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While I think the credit card companies in general are running something similar to a mafia protection racket, they are in fact providing value to retailers. By
by mmcconnell1618 10y ago
While I think the credit card companies in general are running something similar to a mafia protection racket, they are in fact providing value to retailers. By extending credit to consumers they encourage consumers to purchase more from retailers. The question for retailers is: "Does the 2.x% transaction fee cost more than the incremental revenue from customers buying on credit?"
- mseebach 10y agoThat's a pretty limited view of the credit card value proposition. The credit part is, of course, what it is, but also important is the fact that most people have immediate and secure to all their cash (and credit). Also, not to be discounted is that it's far from free to handle cash. The delay in settling credit card payments + apparently pretty heavy-handed practises around charge backs is probably a bigger problem than ~2% transaction fees are.
- mmcconnell1618 10y agoAgreed. I was just trying to point out that the % transaction fee is not just for the currency exchange, but also for the risk involved in providing a line of credit.
- montecarl 10y agoVISA does not offer credit. The issuing bank does. VISA is just a payment network that links consumers, merchants, and credit issuers. Actually it is a scheme that involves 4 parties[1]. [1] https://gendal.me/2014/08/09/a-simple-explanation-of-fees-in-the-payment-card-industry/ https://gendal.me/2014/08/09/a-simple-explanation-of-fees-in...