It is commonly known that one of the “strategies” less high-end establishments use nowadays is the enforcement of cash only payments.
These determined tax dodgers ask to be paid in hard currency for numerous reasons, the main one revolving around taxation.
The elimination of credit cards that charge a merchant fee for every transaction, anywhere from 1.5 to 3 percent, along with the lowered taxation rates allows them to maintain their limited profit. Indeed, in order to break-even, restaurant owners under-report income to tax authorities by not using payment methods that could leave a detectable record.
What these tax evading dining options fail to understand is the impact of this on customers. In North America, cash is no longer the preferred method of currency exchange: people tend not to carry around a large amount of cash to defend against theft and robbery.
By not allowing the use of credit cards and Interac, the restaurants are defying business ethics of honesty and integrity. In addition, people splurge more when they use plastic, while pulling out cash can undermine the desire to spend, psychologically. Here, the restaurants play with the blurry line between the customers’ wants and needs. Although credit card is not absolutely needed when spending, it is much enjoyed. If continued to be denied at these places, consumers will drift away.