It’s a great coup of US credit card companies to convince credit card users that they are getting “free money” when it’s the exact same money they paid in transaction fees.
In any case, I don't pay transaction fees the merchant does. They're often not allowed to give cash or particular types of cash-in-kind store discounts. This actually just raises the prices for everyone.
The payoff for the merchant is it reduces some of the risk of taking cash money and stabilizes some of their transaction flows through their account. It's all probably worth slightly more than what the EU caps it at, but the solution to improve this discovery is to increase the number of transaction networks, not arbitrarily cut them off at the knees and ensure the market never grows to this point.
It's at least one reason to love bitcoin and other crypto. You don't need permission to conduct a transaction. Which, given the extreme costs of transactions there, was clearly sorely lacking in the current artificially scarce market.
Unless you're one of those operating small businesses.
> It's at least one reason to love bitcoin and other crypto.
Sure but what happens in case of fraud, or if I need to initiate a dispute ? What are the fees for that transaction ?
Well, yea, exactly. I'm pointing out two systems that are diametrically opposed and nothing in the middle. It highlights the fact the market is broken. This is one consequence of that.
> Unless you're one of those operating small businesses.
Ironically, I never took credit. Cash or Check only. Handling costs don't apply because the chain of custody is just myself.
I’m ignoring checks because those aren’t a thing anymore. Only people in their 70s might still use them.
In at least some countries you can totally get away with being cash only (although less so since the pandemic).
It’s just not an option. You must accept traceable payments either via cards or direct bank transfer.
Given the interchange cap (0.3%) and current interest rates, this interestingly looks like a losing product at a first glance (the cost of capital for an average due date of 6 weeks after the purchase date is higher than 0.3%).
The transaction fees aren't explicitly added to only credit card transactions - they are baked into the price so people who pay cash and debit are also paying a fee. Credit card rewards therefore reallocate money from people who use cash/debit cards to people who use "reward (credit) cards".
I'm totally okay with not paying higher prices so merchants can pay fees that subsidise credit cards benefits for a few.
ps: is there some sort of contract that stops vendors from adding a "credit card processing fee"?
What are Visa and Mastercard's net take rates in the U.S.? (As in, out of that 3.5%, how much do they keep on average and for premium cards?)
In EU it is not allowed to charge the customer any kind of extra fee for using a card. Though obviously it only works well together with the 0.3% cap on the actual fees the vendor pays.
https://europa.eu/youreurope/business/finance-funding/making...
> You're not allowed to charge your customers extra for using a credit or debit card. This applies to all card purchases (in shops and online) made throughout the EU.
i think the US system is probably better for wealthy people who always use cards and actively play the game (and for the credit card processors of course). Euro system is better for everyone else
ps: is there some sort of contract that stops vendors from adding a "credit card processing fee"? maybe banning those clauses would be the best way to let market forces sort the issue out - once people see that they're paying 3.5% more to use a 2% cashback card, they'll start asking for other options