Tag Archive for: cash is king

7 Reasons Why Cash is Better Than Card

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Do you know why cash is better than card? If you are in the ATM business, then you probably have your reasons, the number one reason being revenue…. But with the advancements in electronic payment technology, money transfer apps, and cryptocurrency, some might start to wonder whether cash will become obsolete.

We’re here to tell you that cash is here to stay. Not only are there a number of situations and scenarios where cash is the only possible form of payment, there are also clear benefits of using cash instead of a debit or credit card.

Trust us. Cash is king. Here are 7 reasons why cash is better than card.

1. Minimize Debt

As you probably already know, credit is a quick way to accumulate debt. It’s the very nature of credit: buy now, pay later. Charging more than what you have or what you make results in debt. And it’s a very easy habit to develop. When you pay with cash, however, you own rather than owe. 

Paying with cash has also been proven to help with budgeting. Budgeting, in turn, prevents debt. Budgeting ensures that you only spend what is available. Therefore, budgeting is made easier with cash payments. You see and feel the money leave your pocket. When it’s gone, it’s gone. 

A budget is much harder to maintain when the debit or charge is so far removed. Ever heard the phrase, “Out of sight, out of mind”? Unfortunately, for many people that’s what happens when they pay with their cards. And this is what makes budgeting so much more difficult.

2. Avoid Interest

Then, as though charging more than what you have or can afford wasn’t enough to burst your budget, you accrue interest on your card payments. In this way, you end up paying more for your purchases when you pay with a card than if you had paid with cash. 

Of course, you don’t accrue interest if you pay the balance each month. But many people occasionally miss payments. Not only do you end up paying more in interest and late fees, but your credit score could be at risk, too. With more cash payments, these problems become less of a concern.

3. Avoid Overdraft Fees

While it might seem clear or even obvious why cash is better than card when it comes to credit, it does have its place above debit as well. First of all, the same “Out of sight, out of mind” maxim applies. It is much harder to stick to a budget when you don’t actually see or feel the funds leave your wallet. 

Second, your debit payments don’t accrue interest, but have you ever miscalculated your balance and been charged an overdraft fee? There’s $20 you’ll never see again…. Alternatively, depending on your bank, you can only get cash if your available balance will support it. 

Once you have the cash, you can spend it until it’s gone without suffering overdraft penalties! You always know how much you have at any given time without the confusion of “pending” transactions, “available” balance, or delayed processing.

Unless you want to keep a register, like we did when checks were more commonplace (Does anyone miss checkbooks?), it might be best to use cash as much as possible rather than rely on debit transactions. Especially if you are trying to maintain a strict budget and decrease your debt.

4. Avoid Transaction Fees

Did you know that it costs money to process card transactions? Yes, there are network fees charged by your card company to process, or allow, your transactions. 

Many businesses adjust the cost of their goods and services to account for the amount these fees will cost them to process card payments. But there are some businesses (typically small businesses, pop-up shops, freelancers, etc.) that pass this fee on to the consumer. And some restaurants pass this cost onto their servers and deduct card transaction fees from their tips!

Maybe a 3% payment transaction fee doesn’t discourage you from the convenience of making an electronic payment rather than a cash payment. But think of it this way:

You use a card to pay for a $50 restaurant tab. That $50 is now worth only $48.50 when you subtract the transaction fee. Whereas if you pay for your meal with a $50 bill, that $50 bill retains its value whether it’s used for groceries, a haircut, or a movie by the next person.

So after, say, thirty card transactions, that $50 will end up being only $5. The other $45 becomes property of the bank after all of the digital transaction fees are paid….  Is that where you want your money to go? 

5. Spend Less

Psychologically, we spend less when we use cash instead of card. It doesn’t “hurt” as much when we spend without our means if we don’t immediately experience the effects. In other words, the option and/or ability to postpone the consequences of our spending money we don’t currently have results in overspending. 

For this same reason, you are more likely to encounter deals when you are able to pay in cash. Individuals, small businesses, and, well, basically anyone, prefer cash payments to electronic payments. 

First of all, they don’t have to worry about missed payments. Sometimes it’s more important to a seller that they get full payment immediately than have to deal with defaulted or delayed payments. 

Secondly, when someone receives a cash payment, again, they benefit from the entire value of the banknote. The alternative is either having to deduct a percent of a card payment or risk missed payments. Therefore, since most people would rather have the security of full payment up front, they are more likely to offer you a sale for less than the ticket price if you have cash.

Often the “ticket price” accounts for the cost of waiting for a fulfilled payment and any associated fees. So when you pay with cash, you not only avoid paying interest, but you might also benefit from paying less up front due to the convenience afforded to the seller. 

6. Decrease Risk of Identity Theft

Have you ever received an email saying your information was compromised in a data breach? When you swipe your card, credit or debit, you put yourself at risk of being robbed. 

When you swipe your card or use it online, your card data can become compromised if there is a lapse in security. This risk applies to money transfer apps tied to your accounts as well. 

On the other hand, there is no paper trail with cash. So when you make cash payments, your personal information remains secure no matter what.

7. Pay for Almost Anything

Finally, cash is universal. You tip your server, bartender, barber, or manicurist in cash. You give a dollar or two to the beggar on the corner. Your kids get their allowance in cash. You pay your young neighbor in cash to babysit. The local farmer’s market or pop-up exchanges goods for cash. 

Most cannabis dispensaries are cash only still, too. And with the recent change in money transfer app taxable income reporting, you might start to find even more freelancers, independent contractors, and other self-employed individuals encouraging cash payments. 

Cash is almost always accepted. You will find more “Cash Only” signs than you will “Card Only” signs. Since cash retains its value while the bank shares in electronic transactions, some businesses just don’t want to pay those transaction fees. And what happens when “the system is down”? You pay with good old fashioned cash!

Most importantly, everyone has access to cash. Minors, low-income, and other unbanked individuals would find it quite difficult to fit into a cashless society. Cash is non-discriminatory and is absolutely necessary in today’s world.

Why Cash is Better Than Card

Now, we know that alternative payment methods definitely have their place. But we also know that because of the benefits cash offers, it won’t become obsolete anytime soon. 

Cash is traditional and familiar. It’s reliable. It’s universal. And it’s better than plastic.

Now that you know why cash is better than card, are you convinced that an ATM business is a solid investment? Contact us to get started today!

Cash App Taxes Could Increase ATM Usage

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Cash app taxes could increase ATM usage. Many small businesses, freelancers, and those employed in part-time work who rely on cash apps, or payment applications, might have a new tax form to file next year. 

Now, just $600 in online payments will trigger form 1099-K. What does this mean for payment app users? What does this mean for independent ATM deployers (IADs)? 

Well, increased tax reporting and scrutiny could push many small businesses and self-employed individuals to encourage or limit themselves to cash transactions. And more cash transactions means more cash withdrawals and more ATM business.

What are Payment Apps?

Payment apps allow person to person (p2p) transactions. Whether payment is for goods and services or for monetary gifts or reimbursement, payment apps are a quick, convenient, free way to send money to people you know and trust. 

Payment apps are popular alternatives to cash because they allow users to pay for goods and services and share money among friends and family without needing to carry a wallet. Payments are now immediate. You don’t have to worry about going to the bank or about someone forgetting to “get you back.” 

Payment apps work by linking debit cards, bank accounts, and sometimes credit card information and securely storing it to send and receive money right from your phone. No wallet needs to be present, you aren’t limited to in-person transactions, and in some cases payments can even be made internationally.

The biggest draw is that they are free to use. The only nominal fees are for expedited or extra services.

What are the Most Popular Payment Apps?

The convenience of payment apps has made them quite popular. Some of the most popular payment apps in 2022 are PayPal, Venmo, Cash App, and Zelle. Each of these payment apps has millions of active users all over the world. And many people use more than one depending on their needs. 

Each app has its own niche, if you will. PayPal is the oldest payment app. It has earned the public’s trust because of its strong encryption technology used to keep user accounts secure. PayPal is a good option for freelancers and other business purposes because it offers an invoice feature that can be used to specify the nature of purchased goods and services.

Venmo is the most popular payment app for exchanging small amounts of money between friends and relatives. Need to spot a friend $5? Venmo. Need to pay your share of the rent? Venmo. Splitting a dinner bill? Venmo.

Cash App is another hassle-free way to send small amounts of money to contacts. Cash App doesn’t offer the social aspect Venmo does (a feed of who sent money to whom and for what). But it does offer users a digital wallet that enables the buying and selling of bitcoin. 

Zelle can be used independently as its own app. Most Zelle account holders, though, use the app through their banking app. Banks like Chase, Bank of America, and Wells Fargo use Zelle to allow their customers to send small amounts of money safely from their bank account. 

In order to use one app, both sender and recipient have to have it. So this can cause some people to have active accounts with multiple payment apps at one time.

Do Cash App Taxes Apply to All Transactions?

You might have heard about cash app taxes from unnecessarily worried peers or even seen something in the news. However, very little is actually changing in terms of tax laws.

Monetary gifts and reimbursement are still considered non-taxable income. So only those who receive payment for goods and services through a third-party app should expect to file a 1099-K form with their 2022 taxes next year.

What is a 1099-K Form?

Form 1099-K is a tax reporting form just like many others everyone has filed in their lifetime. It provides the IRS with information about the gross amount of payment transactions a person receives via third-party payment networks (like the ones listed above). 

The Good News

You are probably already familiar with this form if your gross payments exceeded $20,000, and you reported earnings if you had more than 200 payment transactions. The difference now is that rather than the $20,000 threshold, it’s $600. And rather than 200 transactions, the minimum is 1.

What this means is that more people will be filing form 1099-K next year than previously. More people receive at least $600 worth of income in a year paid via payment app than those who receive over $20,000.

These payment app companies are required to send a 1099-K to the tax filer as well as to the IRS. This actually simplifies tax filing! Say a freelancer or part-time worker has multiple streams of income paid through three different payment apps. Rather than hunting down and documenting information for each app separately, form 1099-K contains information about the gross amount of payment transactions made on any and all qualifying third-party payment networks.

So, whether individuals receive one $600 payment in exchange for goods or services or they receive thirty $20 payments, they should expect to receive a 1099-K form by January 31, 2023.

The Bad News

The problem is, it is possible for this form to reflect both taxable and nontaxable transactions. To prevent confusion and delayed tax filing, it might be a good idea to separate business and personal accounts. Otherwise, someone might end up paying more taxes than necessary. And to make sure they don’t, they’ll need to look at the information carefully and compare it to their (hopefully) carefully maintained records….

Those who only receive $600 via digital payment apps in a given year might not see the importance of separating this income from personal gifts and reimbursements or of maintaining records of it. Now that more people will have an extra form to file next year, more people might dread the extra time and responsibility of discerning the information.

However, self-employed individuals are and always have been required to report all earnings to the IRS when filing their tax returns. So those who aren’t trying to break the law don’t have anything to worry about!

Unfortunately, there could be a number of people receiving form 1099-K by mistake. Take, for example, the bride who worried that monetary gifts she received to help fund her honeymoon would be reported to the IRS and taxed. If she were to receive a 1099-K form, all she would have to do is prove that the money she received through digital payment apps was gifted and therefore nontaxable income.

Although this burden of proof might not be so easy for some people, it should be relatively easy to rectify. Mistakes should be reported to the third-party digital payment company who issued the payments. They will resolve the issue, not the IRS.

Why Are Cash App Taxes a Thing?

2021 American Rescue Plan Act

This new law concerning payment or cash app taxes is part of Joe Biden’s 2021 American Rescue Plan Act which was passed by the Democrats in March 2021. (You might be familiar with the additional stimulus payments, enhanced unemployment aid, and expanded child tax credit also covered by this bill.) 

As a result of the American Rescue Plan Act of 2021, any transactions made after March 11, 2021 that exceed $600 must be reported to the IRS, regardless of the number of those transactions. Prior to this legislation, third-party payment platforms would only report users who had more than 200 commercial transactions and made more than $20,000 in payments over the course of a year.

It’s important to remember that this bill doesn’t change tax laws, it only changes income reporting. Self-employed individuals have always had the responsibility of reporting income from all sources and paying taxes on it. Now, there is just another form in the mail, and it might include nontaxable income if people aren’t careful.

The purpose of this bill is to cut down on tax evasion. It allows the IRS to keep track of transactions made through payment apps that often go unreported. This digital trail keeps freelancers and other self-employed or part-time workers from not reporting or underreporting their earnings.

Tips for Taxpayers

In order to accurately report income, these apps will need additional information. They will need either an Employer Identification Number (EIN), Individual Tax Identification Number (ITIN), or Social Security Number (SSN). If this information is not already on file with the digital payment apps people use, they will be reaching out to users to confirm tax information due to this new law.

Remember, too, that only money received in exchange for goods and services should be reported and taxed. Nontaxable income includes monetary gifts (birthday, holiday, wedding), split bill payments, and other reimbursements. Any items sold at a loss are also nontaxable. Examples are items sold at a garage sale or on Facebook Marketplace. 

But those who purchase new items and resell them for profit should expect to report that income to the IRS. If they don’t, and they receive payment through a payment app, the IRS will know.

The new law requires that form 1099-K go to both the taxpayer and the IRS. So, there is a good chance that they will notice any discrepancies between federal income tax returns and income reports. Therefore, it’s important for individuals to report their taxable income and keep good records.

What Do Cash App Taxes Mean for IADs?

This new legislation affects anyone who receives earnings through digital payment apps instead of direct deposit, paper check, or cash. Those most likely to accept these types of payments are small businesses, freelancers, minors, and other self-employed, part-time workers.

About 1 in 4 Americans makes extra income online. It might be from selling something, renting something out, or providing online services. And global transactions associated with the gig economy are projected to grow to about $455 billion by 2023.

So anyone who doesn’t want their online income reported directly to the IRS will need to conduct more business using cash. Not to mention minors who earn income from mowing lawns, babysitting, caretaking, and other odd jobs.

It seems some kids will be learning about taxes a lot sooner than most. And it could result in their guardians covering these taxes, too. This is just more encouragement for minors and other part-time, odd-job workers to revert to relying on more cash payments. And that’s good news for the ATM industry.

Cash is King

We never believed that digital payment apps would replace cash to the extent that it becomes obsolete. This just confirms what we’ve been saying all along: Cash is king! 

It’s safe, it’s private, and it’s universal. Everyone has it, everyone can accept it, everyone can spend it. And as long as cash has a place in society, so will ATM machines and ATM businesses!

Convinced that there is no better time than now to start or scale your ATM business? ATM Depot can help. Contact us today to get started!

5 Advantages of Using Cash

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Are there advantages to using cash? Do most of us even carry cash anymore? With cryptocurrency, online shopping, debit and credit cards, Apple and Google pay, PayPal, and other money transfer apps, do we really even need cash anymore?

Technology is nice, but what happens when it doesn’t work? Have you ever tried to order food at a restaurant just to be told that their point-of-sales (POS) system is down? Have you ever tried to use a money transfer app to send or receive money just to run into verification obstacles, long wait times, or extra fees? 

For these reasons and more, cash will have a special place in our hearts (even if it isn’t always in our wallets) for a long time. It’s reliable, it’s convenient, and it’s a 3,000 year tradition.

Is the ATM Business Dying?

As long as people need cash, they will need ATM machines. Although cash payments decline as electronic payment methods increase and improve, there is currently more cash in circulation than ever. 

Cash is traditional. It’s familiar. Comfortable. So for a long time yet, there will be people who prefer cash. Could you even imagine what would happen if cash was taken out of circulation? Many people would protest that choice being taken away from them. So we don’t see that happening in our lifetime.

Even so, ATM machines are versatile. They have already evolved to facilitate the cryptocurrency craze. So there’s no reason to believe that the ATM business would be dying anytime soon.

Furthermore, federal law prohibits businesses from going cashless. While state mandates might vary, it’s generally accepted that cash is the most widely accessible form of payment in addition to the other advantages of using cash. 

The Payment Choice Act

The Payment Choice Act (2021-2022) refers to the bill that states that retail businesses do have to accept cash payments. It also prohibits them from charging cash-paying customers more. The goal is to prevent discrimination and keep consumerism fair. 

Without the ability to pay with cash, low-income and other unbanked individuals would be unfairly excluded from locations that would prefer not to accept cash payments. However, as you will see, in most cases, cash payments actually benefit retail businesses. The advantages of using cash on top of the federal law further solidify the role of cash in our society.

5 Advantages of Using Cash

1. Quick

In many cases, cash payments are quicker than electronic ones. Cash payments don’t decline. The POS system doesn’t have to communicate with your bank to release the funds. And when that POS system goes down, you’d better believe you’ll be wishing you had some cash on you. 

Cash is also often more convenient than electronic payment methods. You don’t have to worry about accidentally overdrawing your account and accruing exorbitant bank fees when you pay with cash. 

And if someone needs to pay you for something, cash payments are immediate. You don’t have to download a new app, figure out how to be “added” as someone’s contact, fight with authentication procedures, worry about payments being sent to the wrong person, be restricted by sending limits, wait days for the money to hit your account, or pay any transfer fees.

With cash, once it hits your hands, it’s yours. 

2. Tangible

Cash is tangible, an old-fashioned favorite. Bills can be broken into smaller bills and even coins. Many of us learned to count using bills and coins, and many children still do. Physical money is an important educational tool for children when it comes to counting and budgeting. 

Cash is a useful budgeting tool as evidenced by the envelope method touted by financial guru Dave Ramsey. By physically dedicating a set amount of cash to various categories of your spending habits, it’s much easier to be frugal and disciplined with your money—once it’s gone, it’s gone. 

Don’t payments hurt just a little bit more when you can see and feel the money leaving your side? Electronic stashes are often out of sight and out of mind (and sometimes out of control if you aren’t careful with your credit cards…). Some people also feel safer having tangible money in their possession where they can keep an eye on it and protect it.

3. Private

Cash payments are private. They are difficult to track, and, excepting disposable paper receipts, they leave no paper trail. Sketchy business practices aside, this privacy also serves as a security measure. 

No one can electronically hack into your wallet or safe. Your financial information can’t be compromised in a data breach if you use cash payments at most stores and avoid online shopping. And if you minimize the number of debit and credit cards you carry, you in turn minimize your risk of identity theft. 

4. Universal

Cash is also the most widely accessible payment method. Everyone has access to cash. And it’s a good thing, too.

About 6% of Americans are unbanked, with no bank account, and another 16% are underbanked, meaning they only have a checking account and maybe a savings account. There are many reasons why someone might be unbanked or underbanked.

First, low-income individuals might not make enough money to warrant a bank account. This is especially true when bank accounts charge monthly service fees or impose minimum balance requirements. And what about the homeless man at the intersection? Does he take debit or credit? 

Other people might be distrustful of banks, especially under the threat of national and economic crises. Covid-19, for example, caused more cash to be in circulation than ever. Others still might just not want to deal with bank regulations and restrictions. 

Minors are also unbanked. We pay our children for doing extra chores. We use cash to pay our neighbor to mow our lawn. Our kids receive cash in their birthday cards. They keep it safe in a piggy bank. These are traditions that are still going strong.

5. Necessary

Finally, cash is necessary for cash-only businesses. Many small businesses are cash-only to save money on credit card processing fees and to make bookkeeping simpler. 

The cannabis industry is also often cash-only by necessity. Although legal in many states, whether medicinal or recreational, marijuana is still illegal on a federal level. Therefore, few banks will work with cannabis businesses due to the threat of breaking money laundering laws. 

Even if cannabis businesses find banks willing to work with them, it can be quite expensive for them to maintain those accounts. This is because it costs the banks more to service them due to anti-money laundering software, external auditors, and legal counsel.

Cash tipping is also common in many industries like beauty salons, bars, and restaurants. Many businesses, like Starbucks, only accept cash tips if they aren’t able to apply them to a debit or credit charge. You will see little bowls or buckets on the counters of places like these where customers can leave a cash tip. Businesses that are able to apply a tip to a debit or credit charge will sometimes still place a cash tip receptacle in customer view because the visual reminder (Dare we say peer pressure?) encourages more tips.  

Other times, customers want to make sure that their servers receive the full amount of a cash tip whereas electronic tips are subject to tip sharing and other deductions. And how else do you tip your concierge when you travel? The entertainment at your local bar? Your favorite street performer?

Cash is King

As you can see, cash plays a very important role in our society. There are many advantages of using cash. No other payment option is as secure, convenient, reliable, or universal. That’s good news for the ATM industry. As far as we are concerned, cash is here to stay, and so is the ATM industry. Ready to start your own ATM business? Where there is a need for cash, there is an opportunity for you to make some passive income. Get started today!