Cashback: a possible alternative to rip-off cash machines?

[Theodoric]

A comment by scastle in another thread, "Also, an increasing number of establishments (not just supermarkets) offer cashback," started me thinking. A few weeks ago there were various news articles about the rising number of cash machines that now charge you to withdraw your own money. A few thoughts that occur to me are:

1) How much can you get in cashback? Is it only £50?

2) If cashback really catches on, will the supermarkets get greedy and start charging as well? Or might they just find the cost of providing the service too much?

3) Availability of cashback points is obviously currently limited, especially as regards time. Could this be improved upon?

[Paul M]

I always use cashback. It doesn't cost supermarkets anything, in fact it saves them having as much cash on site (or having to deposit as much in the bank).

[Chris W]

Originally Posted by Theodoric

A comment by scastle in another thread, "Also, an increasing number of establishments (not just supermarkets) offer cashback," started me thinking. A few weeks ago there were various news articles about the rising number of cash machines that now charge you to withdraw your own money. A few thoughts that occur to me are:

i have never paid to withdraw my own cash from a proper machine (ie not one of those silly little ones they have in pubs) - i pay if i withdraw from my credit card, but that is not my money anyway

1) How much can you get in cashback? Is it only £50?

i believe it depends on where you get it, some smaller shops will offer lower limits because they won't have much cash in the til

2) If cashback really catches on, will the supermarkets get greedy and start charging as well? Or might they just find the cost of providing the service too much?

I doubt that the supermarkets would charge, but we'll have to wait and see many small shops charge already, but that is because the cost of them doing it is a lot more significant as a proportion of their total income compared to a larger store.

3) Availability of cashback points is obviously currently limited, especially as regards time. Could this be improved upon?

yes it could, but i have found that most shops i go in that accept debit cards also offer cashback... even my local pub does which is always handy

[bopdude]

The worst offenders are the link machines at the motorway service stations, they charge you £1.75 per transaction, now that is a rip-off

[Graham F]

Originally Posted by monkeybreath

i have never paid to withdraw my own cash from a proper machine (ie not one of those silly little ones they have in pubs) - i pay if i withdraw from my credit card, but that is not my money anyway



i believe it depends on where you get it, some smaller shops will offer lower limits because they won't have much cash in the til


I doubt that the supermarkets would charge, but we'll have to wait and see many small shops charge already, but that is because the cost of them doing it is a lot more significant as a proportion of their total income compared to a larger store.



yes it could, but i have found that most shops i go in that accept debit cards also offer cashback... even my local pub does which is always handy

My local did offer cashback until they installed one of those charging cash machines now they do not offer cashback

[Bifta]

There are certainly a lot more cash points that your bank won't charge you for useage of than places that offer cashback.

Originally Posted by bopdude

The worst offenders are the link machines at the motorway service stations, they charge you £1.75 per transaction, now that is a rip-off

There is a machine in Mansfield which charges you £2.50 per transaction. Now thats a rip off.

[Graham M]

We offer Cashback at One-Stop but we charge £1 for it, the only reason I can think for it is that it costs the company a percentage of the transaction to offer it and people were just buying Chewing Gum et al to get Cashback which made it financially unsustainable, still cheaper than a lot of the cashpoints though

[andygrif]

As far as I know it doesn't cost anything to issue cashback - the reason I say that is that I was studying the small print at a till point somewhere yesterday and it was talking about the 2.5% charges (that are absorbed into the cost of what I'm buying) but specifically excluded cashback when talking about fees.

[SMHarman]

Originally Posted by andygrif

As far as I know it doesn't cost anything to issue cashback - the reason I say that is that I was studying the small print at a till point somewhere yesterday and it was talking about the 2.5% charges (that are absorbed into the cost of what I'm buying) but specifically excluded cashback when talking about fees.

That 2.5% fee thing is a wheeze dreamed up by accountants to reduce VAT bills. Instead of 100% of the transaction being subject to VAT, any transaction with card payment involved has only 97.5% subject to VAT, on the ££Ã ¡Ãƒâ€šÃ‚£ these stores move it adds up to a nice deduction on the VAT bill.

Cashback does not cost stores much to set up, more in management time than processing costs, often it is also done to reduce on site cash and reduce the insurance requirements that entails.

[KingPhoenix]

Originally Posted by Paul M

(or having to deposit as much in the bank).

But that is really irrelelvant, it will cost them the same to have £100 collected by securicor or whoever, as it would to have £10,000 collected.....

[ian@huth]

Originally Posted by KingPhoenix

But that is really irrelelvant, it will cost them the same to have £100 collected by securicor or whoever, as it would to have £10,000 collected.....

But it costs more to deposit £10,000 in your business account than it does to deposit £100.

[Ramrod]

Originally Posted by ianathuth

But it costs more to deposit £10,000 in your business account than it does to deposit £100.

Exactly. Banks charge exorbitant amounts for cash/cheque deposits

[SMHarman]

Originally Posted by KingPhoenix

But that is really irrelelvant, it will cost them the same to have £100 collected by securicor or whoever, as it would to have £10,000 collected.....

Maybe, Cash in transit costs may include an insurance element, transporting 10k would incure a higher premium than transporting 1k.
Also this depends on the business type and size while Tesco may pay securicor to collect their cash, your local corner shop normally takes it to the bank themselves. Cashback therefore reduces the amount of cash they need to take to the bank, reducing the loss if it is stolen en route, and reducing the risk to the ee taking it there. It also reduces the amount of cash that may be in the safe overnight.

Another thing it does is increase footfall as people come into the shop to buy something and get cashback.

[bob_builder]

Originally Posted by andygrif

As far as I know it doesn't cost anything to issue cashback - the reason I say that is that I was studying the small print at a till point somewhere yesterday and it was talking about the 2.5% charges (that are absorbed into the cost of what I'm buying) but specifically excluded cashback when talking about fees.

That 2.5% is nothing to do with the amount charged by the debit card companies. Unlike credit cards which have a percentage transaction fee around 2% debit cards have a flat fee per use around 50p. So if you use your debit card to buy £5 worth of shopping there will be no extra charge if you also get £50 cashback, so effectively the cashback element is free.