Why I have to buy doughnuts with cash
60 comments
·October 11, 2025plantain
jancsika
Retail card processors often charge a flat fee per swipe/tap/whatever in addition to the 1-2% percentage mentioned above. E.g., a five cent flat fee doesn't matter on a $20 lunch, but it's over 3% of a sale for a single $1.60 donut.
Perhaps more importantly, consider the following design document for donut transaction software a la Mitch Hedberg:
"I'll just give you the money. You give me the donut. End of transaction."[1]
Cash achieves this out of the box. You could have John Carmack and a billion dollars seed money and your cc terminal would still need to be rebooted in the middle of a transaction on at least a bi-weekly basis.
xethos
And to really drive home your point,
> a five cent flat fee doesn't matter on a $20 lunch, but it's over 3% of a sale for a single $1.60 donut.
Now do the math for profit instead of revenue
monster_truck
You're both massively underestimating the interchange fees and overestimating their need to dodge taxes. If you had any idea how much money they made you'd know that they can offset all of that via writeoffs without having to even do any "clever" accounting.
They would need to be doing an insane amount of business to get fees that low. In reality it's anywhere between 7-15%, especially for small tx. When you combine this with the penalty system for chargebacks (which quickly escalates to not being allowed as merchants) and people trying small tx with stolen cards, this is why coffee shops, corner stores, etc charge a flat +% for any cc purchase and especially leverage an additional fee for small ones if they even accept them at all.
IAmBroom
When you hear a credit card fee, remember that it is calculated off gross sale, not profit.
A 5% fee on an item marked up 100% is a 10% drop in income to a family-shop.
Food profits run much tighter than other goods, so it can be even worse.
bitshiftfaced
You might have a point because the donut shops that I've been to have started moving to the "discount for cash" model. Same with restaurants.
rendall
I don't know why you would swap in your own interpretation over the article's. Credit merchants in the US charge a lot per transaction. Many businesses find that is not worth it to allow credit payment for low-cost items (like donuts). Many businesses have a credit card minimum of $20.
What about that leads you to the conclusions is to evade taxes?
mingus88
Also, CC companies give cash back and other perks to encourage people to use credit everywhere
If the CC firms take 3% in fees, and give 1-2% back to the customer, why would anyone pay in cash? It’s free money.
it’s pretty easy to see this is rent seeking behavior and you can’t blame small shops for not playing that game.
It’s not enough to take interest from the consumer, they have to squeeze the businesses too.
verisimi
Possibly this is it.
Perhaps you prefer tax, er, "minimisation", to only be available to corporations and individuals (eg politicians) that have enough power to have law makers and tax authorities (legally) decrease their tax for them?
selcuka
> We all know this is to avoid tax, right?
Of course. More correctly, to evade tax.
jldugger
See, I thought it was because cash only businesses are a great way to launder money, ie actually pay taxes on illegal money so you can spend it freely in the banking system.
fracus
This reminds me of the Mitch Hedberg joke..
"I bought a donut and they gave me a receipt for the donut; I don't need a receipt for the doughnut. I'll just give you the money, and you give me the doughnut, end of transaction. We don't need to bring ink and paper into this. I just can't imagine a scenario where I would have to prove that I bought a doughnut."
bombcar
You gotta expense that donut.
ghtbircshotbe
And the thermal receipt paper is supposed to give you cancer too.
tonyhart7
Yes for small purchase and "usual day to day" item maybe its worthless to keep track for that
but for big purchase like car payment,house mortgage etc. its good to have it immutable track record so if any problem occurs its easy to show why I own the thing
fracus
woosh. That has to be an AI bot.
amlozano
This boarders on self-promotion but I'd like to say, "Bitcoin fixes this".
We're launching Bitcoin payments available to every Square point of sale with 0% transaction fees for next year. 1% after that. Available Nov 10th. [https://squareup.com/us/en/releases#bitcoin]
My sincere hope is it catches on and helps out small business. The difference in fees can really add up, and with near instant settlement to dollars on the backend, the merchant doesn't even need to hold or think about Bitcoin unless they want to.
The fine article talks about stablecoins, but in my biased opinion those are much more complicated than Bitcoin to deal with right now.
graton
I use cash so I don't feel pressured to tip when buying donuts
charleshwang
As a former resident of Maryland, it's sort of funny seeing Carlson's Donuts & Thai Kitchen mentioned in the Financial Times and thereby Hacker News. A little disappointing it was not really about their donuts though...
Are they the same owners of Carlson's Donuts in Severn? They are also cash only.
fnordpiglet
These hot takes always ignore the actual reason for fees on credit card transactions. It’s not because of the complexity or avarice of the payment system providers, it’s because the card networks offer insurance and repudiation of false payments. Each layer of the payment network carries loss liability for different types of fraud in the system.
Stablecoins like cash or other cash transfer schemes don’t offer any form of reputation of transactions for any reason. If you lose your money to theft, to a fraudulent merchant, whatever, the money is gone.
This being said, the interchange structure -is- inefficient as there’s been a lot of middle men accumulated over the years. A simpler interchange could be achieved with much lower fees for the merchant and higher rewards for the consumer. Only a major processor like stripe to accomplish this but they are too absorbed with stable coin malarkey
nothrabannosir
> the card networks offer insurance and repudiation of false payments.
*They force the participating banks to offer...
You think MasterCard or Visa hand over a single dime to you? When you issue a chargeback, the money comes from the merchant bank, not from the network. Quite the opposite: the payment network penalizes the merchant bank with an additional chargeback fee.
> It’s not because of the complexity or avarice of the payment system providers,
https://www.youtube.com/watch?v=ks3wP1nlg6U
50% profit margin
This is not a competitive market.
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yawpitch
Kind of ironic this particular article is behind a paywall.
brudgers
It's not the banking system.
It's that cash is the simplest thing that might work.
No declined cards.
No network delays.
No broken electronics.
No waiting on transactions to clear.
...And even better, it segments the market against people who want demand more than doughnuts for dollars.
BrandoElFollito
As a European, seeing 1.5 USD for a donut, having the cash ready, and then learning that I have to pay 1.78 because there is a hidden tax different everywhere is ridiculous.
Gone the advantage of having 1.5 ready, I need to look for the ... euuhhh ... 28 cents, or give a 2 and wait for the .... euuuhhhh ... 22 cents back.
At least here when I see 18 € for a meal, I know that this is 18 €. Not 18 + some tax + some tip = holly molly, this is an expensive meal!
brudgers
or give a 2
Americans don’t use two dollar bills.
We have them, but we don’t use them.
It’s rude.
throwaway422432
Exactly.
For example, pulling in to buy petrol because they're displayed price is good. You don't know how much you have available in the transaction account, but you have cash.
Broken_Hippo
This hasn't been an issue in years.
I have a bank app. It's simple and works. Before that, they had a website. It's easy to check a balance in the morning and use that to guide you.
Before the internet was widespread, banks had a number you could call to get your balance. Heck, I think my current bank still has this, despite me being in a different country now.
Once you are in a situation where these aren't as helpful, you are probably in a bad life situation (speaking both from experience and observation of folks I know).
bapak
Kinda funny, I use my credit card for daily transactions because I know it's never declined. On the other hand, I might not have enough cash on me at all times.
tylerflick
Why not both? Why limit your financial vessels?
2rsf
But that's not sustainable, pulling out random amounts out of your wallet without knowing your current balance will get you into cash flow problems.
If you are responsible and know your balance, then using a debit card, or equivalent app, is the same as using cash.
protocolture
Thats insane. I always know what my balance is. Its right there on my phone.
lmm
Huh? I know my bank balance (it's right there on my phone) much more easily than counting up how much cash is in my wallet.
throwaway422432
I don't do banking on my phone, and non-US currency where you can see what you have from the colour of the visible portion of the notes without opening the wallet.
Also unlike a phone I won't get fined for looking at my wallet while stopped at the lights.
lmm
Cash is a pain - easy to run out, makes you a target for mugging. People who have better options available generally choose them.
zdragnar
Odds are pretty good that you've got more value in what you have on you than you'd have on you in cash anyway... phone, smart watch, laptop / tablet in a bag, etc.
jzb
Perhaps, but they all have to be exchanged for cash to be of real value to a thief. Unless they just really want a laptop, etc. And all those things are traceable - granted, odds of getting caught when trying to sell those are small, but not zero. Cash is hard to trace.
dylan604
The number of people I've seen lately that can't actually make change is disturbing.
skopje
...yeah but it is a pain in the ass. i end up with a percentage of unspent money every week that i have to coalesce into new bills of useful denominations. that leftover screws up my accounting system and takes extra work to put to use. i'd rather have every transaction i make tracked by visa to make my accounting cleaner and not need to futz with the whole process. the downsides you list i've never really encountered since 1992, you need better evidence of failures (unless you live in some underdeveloped nation?).
xethos
I was working in a grocery store (after the turn of the millenium) when the CC processing went down. We could accept debit or cash, but no Mastercard, Visa, or AmEx. I didn't get (or don't recall) the backstory, but I wouldn't call Canada an under-developed nation.
Cash makes my budgeting easier too. I find it harder to overspend cash I don't have on my person. The cost is more tangible (as every debit/credit tap "feels" like the same amount). Consumers have been shown to spend more when using electronic payment methods too. As to the coins, those get tossed in a jar to be rolled later, then eventually taken to the bank and to a rainy day fund.
Cash is fuckin' excellent.
bee_rider
Hmm. When I worked in retail (probably like 2008 or so) when the network went down we could still take credit cards, we young folks just needed a couple minutes tutorial from the more experienced cashiers on how to do the imprint machine.
throwaway_5753
Canada is def under developed
jldugger
fascinatingly also available on msn without a paywall: https://www.msn.com/en-gb/money/topstories/why-i-have-to-buy...
chasing
Crypto is a psycho solution to payment complexities.
It'd be like putting an Indian scammer call center in charge of the telephone network because there are some dropped calls. Or electing a guy who spent a career committing fraud at every turn President because the price of eggs went up a bit. Or solving the problems of the American healthcare system by putting a guy in charge who...
Oh, wait. We're definitely going to do the crypto thing. Dammit.
k310
I fully expect the crypto troika of Vance, Musk and Thiel to outlaw cash and to mandate crypto. Of their choice. And I'm not being snide.
pols45
They are young and stupid. They don't know enough history. They don't know how the story of John Law ended.
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hamhock666
Why would they do that? Is this just spam?
TimorousBestie
Surveillance. It’s more difficult to track cash transactions, more difficult to assess tax on them.
selcuka
Why crypto? Can't they outlaw cash and mandate credit/debit cards?
add-sub-mul-div
I think many overestimate their ability to create legislative change that will outlast the lifespan of an executive order. This is a party that couldn't repeal the ACA when they had control of all three branches. The ACA, flawed as it is, took hard work, discipline, nuance. What we have now are leaders who spend their days venting culture war fumes on Twitter.
The timing of retiring supreme court justices may fall in their lap, which is lasting, but again that's not due to anything they've achieved.
>For its doughnuts, the shop takes only green cotton notes from the Federal Reserve.
>The proximate reason is obvious. If it were to accept credit cards, Carlson’s would have to pay an interchange fee to a network, for the privilege of selling doughnuts. These fees run roughly between one and two per cent, sometimes higher, particularly for smaller retailers like Carlson’s.
I feel like I'm taking crazy pills. We all know this is to avoid tax, right? Why are we pretending otherwise?
They take card for everything else. This is just some tax-free pocket money for the owner.