TELECOM Digest OnLine - Sorted: Re: Touch Tone Grocery Shopping - Promise Never Realized?

Re: Touch Tone Grocery Shopping - Promise Never Realized?

R. T. Wurth (rwurth@att.net)
Tue, 08 Aug 2006 02:34:17 GMT

hancock4@bbs.cpcn.com wrote in news:telecom25.290.8@telecom-digest.org:

> Ironically, today supermarkets do take credit cards which annoys me
> since it adds to the cost of the food. Indeed, pizza places, fast
> food, and convenience stores take credit cards too.

I'm pretty much a cash shopper myself, but I do wonder about the
economics of credit cards vs. cash and checks.

Disadvantages of cash or check/advantages of credit:

1.) Banks charge big cash depositing businesses a counting fee to
deposit cash.

2.) Banks charge businesses a fee to deposit checks.

3.) Merchants bear the risk of bad checks, but for a fee can hire check
guarantee companies to screen their checks at the point of sale and
guarantee payment of those it approves.

4.) Banks charge fees to big customers for rolled coins and wrapped small
bills used to make change. (What a racket--banks charge on both ends of
the transactions!)

5.) Counting the cash tendered and making change slows up the line,
perhaps enough to require adding staff.

6.) Stores were already required to put in electronic card-based
payment systems as part of food stamp conversion from coupons to
electronic cards, (either convert or lose all the business of food
stamp customers) so none of the infrastructure costs are attributable
to credit cards. (Note to non-US readers: food stamps are an
agriculture subsidy/welfare program, whereby the poor receive
coupons/electronic credits that can only be spent at qualified food
merchants for the purchase of qualified foods (no liquor, candy or
soda) processed in US factories from US agricultural products.)

7.) Handling all that cash poses several theft risks (embezzling
cashiers, embezzling managers, armed robbers), and imposes increased
security costs (installation of time-lock safes, armored car service
fees).

8.) For merchants who require presentation of a physical card,
validate the transaction with the issuer's clearing house and collect
a customer signature along with a card imprint or magstripe data, the
merahcnt's bank makes funds available at the close of the current
business day and guarantees payment with no chargebacks for
counterfeit or stolen cards (unless there is clear evidence of fraud
that the merchant was in on). (Chargebacks from customer disputes are
a separate matter).

Advantages of cash and checks/disadvantages of credit cards

1.) Credit card clearing houses charge a considerable percentage fee on
transactions.

2.) Disgruntled customers can generate chargebacks far after the date
of the transaction, which also trigger the merchant's bank to assess
penalty fees.

Where does the balance of these factors lie? I have no idea, but it
seems to me it's not necessarily the no-brainer in favor of cash over
credit most folks would make it out to be. Is there anyone reading
this looking for a subject for a thesis in economics? You are welcome
to take this idea, research the numbers and run with it.

Rich Wurth / rwurth@att.net / Rumson, NJ USA

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