cash

Cash vs. Credit Cards: Cash is nearly always better value for customers

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InvestorBlogger says in response to a post on Bargaineering about Credit Cards vs. Cash.

We run a business here in Taiwan, and we specifically don’t take credit cards in any form. Why? Our best prices are for cash purchases, and that’s what we give our customers.

While we may win a few extra dollars from additional transactions, having that extra middleman just isn’t worth the hassle of letting someone else look after our money.

With installation fees, monthly terminal fees, fees on each transaction, and numerous penalty fees that may apply, plus the risk of the credit card company NOT paying up promptly due to chargebacks, we could actually end up out of pocket for transactions that, cash-wise, would already have been ‘settled’.

The upshot is that, for the foreseeable future, we are not likely to take credit cards, in any shape or form. If we were to, we’d likely have to increase our prices for ALL of our customers by at least 5% to cover most costs. This is not an unusual choice in many more cash-based economies, such as Taiwan’s but in the UK/USA it would be quite an unusual position for a retailer to take.

I really don’t understand why consumers think credit card spending is better. It’s not. It’s not better for you, it’s not better for me. And it’s not generally better for society. Do you know any businesses that specifically reject credit cards for purchases of goods and services? What reasons did they give?

Spending Money for the Public Good: Yet another sign of excess?

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On January 18th, the local government issued some vouchers to all permanent residents and locals in Taiwan. These vouchers amounted to NT$3600 (about US$107) for every man, woman and child on the island. For some families, it was quite a big windfall, but for most it isn’t. The money is in the form of a coupon or voucher that can be used until September 30th this year to purchase goods and service at most places on the island. They were issued in the form of 500’s and 200’s. If you failed to collect yours, you still have plenty of time until the end of April.

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Yes, those are mine sitting on the desk the night I got them. Well, like any good member of the public, I did my duty. I finally used mine to purchase a new mobile phone. Indeed, I went rather over the limit with my purchase. But that’s what happens when you get mad at your old telephone company. I switched to a new company and bought a much better plan. Much Better. It’s very bad form to piss off your customers. More on my purchase later…

Should you swipe at all?

But I was wondering, sitting there with my credit card at the ready. Swipe! Swipe! Swipe! But will that be enough to save the world from the hangover of excess over the last few years? Really, will it? When the government tells its people to spend, rather than save, one has to wonder whose interests it is serving.

Could it be that what is good for individuals and families (cost cutting, sensible saving, reducing debt…) may be bad for the economy (lost jobs, decreased sales, less borrowing…) but what is good for the economy may be ruinous for individuals ( when things get bad, spend, borrow, and cut your savings…). It’s difficult to believe that ordinary families will be persuaded to part with hard-earned cash in the face of such uncertainty.

But why the vouchers?

It’s rare that the government actually provides such a concrete measure to increase spending. Perhaps the usual formula of cutting interest rates has failed to stimulate spending in any great measure. I mean, who in their right mind will spend more money when they are likely to be fired. Rather they will curtail unnecessary expenses, save more in the bank, and make do. None of which will help stimulate demand. Even bribing your public won’t help, will it?

Making something from nothing!

Evil ideas? So it got me wondering. Is it possible to take the $3600 and make some money with it? You’re not allowed to exchange the money for cash, can’t put it in the bank, or even give change for the money. So I brainstormed some ideas.

1. Buy some frames, pay for image processing, and sell some of your photographs as individually signed pictures to people you know, at a market, or to a store. You can limit the series or produce extra pictures to special order…

2. Buy a large item at a warehouse store, repackage it as a smaller items, find a way to add value (by packaging, including other items, through location, …). Buy a large box of instant or fresh coffee bags, a box of sugar packets and creamer, a box of paper cups. Make up sets of each, then sell them to office workers.

There’s no limit to your creativity. You don’t need a big budget, but you do need a sense of where your market is. Once you know your market, creating a product shouldn’t be difficult if you know how to sell to that market. What other ways can you use these coupons? Did you get them? What did you do with them?

How Much Cash Do You Carry? – Share

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Jim at Bargaineering just asked how much people carry on their wallet… and it got me thinking. I typically don’t carry that much … really.

At the beginning of the month, I usually withdraw a nominal NT$5000 (about US$165) to last me as long as I can. It covers coffee money, snacks and outside purchases, the occasional book or two (which are hideously expensive here), newspapers (not daily), some daily necessities, or occasional luxuries. So about the 8th of the month I always feel richer than the rest of the month.

I do make withdrawals from the bank to cover additional expenses, so most of this money is pocket money in the broadest sense. Pretty much by the end of the month, I’ll ‘borrow’ NT$1000 from the wife who’s in charge of the general expenses. That usually lasts me from then to the end of the month.

BUT, the biggest enemies of this money are Buckstars where I typically spend nearly NT$200 on coffee and something to eat! It’s surprising how fast that money can go when I go there every day! Even the occasional trip to 85C can speed up the pace of expenses.

The rest of the money goes on small stuff for home or business, and I occasionally forget to reclaim this money! Right now, though, is an exception: I have nearly NT$2000 in my wallet and that’s before my pocket money. I can’t remember why… but it’s there. I should save it.