Cash or Credit Cards?
Jun 1st, 2005, 08:47 AM
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Cash or Credit Cards?
What do most people do when travelling to Italy in terms of payment? I know that many of the hotels will provide a discount if you pay by cash but in terms of restaurants, does it make a diffence?
Thanks...anxious awaiting our first trip in 10 days!
Thanks...anxious awaiting our first trip in 10 days!
Jun 1st, 2005, 08:52 AM
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Hi irm,
Restaurants don't give you a discount for cash.
Be aware that many restaurants are engaging in "Dynamic Currency Conversion" in which they convert your charge at whatever rate pleases them and present you the bill in dollars.
When you give the waiter your CC tell him that you want the bill in euro. Do not sign a charge in dollars.
Restaurants don't give you a discount for cash.
Be aware that many restaurants are engaging in "Dynamic Currency Conversion" in which they convert your charge at whatever rate pleases them and present you the bill in dollars.
When you give the waiter your CC tell him that you want the bill in euro. Do not sign a charge in dollars.
Jun 1st, 2005, 09:07 AM
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Well here's my opinion for what it's worth...
Based on my experiences at home, when entities want cash, the prime reason is that they wish to hide something from the taxing authorities (you hear it all the time from contractors you know if you pay me cash I won't charge you sales tax..of course not, it's not being reported) which is...well illegal. Not that anybody is gong to send you to jail or anything like that but then again I am a totally honest person (believe it or not) and would never be a party to something illegal...
Having said that, do remember that unless it's an ATM transaction, the cost of converting cash or TC's to local currency is 8 to 10% above interbank rates when fees et al are taken into consideration while cc's charge from 1 to 3% above interbank depending how smart you are....so it might not be a big savings anyway unless you are using ATM's....
Besides which, when credit card decals are spread all over the wondows of an establishment, the service fees the merchant pays to the cc company have some effect on pricing so it's my opinion (just an opinion) that in such a case I am paying for the merchant taking credit cards anyway so I might as well use my credit card.
I have never been able to understand those who say I use my credit cards for major purchases only; why not use them for all purchase everywhere they are taken? Personally just don't understand that.
JMHO
Based on my experiences at home, when entities want cash, the prime reason is that they wish to hide something from the taxing authorities (you hear it all the time from contractors you know if you pay me cash I won't charge you sales tax..of course not, it's not being reported) which is...well illegal. Not that anybody is gong to send you to jail or anything like that but then again I am a totally honest person (believe it or not) and would never be a party to something illegal...
Having said that, do remember that unless it's an ATM transaction, the cost of converting cash or TC's to local currency is 8 to 10% above interbank rates when fees et al are taken into consideration while cc's charge from 1 to 3% above interbank depending how smart you are....so it might not be a big savings anyway unless you are using ATM's....
Besides which, when credit card decals are spread all over the wondows of an establishment, the service fees the merchant pays to the cc company have some effect on pricing so it's my opinion (just an opinion) that in such a case I am paying for the merchant taking credit cards anyway so I might as well use my credit card.
I have never been able to understand those who say I use my credit cards for major purchases only; why not use them for all purchase everywhere they are taken? Personally just don't understand that.
JMHO
Jun 1st, 2005, 10:11 AM
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Hi, xyz123... sometimes it's just a way to manage the credit card balance, especially for the weak-willed who might not pay off their balance quickly. If one doesn't run up a big balance, not so hard to pay it off afterwards. Next trip, I'm going for 'cash' all the way (with a debit card and cash withdrawals).
Jun 1st, 2005, 10:19 AM
#5
My method is credit card for hotels (I haven't stayed any place that offered a cash discount) & cash for everything else (which I get from an ATM machine). Not right or wrong just the way I do it.
Jun 1st, 2005, 11:24 AM
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xyz123,
While your experience with cash discounts may be a tax dodge consider an Italian merchant’s position. He asks for 100 euro for his service and you want to pay by credit card. The merchant will pay 3% to 9% to the credit card company and then not get anything for two to six weeks. When he gets his check from the credit card company he will pay the Italian bank to cash it. So it is possible that the merchant is looking at getting 90 euro in six weeks or getting 90 euro (cash discount) right now. Which would you choose?
While your experience with cash discounts may be a tax dodge consider an Italian merchant’s position. He asks for 100 euro for his service and you want to pay by credit card. The merchant will pay 3% to 9% to the credit card company and then not get anything for two to six weeks. When he gets his check from the credit card company he will pay the Italian bank to cash it. So it is possible that the merchant is looking at getting 90 euro in six weeks or getting 90 euro (cash discount) right now. Which would you choose?
Jun 1st, 2005, 11:34 AM
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No, no I understand that...I just threw out the thought...cash businesses in general are hard to track and governments all over the world claim millions of whatever are lost when there is no record!
The argument has always been that it saves the credit card service charge and that's why one would prefer cash...the lack of documentation is probably a secondary advantage.
xyz
The argument has always been that it saves the credit card service charge and that's why one would prefer cash...the lack of documentation is probably a secondary advantage.
xyz
Jun 1st, 2005, 11:44 AM
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If the tax authorities in Italy operate anything like the IRS, they will audit his purchases, subtract a nominal amount for spoilage, and expect him to declare the income on the rest.
If the Visa merchant banks in Italy operate anything like mine, the day's receipts are EFTd to his account at settlement time the night after the transaction (typically 2AM local), and they charge about 3% depending on the average ticket size and monthly volume.
If the Visa merchant agreement in Italy is anything like mine, he is specifically prohibited from offering a cash discount.
I use credit cards for purchases and debit cards in ATMs for cash.
If the Visa merchant banks in Italy operate anything like mine, the day's receipts are EFTd to his account at settlement time the night after the transaction (typically 2AM local), and they charge about 3% depending on the average ticket size and monthly volume.
If the Visa merchant agreement in Italy is anything like mine, he is specifically prohibited from offering a cash discount.
I use credit cards for purchases and debit cards in ATMs for cash.
Jun 1st, 2005, 12:03 PM
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Robespierre...
In the US, there are 2 important stipulations written into visa/mc agreements...
1. Merchants may not set up minimum amounts for charging purposes.
2. Merchants may not surcharge a credit card sale over the cash price.
The first is obvious; every so often I get a merchant trying to pull this garbage on me...I have a statement from visa indicating this is an illegal practice and insist the charge be done or I will report them to visa. They have almost always complied (although grudgingly so)...don't understand why such a moronic thing would be done anyway..it is the same 3% whther the charge is for $1.21 or $121.00...
2. The second is somewhat more nebulous. For years certain oil companies claimed they were offering cash discounts for paying cash..apparently cash discounts are legal, credit card surcharges are not. When does a cash discount become a credit card surcharge...well when these programmes started, the pump displayed the credit card price and then there was a chart listing the discount. NYS law did not allow this practice so the oil companies became more brazen and simply had separate pumps for cc's and cash...then thinking this cancer would spread, many gas retailers were bamboozled into getting pumps which had a handle which could be adjusted for the cash or credit card price. Just as many retailers sprung for these new pumps, the oil companies came to their senses and dropped this imbecilic programme leaving the retailers with useless new pumps....
But from what I have read, in the UK for example, credit card companies are not allowed ot enforce these 2 regulations and I know many UK merchants have minimums for use of a card (although rarely surcharges)...
In France, the metro used to have a restriction of 42 FF for use of a credit card but then came the strike of armed car drivers which made currency very scarce in France and so that restriction was dropped on the metro and never re-instituted, you can now use a credit card in a metro ticketing machine for as little as €1...
In NY, the metrocard vending machines used to have a restriction against buying a single fare metrocard ($1.50 at the time) with a credit card...there were several letters of protest they were violating the credit card rules of mc/visa and they were forced to drop that silly rule.
What the rule is for credit card use in Italy, I don't have the slightest idea.
In the US, there are 2 important stipulations written into visa/mc agreements...
1. Merchants may not set up minimum amounts for charging purposes.
2. Merchants may not surcharge a credit card sale over the cash price.
The first is obvious; every so often I get a merchant trying to pull this garbage on me...I have a statement from visa indicating this is an illegal practice and insist the charge be done or I will report them to visa. They have almost always complied (although grudgingly so)...don't understand why such a moronic thing would be done anyway..it is the same 3% whther the charge is for $1.21 or $121.00...
2. The second is somewhat more nebulous. For years certain oil companies claimed they were offering cash discounts for paying cash..apparently cash discounts are legal, credit card surcharges are not. When does a cash discount become a credit card surcharge...well when these programmes started, the pump displayed the credit card price and then there was a chart listing the discount. NYS law did not allow this practice so the oil companies became more brazen and simply had separate pumps for cc's and cash...then thinking this cancer would spread, many gas retailers were bamboozled into getting pumps which had a handle which could be adjusted for the cash or credit card price. Just as many retailers sprung for these new pumps, the oil companies came to their senses and dropped this imbecilic programme leaving the retailers with useless new pumps....
But from what I have read, in the UK for example, credit card companies are not allowed ot enforce these 2 regulations and I know many UK merchants have minimums for use of a card (although rarely surcharges)...
In France, the metro used to have a restriction of 42 FF for use of a credit card but then came the strike of armed car drivers which made currency very scarce in France and so that restriction was dropped on the metro and never re-instituted, you can now use a credit card in a metro ticketing machine for as little as €1...
In NY, the metrocard vending machines used to have a restriction against buying a single fare metrocard ($1.50 at the time) with a credit card...there were several letters of protest they were violating the credit card rules of mc/visa and they were forced to drop that silly rule.
What the rule is for credit card use in Italy, I don't have the slightest idea.
Jun 1st, 2005, 12:46 PM
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We were in Italy last month, and used cash exclusively (withdrawn in large amounts via ATM). We were very comfortable with this decision and it worked for us, and we came home and had no credit card bills!
3 out of 4 hotels offered a 5% or 10% discount.
3 out of 4 hotels offered a 5% or 10% discount.
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