An Australian mum has revealed the reason why people should pay with cash instead of cards.
Fiona Edmunds from Brisbane explained on Facebook how physical money retains its value no matter how often it is used.
However, if you pay with a card, there are bank charges and shopkeepers would have to pay surcharges.
“I have a $50 bill in my pocket and I go to a restaurant and use it to pay for dinner,” Ms. Edmunds wrote.
“The restaurant owner uses the bill to pay for his laundry. The laundry owner then uses the bill to pay the barber.
“After an unlimited number of payments, it still remains a $50 value that served its purpose for all who used it to pay.
“BUT if I walk into a restaurant and pay digitally by card, the bank charges on my payment that are billed to the seller can be as high as 3 percent, or $1.50.”
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The mother-of-three pointed out that if the cardholder paid via tap-and-go, any other transaction using that original $50 would be charged a similar amount.
“Payments from the laundry owner, the hairdresser and so on,” Ms Edmunds continued.
“Therefore, after 30 transactions, the initial $50 only exists at $5 and the remaining $45 has become the property of the bank.”
With every purchase, banks and credit card companies take a small percentage of the original $50 until enough transactions make it theirs.
“Use it or lose it, folks…cash is king,” Ms Edmunds said.
The Facebook post has gone viral, with 19,000 people sharing the social platform.
According to the Reserve Bank of Australia, the surcharges that companies pay to banks or credit card companies for using their payment services – known as merchant fees – have fallen in recent years.
“However, consumers are paying more with cards than ever before, increasing the overall cost of payments for merchants,” the RBA said.
“Smaller merchants also have significantly higher card payment costs per transaction than larger merchants.”
This means that a local coffee shop pays more of its earnings in fees than a large department store, which turns much more money and can get fee reductions.
Businesses are allowed to pass surcharges on to customers to cover merchant fees, but the amount cannot exceed the fee amount.
Originally posted as Aussie Mum reveals the hidden costs of using a bank card