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ScottishCalvin t1_ja7u7qo wrote

Probably got investigated for tax evasion

Every business in the country has to contend with fees for processing credit card payments, but a disproportionate number of companies in Philly are cash in hand due to the way the city taxes revenue rather than profit


NoREEEEEEtilBrooklyn t1_ja7x3i8 wrote

Maybe, but a better guess is that they were beginning to lose a lot of business from it. We’re an increasingly less cash carrying society for better or for worse. Businesses are beginning to understand that.


omgahya t1_ja8c883 wrote

Us smaller businesses get charged per card swipe. My shop is around the corner from them, and we’re charged about $3 per card transaction, so cash is always more welcomed. That’s a reason some places have a card minimum of $10-$15.


DanHassler0 t1_ja8lhs3 wrote

If you're charged $3 per transaction then each transaction is about $100+. If so you could probably get better rates from someone else. Rates are no higher than 3%.


blazinsmokey t1_ja8pbqf wrote

$3 per transaction? how big is the average transaction then?
you really should be thinking about fees as a percentage


omgahya t1_ja9bhmu wrote

Average transactions are about $50. I’m not sure how much the actual fees are, the boss herself only mentions the fee as $3, as she deals with the billing side of the POS system.


ronreadingpa t1_jacee4p wrote

That's extremely high. Could see that for a business deemed high risk (often based on its merchant category code) and/or with many chargebacks (customer disputes). 3%-4% average is more typical for many small businesses.

Assuming the $3 is right, the merchant acquirer (payment processor) is probably gouging her business. Sometimes it's not obvious either. It could be their base rate is competitive, but many of her transactions aren't qualifying for some reason and being charged more. Lots of reasons, including some types of cards, such as high rewards travel cards, Amex cards, etc.

Should shop around or, if sales are relatively low volume, use a pay-to-go option, such as Square, PayPal Here, etc. Most are around 3%. While not great, the hardware costs may be cheaper, especially if one can use their own devices, such as tablet, phone, etc. Many merchant acquirers bundle in the hardware cost into their monthly fee. Maybe that's where the excessively extra cost is coming from.

In short, she should shop around.


CreditBuilding205 t1_ja84h64 wrote

I just assume that any cash only business bigger than a food cart is committing tax fraud.

I’m not sure why they aren’t all just getting audited constantly. Seems like shooting fish in a barrel.


bitchisaidwhatisaid t1_ja8a53z wrote

it’s just a better allocation of the IRS’ resources to chase bigger fish than little.


CreditBuilding205 t1_ja9ou8e wrote

There definitely loads of all cash businesses in Philly that are multimillion dollar operations.


Trafficsigntruther t1_jact4oy wrote

And it’s not like it’s free to process cash transactions.


ScottishCalvin t1_jad5fv5 wrote

nobody's processing them, they're using them for wages and like personal ATM. You only need processed payments for putting in a bank account, half your expenditure (things like gas+food and going out) can be paid with cash


Trafficsigntruther t1_jadcpbi wrote

Every time you have sales transaction you are processing cash.

Every shift you are counting the till and some of it is walking out the door unless you have an integrated ordering, payment and ticket system.

The amount of money (labor, added friction) businesses spend to avoid the receipts tax is higher than the actual tax.


just_start_doing_it t1_jadn3a2 wrote

I’ve heard of this effecting grocery stores. Do you have anymore details or a sources that explain this?