The War on Self-Checkouts Shows the Make-Work Bias Is Alive and Well

Fee.org ^ | 2/26/20 | David Youngberg

[WWG1WWA]

I refuse to use auto-checkouts. Americans need jobs.

[fella]

The stores would just mark everything up 5% and come out 2% ahead.

[Fledermaus]

Not really. All costs are “built into the price”. Not sure where you checked but a 4 cent per dollar fee charged for credit card processing is too high. American Express even for small business is the highest around 3.5%.

Bankcards (Visa/ MC ) are around 1.2 to 1.8% depending on volume. Debit cards are the same cost to the business.

Discover is between the two. Diners Club used to be the highest (they invented the credit card) but they don’t exist any longer except for government but that’s probably gone too. They finally contracted with Mastercard to process payments.

I’ve done luxury hotel accounting for decades. Fifty to one Hundred million a year in revenue and the average credit card commission rates cost us about 2% of revenue.

We didn’t price everything plus 2% just for that fee. Costs are costs. We deal with the bottom line. Food and beverage cost, and payroll, are more worrisome.

No business these days ADD a percentage for using a card. They usually advertise it as offering a “discount” for cash. But upwards of 90% of payment these days is on cards.

[The Pack Knight]

Doing bank runs costs the time of the owner or employee making the run, and time is money. There are other costs to handling cash as well, including time, loss due to employee theft, and the risk of robbery incurred when you keep cash on hand. Those costs can be pretty significant.

As you say, businesses that accept cash pass those costs onto you. I’m not sure why they should pass their cash-handling costs onto everyone but only pass their credit card costs onto credit card customers.

You are not saving most businesses any money by paying cash. If you were, then they would incentivize you to do so by offering a discount now that they are free to do so after the big Visa/Mastercard antitrust settlement in 2018. They don’t because most retail businesses would rather most of their customers pay with credit or debit cards.

In fact, a growing number of small businesses are no longer accepting cash at all. In some markets, handling cash from the small number of customers who still pay that way costs the business more than it makes off those customers.

[fproy2222]

“No business these days ADD a percentage for using a card”

It is already added in the price, not at point of sale.

How much per dollar does a hotel pay to the card services for handling their money, not percent of gross?

[buckalfa]

"When gas was over &4.00 per gallon that was sixteen plus cents per gallon for gas. The station makes about $0.04 per gallon. If you used a credit card they were paying you to fill your tank."

Gas stations in Upstate South Carolina have tiered pricing based on payment method:

Unleaded Regular Cash/Debit $1.89.9

Unleaded Regular Credit Card $1.99.9

I would assume that pricing structure is found elsewhere.

[fproy2222]

What did it max out a few years back?

[buckalfa]

In Upstate SC, I believe $3.89 was our ceiling around 2012 and our low was $1.38 in 2016. The bottom line is retailers do account for transaction costs in their pricing.

[Fledermaus]

It averaged 2,5% of gross sales.

[Arones]

I'd be more inclined to use the self checkout if the scanners worked like the ones the cashiers have. Beep Beep Beep Beep Done!

But they don't.

The machine is continually yammering at you about bags and bagging. Then they lock up and need a cashier to come over and clear it.

Or, a cashier to come over to accuse you of stealing....

[N. Theknow]

I also recall when people in all sorts of stores actually knew all their stock, knew where everything was, and could answer your questions intelligently - and the butchers would actually do special stuff for you.

You just described Publix Supermarkets. Where shopping is a pleasure. And if they notice too many people waiting to checkout, they call additional clerks and within less than a minute, they are working.

Most especially, they ask if you found everything you were looking for. If you answer No. They ask what you want and send someone to get it, PRONTO!

Ask any employee where something is, they will say “Follow me.” Take you to the item and make sure that the product is what you want.

[Jamestown1630]

Sounds nice, like the ‘old days’. I don’t think we have Publix in my area.

[pigsmith]

Years algo when the calculator/cash registers become more common, the first thing I noticed was how cashiers no longer count back the change due. I miss those days when the cashier took the time to count it back, coins first. ☹️

[fproy2222]

Wouldn’t that make over a third of the sales cash or check?

Where the people still pay for credit card services.

[Svartalfiar]

Assuming that a cashier isn't two or three times faster as an average customer, you're going to spend a lot less time waiting in line.

Human cashiers are generally 4-5x faster than the self-checkouts. And that doesn;t even include the time waiting for the guy to come over and fix your issue after he finishes the next one over. They are ONLY good for when you're in a rush, there's no line, and you're only buying 2-3 items.

The only time I ever go to a self-checkout is when I accidentally go to the grocery store late at night and they don't have any real checkout lanes open. Annoying.