think they recoup their money? yep bank charges and increased transaction charges which again are transferred to you the customer.

as to your point about keeping track of your monthly spend

i don't see the relevence all you are saying is that its more convenient?

are you really happy to know you pay an extra 5% of your monthly spend for the conveninece of you checking your accounts?

Also if you buy everything with your credit card, everything you like, everywhere you go, is trackable by the banks and the government. Are you really happy to know that the banks can build a virtual picture of the type of person you are?

to know intimimate details about everything in your life? They can then use this information to target you with products you never you knew you wanted or needed.

credit cards are evil!!! they are the financial parasites of the modern world!!!

And if i still haven't convinced you that credit cards are bad,

this generation is more in debt then any previous generation

why? credit cards! we are spending money we don't actually have.

Cash is king because either you got it or you don't.

Anyone can get credit its a buy now and pay a lot more later culture.

[Mayhaw Man]

I'm only saying this once, because all of you are so well behaved that I won't need to say it again...

This is an interesting discussion and it is about cash and restaurants-not about the joys and evils of our credit card habits and the social and economic ramifications of cash vs. credit.

Please keep things directed towards the original topic, which was food oriented, or I will be forced to "taunt you a second time".

[origamicrane]

well its all about tax evasion or the restaurant has been denied credit card facilities by the banks.

[TheFoodTutor]

Thanks, Brooks.

As for the question about upscale restaurants and credit cards, the one restaurant where I work which is very upscale fine dining - we don't do anything like 5 turns a night, and we're lucky if we can even turn our 19 tables once, because the pace of dining is so much slower than in casual places - I'd say that almost 100% of the tabs are paid on a credit card. Once you get to the point where people are spending an average of $100 per person, you almost completely stop seeing any cash whatsoever, except for the valets.

Which brings me to another little gripe I have: Often, I'll have a table that pays their entire bill on a credit card, but they'll split the check 5 ways, which is fine and I have the capacity to do that, but then all 5 of the people will each whip out a $20 bill and ask me for change for the valet! And it will be my first table of the day! Holy Cow, people! How much money do you think I walk in here with every day? Do you think my pockets are literally bulging with $5s and $1s?

Just my personal observation of what seems like strange behavior to me. Sometimes I tell them that I can get them that much change, but it will take me a few extra minutes, as I'll have to go outside to the valet and buy the change from him. At that point they usually say never mind, since they're getting the change for the valet anyway, so they can just as easily get it from him.

The more we move to a cashless society, the more often you're going to see me hanging around in parking lots, making transactions with valets.

[auntdot]

There is one negative I can think of about taking cash.

When I was a kid, many years ago, used to work in a variety of businesses from grocery stores to fast food places (before McDs), in the days when stores did not generally take plastic.

What I remember most from those days is that everyone was stealing.

From the company, from the patrons, you name it.

It was quite an education, and I can tell you many ways it was done.

And no, I was not among those who did, but the ways were openly discussed. And I witnessed it many times.

I would occasionally have to do the books at the end of the week, yes, as a kid. How anyone could make things easier for a thief than that, I have no idea.

But the workers did not know that I could get a reasonable estimate of how much each stole. On the weekends the theft was far more than they were being paid.

On a busy Saturday, people would take more than their weekly salary.

My after hours pay for doing the books was a beer and some breads and cakes that were going past their 'buy by' date.

Had I wanted to I could have tripled my earnings simply without any chance of being detected. But I did not.

Yes, cash businesses are great for the owners, but also for the unscrupulous employees.

And in those businesses, the owners should be very vigilant.

But even so, in a busy restaurant where people are paying cash, the temptations are rife.

[johnder]

I was actually out to dinner with 2 other people last night at a moderate Italian place on 5th avenue in Park Slope, Brooklyn last night and we all got totally caught off gaurd by the cash only.

From the menu of his place, where antipasti run between 8 -13 bucks, entrees run up to the 20's and their wine list has bottles reaching up to $70, it is totally unacceptable not to accept at least one CC.

Between that and the fact that all 3 pasta entrees came out of the kitchen without apparently any salt. Seriously -- We have never needed to salt food at a restaurant as much as we did last night, it was amazing.

Although they did have entertainment in the fact the waitress had a very thick Italian accent at the start of the meal, and by the time the check came she completely lost all of her accent. She went from southern Italy to South Brooklyn in 1.5 hours.

So, I digress.... I think any restaurant where the average bill runs >$50 pp should accept CC.

[Kim D]

Are restaurants charged a flat fee for Debit card usage or are restaurants charged a percentage the same as when a Credit card is used?

One of my favorite places for lunch only takes cash. I've always assumed it was for tax evasion reasons. If I wrote to The Ethicist asking whether I should frequent this place, I wonder what his advice would be.

- kim

[Miami Danny]

Credit/Debit transactions are charged the same, even though there is obviously less risk for the payment services company on a Debit transaction. There was a lawsuit over this, and right now some payment services companies rebate some of that overcharge to the business. There are also set monthly fees as well as per transaction fees-also extras for non-swipes, etc.

On the matter of cash-do you think that every cash transaction (even if the restaurant takes CC's)is simply an opportunity for the business to steal? If so, perhaps you are a little too cynical for your own good. Not everyone is a thief, just because they have cash in their hands. Except bartenders, of course. (Just kidding)

[nwyles]

Are restaurants charged a flat fee for Debit card usage or are restaurants charged a percentage the same as when a Credit card is used?

One of my favorite places for lunch only takes cash. I've always assumed it was for tax evasion reasons. If I wrote to The Ethicist asking whether I should frequent this place, I wonder what his advice would be.

- kim

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We pay a flat fee of $.10 per debit transaction.

[glenn]

The reasons vary why some restaurants choose not to accept credit cards and frankly, I think the reasons are irrelevant. I have no problem with a restaurant taking cash only - high end or inexpensive - as long as a cash only policy is plainly posted where the diner can see it before sitting down. This includes posting the policy on a website if there is one as well as telling people on the phone.

Regarding the statements that restaurants need to qualify credit-wise to accept credit cards, I don't believe that's true any longer. There was no credit check on my place.

[NulloModo]

Miami Danny -

Speaking as someone who has lots both cash and been a victim of credit card fraud, I can tell you straight up that I would rather deal with the credit card fraud than the loss of cash anyday. If you lose cash, you are out the cash, sure you can file a police report, but the chances of anything actually happening are slim to none. On the other hand, the times I have been stricken with false CC charges, all it has taken was a quick call to Amex and they were removed either that day or the next, and I was out absolutely nothing. Heck, they even had the courtesy to send me a notice about a class action lawsuit against one of the companies that falsely charged me. That alone is a reason for me to not to want to carry cash, and a reason I don't frequent restaurants that take cash only.

From a customers stand-point there are tons of reasons to pay with credit: you can get rewards points or cash back, you don't have to pay an extra $1.50 to draw money out of an ATM (honestly, there is never an ATM around for the bank you are with when you need one), and if you purchase something that is sub-par or were swindeled by the seller, you only have to dispute the charges and you are not forced to pay. Restaurants end up paying the extra money for CC transactions, true, but it is a customer service issue, and they are in the customer service industry.

It goes hand in hand with lots of other disturbing restaurant trends, like raising prices due to momentary spikes in ingredient costs, or serving bottled water instead of tap and then charging for it. Customers do not want to be treated merely as potential for profit. Taking CCs makes life much easier on the customer, and restaurants are not running on 5% profit margins, they can take it, and should.

EDIT:

Just to say, if a restaurant is going to be backwards enough not to accept CCs, they need to make that policy abundantly clear with signage, notes on the menu, and preferably someone telling patrons in person when making reservations, or a note on the cash register/wall if it is that type of place. It is incredibly embarassing as a customer to order something and then to realize that one has no means to pay for it; an embarrasment such that I would make a point never to patronize that particular place again.

Edited April 24, 2005 by NulloModo (log)

[nwyles]

From a restaurant side. CC scams are out there and I have had to take it on the chin a few times. The CC companies don't care about the hows or whys, they just know that they are not going to pay and have reached into my bank account and removed money on a number of occasions.

My wife and I are now signing our personal cards - "show picture I.D. "

[glenn]

[...]It goes hand in hand with lots of other disturbing restaurant trends, like raising prices due to momentary spikes in ingredient costs...

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Most restaurants don't change prices based on a spike in costs and they absorb the additional cost. Maybe a handful adjust prices, but that is not the norm. But what's wrong with that? If the cost of ingredients goes up by 25%, why should a restaurant have to suffer? Most every other industry adjusts their price if their costs change. But I digress....