Scuba Tony - Cash Only

[Christi]

No problem

My post last night was actually incomplete! I actually TRIED to post what I posted today - but I was having internet issues last night and every time I tried to post - I would get timed out. So I posted a short post then tried to go in and edit hoping that would work - and I still kept getting timed out. So - I left it and then came in this morning and posted what I intended to post last night - and to be very clear that it was nothing to do with Tony or any other operator - and more about how business REALLY works here. I now see how that could have come across the wrong way - but it was not intended that way - and I honestly thought it was too short and vague and didn't really expect anyone to get ANYthing from it - hahah!

Sorry for the misunderstanding and confusion

 

[Mike]

It's FINE if an op wants to offer a cash discount across the board or offer it to only select repeat customers, etc. But please don't be mistaken - we have to pay and report the sales tax regardless of whether you pay cash or credit card. If they are offering a cash discount, it's probably for other reasons. If they are TELLING you it is to avoid the tax and that is really what they are doing - then I want to know who their accountant is.

Well, now there is the other side which is offering a cash discount in order to funnel good ole hard cash into the hand, avoiding any electronic or paper trail of the transaction and therefore opening up the opportunity for avoiding any taxes as long as the cash goes under the mattress and doesn't go into the bank. Seems to me anybody offering a cash discount is probably partaking in these 'benefits' to some degree. If not you don't offer a cash discount you simply offer a cash rate and a higher rate for CC transactions. When you offer a cash discount, let's face it, you're trying to entice the buyer to go through the extra hassles of paying in cash by giving them a discount and ending up with a huge benefit to the business owner if he operates outside of the banks.

I have friends who are business owners. The credit card companies not only charge the business owner a percentage of the fee, but also charge a transaction fee, also present are 'set up' fees to be able to use the companies card, along with annual fees. Often moneys are not received until 90 days after the transaction.

I agree with everything you said with the exception of a business waiting 90 days for their money, one of the very strong incentives to businesses to accept credit cards is that they get their money almost instantly. As soon as you run your 'batching' at the end of the day, week or whatever, the money shows up in your account within 24 hours. I have suppliers who gleefully take my credit card for transactions where I think they are crazy, but to many businesses giving up 2-3% of the gross sale in order to get instant access to cash flow is worth it to them. If they want to let me bang fifty to hundred thousand dollars worth of materials on my credit card a year with them, I'll help them with their desires, I love the free points I get as a benefit!

We don't accept credit cards because our transaction amounts are large and we don't lose business by not accepting them, but for a service industry in the travel industry, credit cards acceptance is a huge benefit. There are legitimate reasons for being reluctant to accept them such as swallowing the discount fees, but in Mexico it's typical to tack them onto the transaction, telling the customer up front that they are going to pay an extra fee for using a credit card. When you aren't taking them and you're trying to steer customers towards actual hard cash transactions, I usually suspect there is an ulterior motive for this, and you probably have a thick mattress, or a bunch of mason jars buried out in the back yard. In the USA, the IRS certainly feels the same way and if they get wind of it, you're definitely going to be on their radar.

 

[Christi]

I agree with everything you said with the exception of a business waiting 90 days for their money, one of the very strong incentives to businesses to accept credit cards is that they get their money almost instantly. As soon as you run your 'batching' at the end of the day, week or whatever, the money shows up in your account within 24 hours.

This is true! The money from CC transactions (MC/VISA) shows up directly in our business bank accounts within 24 - 48 hours - excluding weekends! EXCEPT for AMEX - this is why you will see so few vendors accepting AMEX - typically it is only a very large and/or high volume business like hotels that accept AMEX (here at least) takes forever to pay. I used to accept AMEX, but it was sometimes 2 weeks before we would receive the money. That is hard for a small business when cash flow for covering everyday expenses is so important - especially in the diving biz when so many things have to be covered on a daily or weekly basis (gas, tanks, etc.)

 

[mstevens]

The ATM fees are outrageous

Where do you get that? I've never been charged very much for ATM withdrawals on the island.

which is why he is cash only

What would the connection be between ATM fees paid by a customer and a business's cash-only policy?

---------- Post added February 19th, 2013 at 12:50 PM ----------

I wonder if Ops could start taking US checks and depositing them to their BOA accounts with the smartphone app?

BOA stopped their SafeSend program, so it could be difficult to get that money into Mexico in usable form. As others have pointed out, a local business should probably be banking within Mexico for legal and tax reasons.

The phone app works great for topping up a (US-based) BOA account for someone who wants to withdraw that from a Santander ATM a couple of days later and doesn't want the hassle and cost of wire-transfer fees. That would be useful for tourists, ex-pats, and part-time residents but I don't see it as a good alternative for a business.

 

[cvchief]

BOA stopped their SafeSend program, so it could be difficult to get that money into Mexico in usable form. As others have pointed out, a local business should probably be banking within Mexico for legal and tax reasons.

The phone app works great for topping up a (US-based) BOA account for someone who wants to withdraw that from a Santander ATM a couple of days later and doesn't want the hassle and cost of wire-transfer fees. That would be useful for tourists, ex-pats, and part-time residents but I don't see it as a good alternative for a business.

I bet there are alot of peeps using the BOA especially those former or semi-former Gringos who still have ties in the US. Figure you can extract more than $3000US a week from Santander in Pesos. Maybe you can use it more than once a day even? Even so, you could convert 166,000 US dollars into pesos a year that way and not get burned so bad on the buy sell exchange rates.

Not saying that completely complies with US or MX tax laws.....

 

[Wookie]

Where do you get that? I've never been charged very much for ATM withdrawals on the island.

I think that $6.95 for a max $200 per day withdrawal is outrageous. YMMV.

What would the connection be between ATM fees paid by a customer and a business's cash-only policy?

My mistake. I assume he is cash only because of the high clearing house fees. I only pay 2.5% for MC/Visa and 2.25 for AMEX, but I shopped for a deal. I would bet that in Mexico you pay whatever the central bank tells you to. ATM fees have nothing to do with why Tony would be cash only. My apologies.

 

[Christi]

I think that $6.95 for a max $200 per day withdrawal is outrageous. YMMV.


My mistake. I assume he is cash only because of the high clearing house fees. I only pay 2.5% for MC/Visa and 2.25 for AMEX, but I shopped for a deal. I would bet that in Mexico you pay whatever the central bank tells you to. ATM fees have nothing to do with why Tony would be cash only. My apologies.

Bank fees here are 4 - 5% for their commission and THEN they charge us sales tax on top of the commission - doesn't make sense to me, but they do it!

So a bank statement will read something like this (in English for the gringos benefit :

CC Transaction - commission - $250.00 (pesos)
IVA (sales tax 11%) - $27.50

So yes, the bank takes a significant chunk out for accepting credit cards - not to mention the monthly fees of $300 pesos just to have the credit card terminal

 

[Gdog]

For what its worth, going to Bonaire next week, and staying at Dive Hut...was told I can save 4% by paying cash over card. They must be in cahoots with Scuba Tony!

 

[judydivescoz]

I think that $6.95 for a max $200 per day withdrawal is outrageous. YMMV.


My mistake. I assume he is cash only because of the high clearing house fees. I only pay 2.5% for MC/Visa and 2.25 for AMEX, but I shopped for a deal. I would bet that in Mexico you pay whatever the central bank tells you to. ATM fees have nothing to do with why Tony would be cash only. My apologies.

Another plus for the BofA/Santander AtM....they allow 6000 pesos per day free of charge!



i must have missed something...never read Tony was offering any kind of discount for cash, it's just how he does business. I don't understand the discount/cash connection some posters are trying to make.

 

[Mike]

For what its worth, going to Bonaire next week, and staying at Dive Hut...was told I can save 4% by paying cash over card. They must be in cahoots with Scuba Tony!

More likely in cahoots with avoiding paying taxes on the income, and letting the rest of the legitimate business operators make up for it for them.

Did they tell you that in a private email after the fact or is it published publicly on their website for the government to read?

You might want to ask them for a further discount since I'm sure the tourist taxes they charged you won't be being forwarded on to the treasury so maybe you can split the additional profits they are pocketing, maybe see if you can do a 50/50 split with em.

I'm not the tax police, but I don't run around with blinders on either and rose colored glasses rationalizing as to what businesses are really doing. As a consumer many of us just say, not my problem what they do, but as a business owner I feel sorry for the other operators who are paying their full tax burdens and operating at a disadvantage to the 'cash' businesses who operate illegally with lower expenses and those legitimate businesses who bust their butts day after day following the rules might have a different take on how harmless the whole thing is to them. I personally break the balls of the douches who approach us with 'is there a cash discount' crap wanting me to break the law in order to save their cheap asses a few bucks. They are told, it's all cash, it doesn't matter if you pay with cash, a check or gold bars, it's still costs the same since we will report the income no matter how it's paid. Usually that's enough for them to get the idea, other times some of the real beauties will try to spell it out to us, like we don't know what they are getting at with a "but if I pay you cash, you know..... (wink wink)"