Paying cash: why is it cheaper?

open question cuz there are lots of different answers to this at least I hope there are you go to the shops to buy something go to the shops to buy something okay how can you pay money be more specific okay one at a time hands up let's go to to a debit card thank you debit card number one another Peter change change cash cash okay goodare another gift cards excellent U Dar a bank Lo a bank [Music] loan that cheeseburg be $2 cuz I pay by a bank loan okay so actually we'll get to we'll get to loans surely okay another one someone else has an answer yeah check it check if you are living in the '90s paid by check yeah cred c credit card thank you very much um what you going to say luas savings savings okay so that would be um under here savings okay any others okay so FP sorry what does FP stand for it's an ACC let's get this again electronic and I heard it up the front funds funds as in money transission of almost close it's transfer it's transfer right transfer from you to the guy you're paying at point of sale right so you can just be right there at the checkout and it works okay swards reward okay all right hold on sorry I was I'm getting a bit ahead of myself I said fos applies to a bunch of these let's sit down for a second I'm getting a lot of good answers but now that there's quite a few on the board a lot of the ones that you're saying to me are either already on the board or they're actually not forms of payment I'll give you an example okay layby Labby is not a form of payment in fact it's a form of not payment right it's a I won't pay for this and we we agree on conditions on how that's going to work out in the future right okay so before you raise your hand and Shout out a few more now that we have a few more of the board think about where it my Feit I'll give you an example further one that's already on the board is points points where do you think points like credit card points that kind where do you think it fits on here and I'll give you a clue it's not credit it would almost certainly be gift cards I'll tell you why I'll show you one right now if you've got a credit card right and you're earning points and all that kind of thing right when you go they're actually very small bucks uh when you go to cash in your thousands of points to get a a value out of that what they'll give you is a gift card right and then you can can use that which is like well actually I have I've still got $7 on it that's all so that's I okay um are there any others that really you've thought about it they're not on the list yeah pay pass pay pass okay hold on pay pass pay pass um paywave same kind of idea right um it's really just a form of this it's a different it's a it's it's still a way of pain but it's just that the chip is different yeah that's right it's the it's the physical scanning method is different okay but it really is any of these right I think it's a pretty good list are you guys happy with that list it's reasonably um you know nowadays though like I said if you're living in the 90s you pay by check increasingly you cannot pay by check anymore okay um you can't always pay by the next most common probably um is credit but you can't always pay by credit some places you'll go there and um they'll have a sign that talks about credit cards and it says something own any suggestions anyone read these signs before have you paid attention when you've been in a shop yet okay so firstly they might just say forget it if you want to buy a kebab here you give me cash okay I don't take credit cards okay the other thing they might say is they may take credit but then they say but okay number one you know they might say uh yeah might say no ax okay because um I'll get i'll get into the reason why not americ okay ah now hold on I heard another one um they'll say um they'll say a quantity and the quantity varies it's five or 10 or 20 or whatever right but they say look if you're going to buy something small I won't accept your credit card I'll only accept cash or debit right now hold on this is really interesting and it give be different quantities right U why is this they've got the machine sitting there like the little fos read right why would they apply a limit of some kind to it Chloe the hold on wait say that again oh right okay so it's to coers people to buy more objects okay here's the business woman at the front okay someone said you said tax I'll put that off on the side here I want to hear what s has to say you're going to say that okay right kind of let me explain let me explain okay um American Express why is there um why is there what's the word I'm looking for discrimination against one kind of credit card versus what are yellow onesa Master Visa Mastercard are are the main ones uh it used to be common that you'd get din Club but they they're very they're very uncommon these days the these three they're the big guys and they're International yeah is that I have aarg ah okay now it has to do with something called a search charger I'll put this in another yeah you might if you're on the other side of the business you might you might experience this right um that's a bad choice sorry I need to refill it is's a search charge what's a sech charge a you have to it's a it's an extra little fee right so here's the idea let's let's let's change our position now I asked you about all of this in terms of you're paying okay um now let's put you on the other side of the counter I'm someone comes to you you're the vendor now right and they want to pay you with these methods okay now here's the thing right to accept cash doesn't cost you anything right like if I put $5 in your hand there's no like you get the $5 all of it right but to do credit or and even debit cards right we were talking about that machine right that machine costs money number one you got to buy the machine number two you often actually have to pay ongoing fees to keep using it right have some of you noticed like um some of them they're actually Wireless like they don't there they can just take it around anywhere it's it's working just like a phone it's got reception and it dials up and it it talks to the bank and it does all of this fpos stuff right that's not free there are guys over here that will charge you for that okay now in particular American Express is renowned because they charge the most right so if you're a little guy and like as a shop you don't get a lot of business why would you bother paying these guys right lots and lots of money every month or every quarter whatever just so that you can get the AMX people right they probably got some other card in their wallet anyway or cash so you just say no forget it I'm not going to pay it okay alternatively you know even when you do these guys which are a little better there's still costs involved okay and that's why they'll apply a minimum to coers you to buy more so that for you as a vendor you know it's worth your while okay all right yeah question common yeah it's pretty common yeah like it's um I I would put American Express visa and MasterCard I put them all on the same level like it's not like this is a little guy but because of this surcharge business this is their this is their business model this is how you wonder how do credit card businesses make money they make it they don't make it off you they make it off businesses by charging them okay all right now here's the thing again quick question or long one um it's like a statement sort of but um I was buying something at the shop like with those Wireless um things pay wve pay pass whatever yeah yeah yeah and then no not the pay pass like whatever was I put my card and then like it said like dialing up and then like it called the bank whatever and then it said like card approved or whatever but yeah it just called up something I don't know yeah yeah yeah it's exactly like a phone call it's exactly like a phone call um I don't know what the relevance of that was but let's move on okay no I'm going to move on is that okay if you got if if it's still relevant after you can come back to it okay now again I'm putting you in the shoes of the business again okay now let's suppose you really really want to be able to provide credit okay but it's costing you money okay you want people to be able to pay credit to you but you've got to rent these um these devices you got to pay these guys okay so here's what you do okay yeah from CB Whatever by the way CBA West pack a andz etc they're not the credit card providers these guys are okay but that's a side here's what you do suppose one day you didn't have the credit card machine you go and buy one you go and rent one right so it cost you money they're not cheap so here's what you do what did we have before we had like soft drink or something right we had like 500 mil bottle one L bottle 2 B and they had some costs right I can't me help me remember 75 cents was like a dollar 20 and 250 right okay so here's what you do remember um the cost for you as a business to be able to accept credit right is not just a once off it's going to keep going right so you're making the same amount of money but you're getting less profits because you got to pay these other guys so here's your solution here's your solution you take all of your things right and you just add a little bit to each one you make them all a little more expensive something like this maybe you push this up to 90 cents maybe $150 maybe 275 something like this okay so this is your way of compensating you're like this is an extra charge I got to pay for but I still I still got to you know feed the family and all that kind of thing so I can't my bottom line my profits what I take home and I can spend um I'll need to raise these prices to sort of compensate for this okay this is really interesting because now if you come in and you're like hey you've raised your prices right but maybe you don't even have actually probably most of you don't have credit cards right cuz you got to have like income and that kind of thing people don't just hand them out so you're like I pay cash all the time this is not fair I'm getting ripped off because other people want to use credit other people want to use credit right so businesses they recognize this and that's why they do things like this you recognize this this is this is the good guys this is their Banner actually and it says pay less pay cash what's that about what does that mean has anyone actually done this before yeah okay so what happened what does it mean if you pay cash it cost less so this seems like a simple concept right but why is that do GST it's not to do a GST it has to do with this difference right okay if you're paying cash the business in a sense it doesn't have to you don't have to foot the bill for all of this stuff right so they're willing to pay you this lower price okay sorry they're willing to let you pay the lower price right versus this higher price which you'll pay for fos okay does this make sense so this Payless pay cash business has to do with this it's really quite interesting

Channel: Eddie Woo

Views: 1,809,017

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Id: BzC-GCaEyJ4

Length: 12min 12sec (732 seconds)

Published: Fri Jul 18 2014