Just had some food at an Asian restaurant in the CBD, and they offered 5% off the bill on cash payment. Why?
As I remember, only Asian restaurants did that.
Why Are Some Restaurants Offering Discounts if The Bill Is Paid by Cash?
nignucial on 18/08/2019 - 18:26
Comments
Also to save a bit on credit card processing fees.
Yep that too
but mainly to avoid tax
Credit card fees are usually around 0.5% to 2% for amex. Restaurants giving 5% off for cash payments is to hide their income.
somehow costs my company 1.1% to process AMEX, cheaper than visa/mastercard at 1.5%
@rave75: Most of these dont accept AMEX or pass charge to customers. Discount when paying cash is only for hide the income and pay less tax.
plus fixed charge per transaction , approximately 5% fee (based on average transaction $10)
Tax department expects a 50/50 split between cash nd card, if you reduce the card you can hide more cash. The only person losing out is the government.
@Seedy seed: If the government loses out, every single person in the country also loses out. I know people like to think everything is corrupt etc (and it is to some degree), but if the government is defrauded out of $100 then that's $100 less to spend on schools and hospitals - it's not coming out of a politicians pocket.
In addition to CC# fees, if a customer for whatever reason decides to file a chargeback, you get hit with a $20-$50 fee by the banks. Disputing chargebacks are virtually impossible.
Also, if a business generates 2% of their revenue in chargebacks in any single month, their merchant facility is cancelled and the owners are put a "blacklist" commonly known as TMF/MATCH list. Being on such list means you'll be blacklisted for every merchant facility application for a period of between 5-7 years. Which means if you process say $10,000 a week, your chargeback threshold is $200. If 4 customers decide to file $50 in chargebacks for whatever reason, there's a good chance you lose your facility. The % varies between banks, but it's usually around 2%. See https://en.wikipedia.org/wiki/Terminated_merchant_file
Also, not many people realize that in addition to paying 0-3% processing fee, they also have to pay a TRANSACTION FEE, which is usually around 10-30c.
If Jane buys a coffee for $5, that small business owner has to pay:
25c - transaction fee (5%)
2% - processing fee
That $5 coffee has already cost the owner 7% in just bank fees alone.Now, imagine turning over $10,000 a week = $700 week in fees or $36,400/year in fees…. That's like buying a car for the banks every year!
Also note that $10,000/week is pretty "low-average" for a restaurant. Many busy restaurants in Syd/Melb do over $20,000-$30,000/week.
It's not uncommon for a quite busy restaurant to pay $100,000/year in bank/merchant fees (assuming $30k+/week turnover).I've seen the books of some of these restaurants doing $20-$30K/week and the owners are lucky to get earn $100k/year!
I'm ALL for being a 100% cashless society, BUT the government needs to subsidize or run these merchant businesses. Why is it that we are able to send money/to each other for FREE (direct debits), yet businesses are GOUGE for collecting payments?? The only people who make a killing from being a 100% cashless society are the banks who are laughing all the way to the banks.. (heh)
You can't really extrapolate fees from a low value item into a busy restaurant with higher value transactions. Sure, selling the $5 coffee may have a higher fee, but there's usually a number of transactions included fee free in a monthly fee, and discounts for volume. Short of high risk sectors like online services and accommodation, fees are typically < 2% including all per transactions fees. Supermarkets are paying much less than 1% even for Amex.
It's now illegal to surcharge credit cards beyond the cost of acceptance, most cash places I used to visit now accept card and completely dropped their surcharges, those that don't are usually trying to hide income, the cost of handling cash is more than a couple of %.Think about that restaurant taking $10,000 a week, what it costs them to take that to the bank, for what is very likely, on a decent average transaction $200 or less. Just a couple of slippery fingered staff and it's cost you that much, much less actually having to deposit it several times a week.
It's not a shock that places without dubious hiring practices have largely removed any surcharges or discounts, excepting very cheap and high value locations, which still offer free eftpos.
Discounting for cash is likely to increase your chargeback % because you'll have less honest customers paying on card to offset the dishonest ones, assuming you have cctv etc, in-person, card present fraud is way less likely than online fraud.
You've neglected to mention the costs of doing business with cash though…
- Takes (paid employee?) time to take cash to the bank
- Possibility of mistakes in counting change
- Risk of theft if you hold a lot
- Chance of counterfeits
(I wouldn't be opposed to a free govt-run transaction network, but it ain't gonna happen. Even that Osko thing we have now involves someone making a profit, although individual transactions are free)
If you're paying 2% plus 35 cents per transaction, you're getting ripped off and have no one to blame but yourself.
Even over the counter merchants like Square are 1.9% and zero transaction fees.
Any half decent volume and you're on 1% which can legally be fully passed on to the customer.
The only reason a restaurant provides a discount for cash purchase is tax fraud. And that's what it is. Fraud. Let's call it for what it is.
to pay illegal workers cash under the table to save on both tax and cheaper than award wages.
report them.all our workers on visas are limited in what they can work for us. to work 20 hours for example while "studying" but as many hours as we want them for during semester breaks. but many work second jobs at other venues or as uber drivers. the other jobs would be all cash under the table to avoid visa conditions.
no avoid paying super too.
Which is going to (profanity) is all when these workers retire, and you, and your children have to pay their pensions.
apparently the ATO is stopping tax deductions for such expenses
https://www.news.com.au/finance/money/tax/unreported-cash-in…
Agreed with Wizzy avoid Tax I reckon, I think some prefer it as it gets around any card fees as well (maybe they have card fees inbuilt into the price)?
Actually not to hijack the thread but I also always wondered for Asian restaurants I'm always severely encouraged to 'eat in' when I try to order takeaway with server saying stuff like 'it tastes better, you get better stuff etc etc' I always wondered why though?Upsell you on drinks, offer you more food.
Takeaway containers are expensive, eat in crockery is “free” except for the labour to wash it.
Our local favourite charges 50c per takeaway box. I just put my leftover inside an empty drink cup (wiped first)
@payton: Yeah is sucks to pay for takeaway box when you've eaten in and paid for the overpriced meals. Hate that
Hmm thats strange… I had opposite experience where eat in was more expensive than take away in a thai restaurant in cbd…
Any fried food will go soggy in takeaway containers, even in the ventilated containers. Bottom line is it does taste better/as they intended.
This is also part of it - more control over how the food tastes, that it hasn't been left too long/gets cold etc.
But mostly because take-away packaging costs money.
That's true, but I don't know if it's the real reason.
Filled restaurant seats makes it look busy, making it look popular, maybe making you want to eat their food.
To add to this, to avoid food poisoning, people tend to leave it as is, sweating in an air tight container then nuke it 24hrs later…
Not exactly safe
Yeah wouldn't want to vomit at home and clean up myself.
Just vomit on site. True bargainz
If you pay by card, the store has to pay the Visa/MC merchant fee. So cash payment = no fee.
Also, if the card is stolen or the card owner disputes the transaction, the stores doesn't get a cent.
(Same idea as why if you are selling an item via meet-up, you ONLY accept cash, and NOT bank transfer.)Essentially, cash is king in almost all transactions.
Counterfeit notes do exist.
Who's using counterfeit notes to pay for their fried rice?
Bikies?
People using counterfeit notes don't use them to make big purchases, as that's really obvious. It also usually requires making a purchase in a location / cash register that's under video surveillance.
Large value counterfeit notes are intentionally used one at a time for minor transactions, to get as much legit cash back in your hand in the form of change from that transaction as possible.
This is why places like food festivals, music festivals, organic food markets and food courts are targeted by people with counterfeit notes. They can hit 40 stalls in an hour, getting back $45 in change for a fake $50 note on easy small $5 purchases at every point of sale.
@infinite: Thanks:) Your comment reminded me of that incident earlier in the year when police issued a warning after fake $20 notes were used to buy hay and goods from a bakery. Link
The re-designed notes that recently came out are supposedly harder to counterfeit.
@capslock janitor: Looks like it:
The first denomination in the new series, the $5 banknote, was issued on 1 September 2016. The new $10 banknote was issued into general circulation from 20 September 2017 followed by the new $50 banknote on 18 October 2018. The new $20 is expected to be issued in October 2019 and the new $100 in 2020.
Who doesn't ?
Restaurants now have cameras near the exits and till
That's why I exit via the toilet window
more so in China where most notes get scanned!
In China people don’t use cash anymore
Wake up man!! Even beggars in China use cashless system.
Accepting cash can also come at a cost, being one or more of the following -
1. Staff time to take cash to the bank (assuming not all pocketed to avoid tax)
2. Security risk of taking cash to bank
3. Security risk of having cash onsite
4. More staff time at the till counting cash & giving changenumber 4 is a marketing scam by the credit card companies
Unless your staff are working 24/7 non stop, or you have endless queues, you're not really saving any more from using credit
So that they could "accidentally" forget about your visit to the restaurant, "accidentally" forget to put in your cash as income, so they could "accidentally" not pay any income tax on your payment.
Same reason some tradies take cash-in-hand only.and send the money back to China to invest and not pay tax or declare the income from that investment as well.
Woildn't that be tracable by government? Western Union guaranteed keeps all records and receipts.
Unless you mean carrying $9999 into an airplane to avoid customs…Why do we pay tax? Why not just get the amount "after taxes" ?
The Common Reporting Standard (CRS) is an information standard for the Automatic Exchange Of Information (AEOI) regarding bank accounts on a global level, between tax authorities, which the Organisation for Economic Co-operation and Development (OECD) developed in 2014. Its purpose is to combat tax evasion.
Both Australia and China are parts of CRS.
You apparently have no idea what are these fancy Chinese resturants in CBD/downtown for.
Just extending this question, I have noticed they are still willing to print a bill if you paid by cash. Would'nt it kind of defeat the process of avoiding tax, if they record the sale and print out the bill. Sorry for sounding to naive, do they also delete this bill from their records if they wish to avoid tax?
Tax is just a speculation, other reasons as discussed are card fees.
Another reason I would think is maybe their suppliers offer them cash discounts, so if they take all their income on card they will need to make extra effort to get cash for the discount and might be easier for them to just give a discount for cash to their customers. Essentially passing on the discount. Maybe fruit and vegetables stores do not have card functoins (ofcourse many do too.)
Till system and accounting system will be separate so you can still print receipts, cash is just taken out before it gets accounted for
Places like this usually just write up a bill on a pad. Usually no business details or ABN so can't be traced back.
They need cash to pay the illegals working out back in the kitchen.
This and suppliers sell goods off the back of the truck as well. You would be surprised how much food/drink can be purchased for cash (no records).
Would actually keep goods receipts to increase costs of business vs income
- worked in Asian restaurants before.
Even to pay for the legals.
Both my kids work at a cafe / function centre and they are both paid cash (as do the other 10 staff). The 18yo gets paid $4/hr more than her friends at McDonalds. The $22yo get paid about $2/hr less than award. Neither is concerned because they only do 1 shift a week of 8-12 hours so it's a good wad of money.
Strange definition of "legal" there.
In my world an illegal worker is defined as somebody without the correct work visa. As both my kids are Australian citizens this isn't the case. I've never heard the term applied to somebody working CIH (ie: you never hear of a tradie being referred to as an illegal).
Sure, both work cash in hand but what can you do if they have a safe work place, are treated decently, have flexibility and always get paid and there's nothing else available? They are both over 18 and have to make their own decisions on these things. (PS: neither receive any government subsidies, handouts, allowances or scholarships nor have we ever received FTB A or B so we aren't trying to circumvent any means tests).
@brad1-8tsi: So the employer doesnt pay tax, they pay your kids less than award, they possibly cut corners on work place conditions, health and safety, food handling guidelines, and the training requirements all legal are required to comply to.
Profit for the employer and your children get a wad of cash and a bad mentors(family and workplace).
I feel sorry that your kids have been let done in this life lesson.@capslock janitor: what’s all the blame on employers, what about the employees wanting cash so they can still get their centerline benefits
@Lovemybargains: 1) My kids are both young adults over 18. I can guide them but I can't force them to do anything.
2) Yes, they could possibly cut corners and all the other things you mention but the kids haven't noticed that. They are fully aware of safe work practices (due to my mentoring as I do a lot of WHS for work and the older one is a qualified Advanced Gymnastics coach).
3) If they were to leave then nothing would change and neither would have a casual job but somebody else would. This is the nature of the workplace in Australia these days.
4) You do your parenting (you do have kids don't you?), I'll do mine. Both my children are honest, reliable, polite, well groomed and work hard. I'm happy with how they have grown up and their contribution to society.
@kiitos: In fairness, i highly doubt anyone working a shift a week at a cafe is even close to the tax threshold, only thing id be concerned about is centrelink income reporting.
Its illegal for the employer, especially because i highly doubt they are paying superannuation. The employee most likely isn't in the wrong in these matters though.
@kiitos: I know you are having a joke but they pull in <$10k so there's no tax obligation and neither are on any form of government benefit and never have been.
Send home to China.
OP said Asian restaurant. It could be Indian instead.
…well, actually
Correct, they are native Americans.
/s
Ohhhhhhhh boy.
looks like someone napped through their geography classes in high school
This guy…
Lmao what have you been learning in school.
Please kindly resign if you are in the education sector.
Here is some information on your country India
I hope you now know more about your country.
Regardless whether indian or asian…Who is owner… may be an Australian..
Could be Japan, Korea too
I remember years ago as a fresh-faced youngster in the workforce, the milk deliveries were late and I was sent across the road to a milk bar to get some milk, and told to get a receipt. I asked for a receipt and the guy hurrumphed about it and had to turn on the cash register to give me one (note: this was in the afternoon near the middle of the city).
When I got back to the office, we realised the date on the receipt was a couple of years ago! (I don't think it was a default date, as it wasn't 1st Jan XXXX.)
We had a milk bar up until around 6 years ago, not once did we ever change the receipt roll in 20+ years.
Have seen up to 20% discounts in one of the Korean restaurants in Sydney CBD.
It's to get around the Credit Card surcharge laws. By calling it a "cash discount" it's no longer a surcharge.
No credit card in Australia charges a merchant 20% for card payments.
This one charged a 1.5% merchant fee but also offered a 20% discount for cash.
So $100 spend was $101.50 (card) or $80 (cash).ahh that makes more sense, trying to get you to spend $100
Just 20% discount, would be more than any tax on profits
I’d pay cash for a 20% discount lol
Funnily enough 20% is less than the lowest tax bracket…gee i wonder why….
wonder why fking aust gov isnt cracking down on these tax avoiders.
To avoid tax