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14 December 2013

Why are so many places offering cash back to debit card users? [More:]This is everywhere these days; even the Post Office does it. I can't imagine what's in it for the merchants -- offering cash back has never drawn me to a particular store. Perhaps it just means less money to count down at the end of the night?
I'm not a big fan of the debit card because it is an instant deduction from the linked account. Yes, you can call the bank and cry 'fraud'; but it is still a phone call; and my time, and then need to prove. And or the OMG where did my money just go / product broke the very next day and they won't accept a return / I just got billed three times for my payment / WTF somebody just bought a LCD TV three states away and that money has already been processed out of my account WTF I'm broke until I unfutz this and the bank will only give me a 'temporary' credit of X$ towards my claim .... effect.

CC's don't do this.

I suppose for merchants it is instant cash in an account as compared to how some CC's companies only pay the merchant ( or subcontractor; stylists in many salons only get a client's store front CC payment at the end of the billing month; I.E.; Astylist rents a booth from Hair Salon; Client pays Hair Salon at front register instead of giving Astylist a check or cash; Hair Salon pays Astylist their CC share of front register at the end of the billing month. ) at the end of the month.

Cash back is the incentive to do the instant electronic transfer, and I'll bet the standard 3% CC fee is less with a debit too, so that would be another incentive.
posted by buzzman 14 December | 14:27
If a store allows you to write a check for more than the purchase, it only makes sense to offer it to debit cards, too, since they're, functionally, the same thing. Personally, I've always thought it odd to do cash back on checks and debit cards.
posted by Thorzdad 14 December | 14:58
Credit card fees are very high. Up to 7% depending on the business and the products. Now that CC companies are encouraging people to use cards for even small purchases it is murder for small business.
posted by arse_hat 14 December | 16:14
It seems to me that for a store it's interesting not to have too much cash at the end of the day; they have to pay a fee to get it in digital form I think.
Also cash is a risk wrt robbery.
posted by jouke 14 December | 16:19
You've answered your own question. There's a significant cost to retailers from cash handling in terms of counting it up, transporting it and paying it into the bank. They'd much rather get rid of it to their customers.

Debit card fees for merchants are generally a flat rate per transaction, so there's no cost incurred by making the debit card transaction bigger.
posted by cillit bang 14 December | 16:19
My grocery store just got rid of its ATM, saying that the fees it was charging were more than, e.g., a pack of gum, so it made sense for customers to buy a pack of gum t0 get their cash rather than just pay a fee to get their cash. So I'm guessing that offering cash back basically turns small merchants into ATMs and increases their sales a bit.

That doesn't cover fees charged to the businesses by the banks, of course. Maybe it evens out, or eventually works in the favor of the business? ("If I'm running into the market for cash, I may as pick up X, Y, and Z, too.")
posted by occhiblu 14 December | 16:52
Interesting. Over here, lots of small shops have ATMs because they actually generate income - the shop gets a percentage of the fees (users are charged up to $2.50 to use an ATM that doesn't belong to their bank). The major supermarkets don't require a transaction to withdraw cash and the automatic checkouts ask you first if you want to shop or withdraw cash. I think part of the driver is that banks charge retailers for transactions based on their turnover so increasing the transactions decreases their cost of sale. Also, traditional debit cards are decreasing in use dramatically in favour of debit MasterCard/Visa cards, which have the same protection (more or less) as a credit card but use your own money instead of credit. The rise in the use of ' touch and go' style transactions has probably accelerated this, I think (transactions under $100 don't require PIN or signature - you just touch your card to the reader and walk away).

I still can't get my head around the idea of using cheques at a shop. Cheques are pretty much non-existent here and almost all transactions are done via EFTPOS or, in the case of businesses, bank transfer. I don't remember the last time I paid a bill in cash, either - most people pay all their bills through their bank's online banking system.
posted by dg 14 December | 18:43
Also, I have a nagging feeling that the promotion of EFTPOS over cash is at least partly so retailers can build profiling information on their customers. I know they can't collect personal information from the card, but I have a suspicion that they track transactions from the same card and use it to analyse what the purchasing pattern of (anonymous) individuals looks like it inform their marketing. I may also be paranoid.
posted by dg 14 December | 18:52
Getting cashback at the checkout is the safest way - outside of going into the bank and drawing it over the counter - of getting cash from your account. ATM fraud is rife, world-wide, and at work we regularly have presentations from the various card companies showing us how sophisticated the ATM frauds are. With every new step taken to thwart the fraudsters, it only slows them down, not stops them. They soon work out how to put a new kind of card reader over the slot on the newest ATM model.

I only ever use an ATM as a last resort if it's outside. I'll use ones inside the bank, during bank opening hours. Believe me, I've handled enough ATM fraud cases to convince me they're one of the least safe ways of withdrawing cash.

In the UK nobody uses cheques any more. I can't remember the last time I wrote a cheque.
posted by Senyar 14 December | 19:29
Yeah, we get constant warnings about them here too. Most of the bank-owned ones have all sorts of measures like weird-shaped card slots, photos of what the card slot should look like on machines, weird devices that vibrate the card as it's inserted/removed etc. I don't like to use the non-bank owned machines because they are much easier to add a card skimmer to.

posted by dg 14 December | 23:20
I absolutely choose stores that give cash back over stores that don't. On a busy day already full of errands, it's great to combine what would have been a bank run + a prescription pickup into one store visit. I actually strategize around it sometimes. While there I might get some other stuff I had forgotten I needed/wanted until I saw it. I am certain this adds up to more sales for them over the long haul.

Last night I had to stop off for my cat's food. He eats special food they only have at PetSmart. I was delighted to see that they offered cash back at the register - it was awesome because we were on the way to this reading event that I suspected might have a cover charge or pass-the-hat, and I had no cash. That kind of thing makes me really grateful for the service - and yes, it is more secure than an ATM.

I have had a couple things go wrong with my debit card in my 20+ year history of having one, but they were all cleared up easily enough with a phone call or two -- not enough to make me fear using my debit card in the full range of ways. I'm sure had I carried wads of cash for that long that consistently, I'd have experienced other forms of shadiness or inconvenience.
posted by Miko 15 December | 00:19
I still can't get my head around the idea of using cheques at a shop

They're pretty rare here in the US too. I've probably seen someone pay with a check at a supermarket twice in the last five years. Usually it's only little old ladies.
posted by octothorpe 15 December | 08:53
And sometimes me. I'm a tallish lady who's getting old. :)
posted by JanetLand 15 December | 11:13
I never shop with my debit card because I have a long-standing fear of bouncing checks (never mind that I rarely write them anymore). Plus I like getting credit card rewards.
posted by ThePinkSuperhero 15 December | 14:26
I will never believe in anything ever again. || Any opinions on the rediscovered 'Stoner' by John Wiliams?