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‘Why all Aussies should start paying CASH’: Mum exposes the little-known hidden cost of using a bank card: ‘Use it or lose it’
- Facebook post about why it’s better to pay with cash instead of card has gone viral
- The simple explanation shows that $50, by using a bank card, will slowly lose its value.
- For each transaction, the amount is reduced by merchant fees that stores must pay
A mother of three has explained why all Australians should start paying with cash instead of cards, proving that tapping for payments is taking money out of the community and giving it to banks.
In a Facebook post that went viral, Brisbane woman Fiona Edmunds showed that physical money will retain its value no matter how many times it is used.
However, every time you use a bank card, part of the money will invariably be consumed by fees, which store owners are forced to pay.
A Brisbane mother of three shared a simple and elegant explanation of why cash is better than paying by card
“I have a $50 bill in my pocket and I go to a restaurant and pay for dinner with it,” Edmunds said in the post that more than 19,000 people have shared.
‘The restaurant owner then uses the bill to pay for the clothes. The laundromat owner then uses the invoice to pay the barber,” he continued.
“After an unlimited number of payments, it will still be $50 worth that has served its purpose for everyone who used it for payment.”
“BUT if I go to a restaurant and pay digitally by card, the bank fees for my payment charged to the vendor could be as much as 3 percent or $1.50.”
Ms. Edmunds said a similar percentage is imposed on all other transactions using that original $50 if the holder pays via tap and go.
‘Payments made by the owner of the laundry, the hairdresser, etc. Therefore, after 30 transactions, the initial $50 will exist in just $5 and the remaining $45 will become the property of the bank.’
While this is a simplified example and fees vary greatly between banks, the principle is sound.
With each subsequent purchase, banks and credit card companies take a small portion of the original $50 until, with enough transactions, it finally becomes yours.
‘Use it or lose it folks… cash is king,’ said Mrs Edmunds.
According to the Reserve Bank of Australia, the fees that businesses pay to banks or credit card companies to use their payment services, known as merchant fees, have fallen on average in recent years.
“However, consumers are making more card payments than ever before, which is driving up total payment costs for merchants,” the RBA said.
“Smaller merchants also face significantly higher card payment costs per transaction than larger merchants,” the central bank also noted.
This means that your local cafe is paying more of its income in fees than a large chain store which makes much more money and can get fee reductions.
Businesses may pass on surcharges to customers to cover business fees, but the amount cannot exceed the amount of the fee.
Brisbane woman Fiona Edmunds says all Australians should start paying cash