There’s a Facebook post going around, probably reshared without comment, that opens with something like “as a former banker, this is crazy” and then walks you through a story about a fifty dollar bill.
The story goes like this. You have a $50 bill in your pocket. You spend it at a restaurant. The restaurant owner uses that same bill to pay the cleaner. The cleaner spends it at the barber. The barber buys groceries with it. On and on, forever. After a hundred transactions it is still a $50 bill, and the bank never touched a cent of it.
Then you run the same $50 through card terminals instead. Every transaction gets clipped 3%, about $1.50. Do that thirty times and the post tells you there is only $5 left. The other $45 belongs to the bank. The conclusion made is that “they” (the banks, the government, etc.) want to get rid of cash so they can collect more in fees, and if you care about small business you should pull cash out of the machine and pay with it.
Let me be fair to the argument before I take it apart, because there are really four separate claims stacked inside it, and they are not equally wrong.
The first claim is that merchant fees are a real and painful cost for small business. That one is true. It is not a small line item. It comes straight out of the owner’s margin, every single month, whether the month was good or bad.
The second claim is that a physical bill can circulate indefinitely without being reduced. Also true, as far as it goes. A banknote does not shrink when it changes hands.
The third claim is where it starts to go sideways. The post treats those two facts as opposites. Cash circulates and stays whole, therefore card payments must be the reverse: a pot of money that gets drained a little at every step until it is gone.
The fourth claim is the emotional payload. If money is being drained, someone is doing the draining, deliberately, and the war on cash is how they plan to finish the job.
I understand why this spreads. It gives you a villain, a number, and something you can do about it before lunch. That combination is very hard to beat on social media. It also lands on a real grievance, which is what makes it feel true. Anyone who has ever read a merchant statement knows the fees are genuinely irritating.
About that “former banker”
Notice how the post opens. Not with a number, but with a credential.
That line is doing a specific job. It is asking you to skip the verification step, because someone on the inside has already done it for you. And it works, because most of us have no idea how interchange is priced and we are grateful when someone who does offers to explain it.
There are three problems with it.
First, the credential is unverifiable and it is not attached to a name. You cannot look this person up. You cannot ask them a follow-up.
Second, and more telling, the claim drifts. This post has been reshared thousands of times with the “as a former banker” line still sitting at the top, which means most of the people you are reading it from are not former bankers. The “I” in the post is nobody in particular.
Third, and this is the part that should settle it: an actual former banker would not have made these errors.
Compounding a percentage is first week material. So is the difference between a fee and a loss. The credential is not just unverified, it is contradicted by the content underneath it.
None of which means credentials are worthless. It means they are a reason to read carefully, not a reason to stop reading. Check the math, not the badge. That applies to this post too, and I have shown my arithmetic below so you can.
Where the argument actually breaks
Start with the arithmetic, because it fails on its own terms. Take 3% off thirty times and you are left with about $20, not $5. The post charged a flat $1.50 against a balance that was supposedly shrinking. It made the same mistake twice, actually. The example about a shop doing $50,000 a month with 90% on card comes out to $1,350, not $1,500, because 90% of $50,000 is $45,000.
Now the bigger error. Fees do not delete money. That $1.50 does not evaporate. It becomes somebody’s wage, somebody’s dividend, somebody’s fraud reserve, somebody’s terminal on somebody else’s counter (remember banks have employees too!). It gets spent, exactly like the banknote gets spent. The chain does not stop. It just changes hands. The post imagines the economy as a bucket with a hole in it, when it is actually a circuit. This is the same error as believing a dollar paid in taxes is a dollar destroyed.
And the 3% is out of date in this country. Since October 19, 2024, qualifying small businesses pay a weighted average interchange rate of 0.95% on in store credit, with eligibility set at under $300,000 in annual Visa volume and under $175,000 for Mastercard. Add processor markup and assessment and most owners land somewhere between 1.5% and 2.5% all in. Real money, but not 3%.
Worst of all the post tells Canadians to stop tapping. In Canada, tap is usually Interac. Interac debit runs a flat per transaction fee, typically somewhere between four and twelve cents, with no percentage component at all. On a $200 sale, that is a dime. The post is steering people away from the single cheapest way to pay a Canadian merchant. (One caveat: Square moved Interac to 0.75% plus 7 cents back in 2023, so it is not universal. It holds for most traditional processors.)
Finally, cash is not free either. Somebody counts the till. Somebody reconciles it. Somebody drives it to the bank. There are deposit fees (yes, banks charge you for depositing cash now!), counterfeit risk, shrinkage, and the insurance premium that goes with keeping money on the premises. The payments industry publishes some very large numbers on this and I would treat those with suspicion given who is funding the research, but the honest version is simple: the cost of cash is not zero, it is just invisible.
So what actually helps a small business at the till? Not cash. Debit. Leave the rewards Visa in your wallet and tap the Interac card instead. Every point you earn on a premium card is paid for by the person standing on the other side of the counter.
Two things owners should actually do
First, work out your real blended rate. Not the number your processor quoted when they signed you. The real one: total fees divided by total card volume, off last month’s statement. Most owners have never done this. That is where the money is actually hiding, and it is worth more to you than any debate about banknotes.
Second, know that you are allowed to surcharge, because most owners still don’t. Surcharging credit cards was banned in Canada until October 6, 2022, when a class action settlement stripped the no surcharge rule out of the Visa and Mastercard merchant agreements. You can pass the cost along. Nobody sent you a memo about it.
The rules are specific, so if you go this way, go carefully:
- The cap is 2.4% per transaction, or your effective merchant discount rate for that brand, whichever is lower. If your real rate is 1.8%, your ceiling is 1.8%.
- You have to register with Visa and Mastercard at least 30 days before you start, and tell your acquirer.
- You have to disclose it at the entrance of the store, at the point of sale, online at checkout, and as a separate line on every receipt.
- Credit only. You cannot surcharge Interac debit or prepaid cards.
- Quebec is out. The provincial Consumer Protection Act blocks surcharging consumers there, although you can still surcharge other businesses.
- You can do it brand wide, or target only the premium rewards cards that cost you the most. Brand level is simpler.
Whether you should is a separate question from whether you can. Customers dislike it, and a 1.5% surcharge that costs you a regular is a bad trade. But surcharging premium rewards cards specifically has some logic to it, since those are the cards that cost you the most and their holders are the least price sensitive people in your store.
What cash is actually good for
None of this makes cash useless. Ask any retailer who was open on July 8, 2022, when the Rogers outage took Interac down across the country and cash was the only thing that worked.
Cash matters for resilience. It matters for people without bank accounts. It matters for privacy. Those are real arguments and they stand up on their own. They do not need bad math propping them up, and attaching a conspiracy theory to them only makes them easier to dismiss.
The fifty in your pocket
Come back to that bill.
The post is right about one thing. It really can circulate forever, and there is something satisfying about picturing it moving from the restaurant to the cleaner to the barber, whole every time.
What the post misses is that the dollar fifty does exactly the same thing. It goes to a bank, and out again as a teller’s wage, or a shareholder’s dividend, or the cost of catching the fraud attempt nobody told you about. Then it buys somebody’s groceries. The money never left the circuit. It just stopped being visible to you, and the post mistook that for it being gone.
This matters more than a math correction, because a bad diagnosis sends you after the wrong lever. The owner who believes the bank is quietly eating his margin goes cash preferred and pays for it in staff hours, deposit runs, and shrinkage he never puts a number on. The customer who wants to help walks past the cheapest option in the store and hands over paper. Both of them acted. Neither of them helped. Meanwhile the actual money is sitting on a statement in a drawer, in a blended rate nobody has calculated, next to a surcharging right nobody knew they had.
The instinct behind that post is sound. Small business is getting squeezed and people want to do something about it. But wanting to help is not the same as helping, and the difference between them is almost always arithmetic.
