Tim Hortons luddism ?

April 4, 2006 11:47 AM

Why does one of the biggest coffee franchise across Canada will only accept cash as a payment method ? I understand that banks charge a fee per transaction but I would assume profits from sales could justify such a commodity but Tim Hortons seem the think otherwise. maybe someone could explain why such a decision is still viable in 2006.
posted by selfsck to Food & Drink (32 answers total)

speed of service

there is ALWAYS a line-up at Tim's, but it moves incredibly quickly. If they accepted debit they'd have to employ more people to get the lines to move as quickly.
posted by unSane at 11:49 AM on April 4, 2006

by the way, this isn't a guess. There's a notice posted on the drive-thru at the Tim's at Leslie & Lakeshore to this effect, aimed at Americans whose Tim Hortons *do* take debit.
posted by unSane at 11:50 AM on April 4, 2006

Are credit cards as ubiquitous in Canada as they are in the US? By which I mean, are there lots of people who carry absolutely no cash, and use their credit cards for even the smallest transactions? As a coffee-and-doughnut shop, the vast majority of Tim Horton's sales are going to be tiny, so as long as they can avoid paying transaction fees, dodge the cost of installing and maintaining credit card equipment, and not alienate a significant percentage of their clientele, then why bother taking credit cards at all?

In fewer words, because they can get away with it.
posted by Faint of Butt at 11:53 AM on April 4, 2006

Where do you live, selfsck? All the Tim Hortons in Edmonton take debit cards.
posted by Zozo at 11:55 AM on April 4, 2006

what unSane said, plus...

The costs of installing a high-speed debit system are large, vs. a slower phone-based system. If you go to a larger Canadian chain where they have centrally controlled registers, authorizing an Interac transaction usually takes less than 5 seconds. Wal-Mart Canada's system in particular is freakin' lightening. Compare to a smaller store where they use separate debit machines that phone a toll-free number to do the authorization. They're on the order of 20 seconds.

An extra 20 second delay for every other transaction at Tim Hortons (if you use Interac, you really really like it apparently) would shut down our country.

On Preview: FaintOfButt, to some extent, but Interac is the home-grown debit system we love.
posted by chuma at 11:58 AM on April 4, 2006

Sorry, chuma. I was unaware of Interac, and my US-centric brain just leapt straight from cash to credit, with no stops at debit in between.
posted by Faint of Butt at 12:00 PM on April 4, 2006

I understand. It's much easier to put together a nationwide payment system when you only have five banks to coordinate (at the time) versus thousands and thousands.
posted by chuma at 12:01 PM on April 4, 2006

FOB: Yeah, plastic's just as ubiquitous here.

The cost of installing and running a terminal, which can be probitively expensive for small independent businesses, wouldn't be too large an expense for a hugely popular chain like Tim Horton's. unSane nailed it, it's all about the speed of service.

(Although I could have sworn I've seen at least a few Hortonseses with interac/credit card terminals).
posted by Alvy Ampersand at 12:03 PM on April 4, 2006

Are credit cards as ubiquitous in Canada as they are in the US? By which I mean, are there lots of people who carry absolutely no cash, and use their credit cards for even the smallest transactions?

Credit cards are pretty much everywhere in Canada, but they aren't the usual choice for small (under $100) transactions. For those, debit cards (via Interac Direct Payment) are king. Unlike debit cards in the USA (which are tied to Visa or Mastercard), debit cards in Canada are issued by your bank, and require you to enter a PIN at the point-of-sale to authorize the transaction. The funds are instantly transferred from your account to the merchant's account.

In response to the original question, speed is definitely the deciding factor. Tim Hortons restaurants are extremely busy at peak times (before work, coffee breaks, etc) and doing cash-only allows the lines to move much faster.
posted by gwenzel at 12:03 PM on April 4, 2006

(Although I could have sworn I've seen at least a few Hortonseses with interac/credit card terminals).

Of course, if franchisees want to install them, they're free to...
posted by chuma at 12:06 PM on April 4, 2006

Waffle House in parts of the US is cash-only as well (though I hear that this is slowly changing).
posted by jeditanuki at 12:07 PM on April 4, 2006

How much are you spending at Horton's that you need to carry plastic? ;)

Seriously: cash is faster unless dedicated high-speed hardware is installed like the "wand" system that Exxon instituted and now works at some McDonald's locations.

As these are low-risk transactions with high volume, it really isn't a matter of service fees as much as outlay on manpower and equipment.
posted by beaucoupkevin at 12:10 PM on April 4, 2006

Look at McDonald's. They still don't (widely) accept credit cards, and you can bet your ass they're making money on every debit transaction they make. On my pin pad today, when I bought my Egg Biscuit Thing:

A 75 cent transaction fee will be added to this purchase.

Speaking from the credit side of things, I have a merchant account, and I pay 31 cents per transaction + 2.2%. Mine is ridiculously low-volume, entry-level processing. And no magnetic strip present. With magnetic strip, and high volume, that value drops dramatically, but it's still eating into a few dollars profit for just a cup of coffee. I think it'd be wise of them to do the debit transaction fee thing, but I don't know if you're allowed to charge transaction fees with credit.

I'm liking more and more the direct bank transfers. Grocery stores out here are asking you one time for your bank account and routing number, and having you key a pin and your fingerprint, so that you can purchase things with biometrics. Banks don't charge any (or negligible) transaction fees, so it's a win for everyone. Amazon's even doing this now.

Good times.
posted by disillusioned at 12:11 PM on April 4, 2006

I believe that some Timmy Ho's take Dexit, which is much faster than swipe, cashier enters amount, choose account, dammit wrong one, start over, type in PIN, doh missed a digit, hey stop glaring at me you'll get your coffee, enter it correctly, wait for receipt, I SAID YOU'LL GET YOUR COFFEE, and walk away.
posted by dirtynumbangelboy at 12:27 PM on April 4, 2006

dirtynumbangelboy: Tim Horton's is done with Dexit (which was just in downtown Toronto anyways), and Dexit is pretty much done themselves, despite the excitement on their website.
posted by loquax at 12:35 PM on April 4, 2006

I find it entertaining when a combo location (Wendy's and Tim Hortons) has debit on one side of the fence, but only accepts cash on the other. Speed of transactions is the only consideration here. It takes a bit longer to put together a meal combo than it does to pour a coffee and maybe grab a muffin.

I'm sure that the folks at Tims have spent a very large amount of time and money researching how best to integrate debit or credit purchases, and the effects it would have on their transaction times. I guess it (still) doesn't work for them in most cases. If there was a way they could get more money out of their franchisees, like a centralized processing network, I'm sure they'd use it.
posted by lowlife at 12:49 PM on April 4, 2006

/semi off-topic

if places like Tim Hortons would accept paypal at the register (or allow you to deposit your change into your paypal account by giving your email address), the problem of micropayemnst and credit card transaction fees would eventually go away...
posted by Izzmeister at 1:02 PM on April 4, 2006

I'd say it's not just speed of transaction - Tim Hortons also has a significantly smaller average purchase value, and Interac transactions cost them several cents per transaction.
posted by jacquilynne at 1:11 PM on April 4, 2006

In BC, every Timmy's accepts Interac (or visa if you're so inclined).
posted by aeighty at 1:30 PM on April 4, 2006

It's speed of transaction. Some Tim's have Interac, some don't, and every one I've seen without has a sign stating something to that effect.
posted by sauril at 1:36 PM on April 4, 2006

Even the really ridiculously busy downtown Tim Hortons(es) in Edmonton take Interac. I think that the ones I patronized on Bloor St in Toronto did too, but I can't remember, now.

Actually, now that I think about it, I think there was one till that had interac, and a number of others that didn't, in the one I went to most often in Toronto. The ones on the York University campus didn't have interac, but they did use the on-campus food card system.

Tim Hortons are franchise operations, aren't they? Perhaps it's up to the owner.
posted by blacklite at 2:04 PM on April 4, 2006

aeighty - there are Timmy's that take visa? Certainly not all BC Timmy's take visa; I know that the Port Alberni Timmy's does not (but it does take Interac).
posted by crazycanuck at 2:37 PM on April 4, 2006

gwenzel: Unlike debit cards in the USA (which are tied to Visa or Mastercard), debit cards in Canada are issued by your bank, and require you to enter a PIN at the point-of-sale to authorize the transaction. The funds are instantly transferred from your account to the merchant's account.

Sort of right. While many USbank debit cards have ties to MC/Visa, they're actually dual purpose cards, and can be used as either a debit card with PIN and immediate transfer or a MC/Visa with signature.
posted by jlkr at 3:03 PM on April 4, 2006

Here's a little sideline possibility...

Consider accounting for tax purposes. If you're a mostly-cash business (as most restaurants were before credit and debit cards became ubiquitous), it was very easy to cook the books and hide your income/profits. Unfortunately, it was also very easy for your employees to steal from you.

So most companies are doing business honestly, and for them the credit/debit card support is a no-brainer -- accounting becomes fast and easy with a paper trail in case of audit, and you stop your employee theft almost completely (doesn't stop pilfering from the food stores, after all.) But some companies are doing business dishonestly, and for them the amount of theft they'd prevent doesn't offset the amount they're saving through tax underreporting and whatnot.

This doesn't mean that all businesses avoiding credit/debit cards are being run dishonestly -- after all, there are many other good reasons to avoid 'em, such as longer queues, start-up costs, and per-transaction fees, not to mention good old fashioned ludditism -- but it's a very good reason that hasn't been mentioned yet.
posted by davejay at 3:56 PM on April 4, 2006

I had a killer In-N-Out craving once when I first moved to California (they hooked me with the first bite) and discovered that they were cash only. Are all In-N-Outs cash only?
posted by DakotaPaul at 4:24 PM on April 4, 2006

I wonder if people are more likely to leave a tip if they pay with cash. Perhaps this could be why places like waffle house here don't take anything but cash.
posted by bigdave at 5:04 PM on April 4, 2006

I think the till signs say that "TDL Ontario does not accept debit".

There was only one Tim's that I knew of that took Dexit, and they didn't have their machine last time I looked. My experience with Dexit sucks, so I'm not looking for other Dexit-enabled locations.
posted by scruss at 6:04 PM on April 4, 2006

Bigdave, in my experience, people are more likely to leave a tip if they have a card--it prevents things like people limiting their tips by their change or not having the cash to leave more than the amount of the tab.
posted by Cricket at 8:51 PM on April 4, 2006

Look at McDonald's. They still don't (widely) accept credit cards, and you can bet your ass they're making money on every debit transaction they make.

Nearly all of the McDonalds in the Chicagoland area (Where the Corporate HQ is) accept credit cards now. There was even an article in the Tribune last year about it. The reason they are installing them: speed of transaction. McDonalds says that credit card pin pad and SpeedPass™ that customers use are 20 to 30 faster than the person behind the counter making change, etc.

There is one McDonalds that I will go to for lunch every so often in the Loop (Wabash & Washington) that is extremely busy during the lunch rush. People who pay with plastic get through the line considerably faster.
posted by Steve_at_Linnwood at 8:51 PM on April 4, 2006

Some of the Tim Hortons in Alberta accept debit cards using a 'nontraditional' merchant agreement that charges the end user a transaction fee instead of the merchant.

The transaction fee that the client agrees to pay (usually $0.25) is split with the Tim Hortons franchise owner who now stands to actually make money by accepting debit - as opposed to using Moneris (which is run by Royal Bank and Bank of Montreal) whom does not permit its merchants to charge extra for using debit or credit instead of cash.
posted by jeffmik at 1:10 AM on April 5, 2006

To clarify - these merchant agreements are actually marketed to franchises like Tim Hortons as a new revenue generating stream. Encourage as many customers as possible to pay with debit (theres no reason why debit should be slower than providing change) and all of a sudden the company is pulling in an extra $0.10 profit on every transaction.

They still shy away from credit though because VISA and Mastercard do not generally approve of any 'cash discounts' or fees passed along to make the customer pay the credit costs that the merchant gets charged.
posted by jeffmik at 1:18 AM on April 5, 2006

DakotaPaul—the In-n-Outs I've been to (in Arizona) accept debit/credit.
posted by disillusioned at 8:21 AM on April 5, 2006