Are grocery stores becoming cash-negative operations?
May 14, 2012 9:49 AM   Subscribe

With so many customers using non-cash methods of payment and customers getting cash back via debit purchases, are grocery stores becoming cash-negative operations?

Whenever I'm in line at the grocery store, it seems like most people are paying with credit or debit cards, and a not-inconsiderable number of debit card users get cash back. Many places have a fairly low cap on cash-back transactions, in the range of $20 or $35. But other places like (iirc) Whole Foods and Trader Joe's let customers get up to $50 or $100 back. Are some stores running as cash-negative, now? It seems like some of them must be far less cash-positive than they used to be, at the very least.
posted by rmd1023 to Shopping (11 answers total)
 
Didn't Dodd-Frank cap the debit card fees, making debit transactions cheaper for merchants?

I have (well, had) a Chase Mileage Plus debit card and the mileage rewards went away just as Dodd-Frank was passed. It wasn't a coincicence.
posted by JoeZydeco at 10:07 AM on May 14, 2012


Response by poster: I'm just talking about actual physical paper currency. When I worked retail at a convenience store, every night there was a big bag of money we brought over to the bank and put in the night deposit box after closing. At some point, if more cash is handed to customers for cash-back transactions than is handed to the store for cash payment, will stores end up not having a cash deposit to do at the end of the business day?
posted by rmd1023 at 10:14 AM on May 14, 2012 [1 favorite]


I often see an armored truck leaving my local Whole Foods when I go there right at opening time, so my guess is that they get cash delivered to them regularly (presumably if they were sending cash out, the truck would be coming after closing time).

It might be worth searching the archives of industry mag Progressive Grocer to see if they've written about the issue.
posted by Sidhedevil at 10:23 AM on May 14, 2012


Oh I see, you're talking about debit card customers doing $20-$40 over and taking the change (which is free compared to most ATM fees). Never mind my response.
posted by JoeZydeco at 10:28 AM on May 14, 2012


My guess is you are correct in that they are running less cash positive, but, other than interest earned on their cash which these days is almost nil, this does not much affect profits. I actually go to one specific grocery store because they do allow me to get up to $250 cash back. Saves me a trip to the bank and about $2.00 in gas. But, I go there more often than I otherwise would, so I spend more. Unless you are looking to rob the place, less cash on hand could even be a good thing. Corporate gets the income electronically. Less cash to deal with locally is a good thing I think.
posted by JohnnyGunn at 10:34 AM on May 14, 2012


will stores end up not having a cash deposit to do at the end of the business day

As I understand it, that's the whole point of cashback - not your convenience. I don't know about in the US but in the UK (where cashback originated IIRC), large businesses are charged a % to deposit cash whereas debit cards are typical a flat per transaction fee. Stores don't want cash, it costs them money to deposit it - as well as the costs of securely storing and transporting it.
If you pay for your shopping with $20 in cash that will costs them approx $0.10 to deposit it. If the next person comes along and pays with a debit card it costs the store nothing extra to charge an extra $20 to that person's card and save themself $0.10 with the added bonus of making a happy customer who wanted cash but didn't want to pay the ATM fee or go out of their way to find an ATM
posted by missmagenta at 11:02 AM on May 14, 2012 [3 favorites]


Best answer: I work at an independent grocery store, and we take in much more cash than we give out via debit cash back. A lot if customers still pay with cash, sometimes for large purchases.
posted by Slinga at 11:05 AM on May 14, 2012


Best answer: I can't answer the OP, but I can say that an armored truck is no indication either way: what happens is that business that accept cash will get big-bill heavy during the course of the day. They take in 20s, 50s, and 100s, and give out 1s, 5s, 10s. That creates an imbalance in the distribution of bills they have, but they don't want you, the customer, to think twice about showing up first thing in the morning and dropping C-notes on them. (Or XX-notes, more commonly.)

Likewise coins go out far more than they come in , and in some cases, even if you have coins coming in, you don't bother to sort them; you throw it all into your deposit bag and let your bank or cash-services company do it for you. Lots of business banks completely outsource their cash-handling to a cash-services company, which in turn runs the armored car business.

I, for one, get sandbagged by a fee (by my bank, and it's bigger than any ATM fee) if I take any money as change from a debit-card transaction, so I don't engage in that, and others presumably don't either.
posted by Sunburnt at 11:20 AM on May 14, 2012 [1 favorite]


Best answer: I was a cashier at a grocery store about 5 years ago and there were far more people who paid with cash than people who got cash back (maybe a couple per shift). It's probably shifted a little further away from cash, but I doubt it's changed that dramatically (probably fewer people get cash back now, too).
posted by randomnity at 12:07 PM on May 14, 2012


Best answer: I have no knowledge regarding grocery stores, but the fairly successful restaurant I manage tends to have negative cash deposits on nights when people use credit cards to pay and leave tips. The credit card tips are distributed out of the restaurant's "bank" and if the amount paid out to employees outweighs the amount brought in on cash sales we have a negative cash deposit. We aren't "losing" money, our deposit just consists of mostly credit cards on some nights. I imagine we experience a negative deposit more often than a grocery store due to the very valid point by randomnity.
posted by Stan Grossman at 1:21 PM on May 14, 2012


Response by poster: Interesting - it hadn't occurred to me that restaurants are in the same boat due to tip outflow.
posted by rmd1023 at 4:26 AM on May 15, 2012


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