5 ms·

The “cash back” is getting pulled right out of merchants’ wallets. If you’re patronizing small local businesses, then using such cards is not very neighborly.

ryanlol 10y ago
There's 0 difference between using a "cash back" card and using a non "cash back" card.
- rsync 10y ago
  That's not true at all. A merchant that takes a big-bonus cashback card pays more in total fees than if they were paid with a "normal" card. The merchant is charged additional (sometimes substantial) additional fees, on top of the normal processing fees, for transactions done with those cards. That is true with any big bonus card - whether it is cash back or miles back or triple-points or gas-bonus or whatever ...
  - zeroer 10y ago
    I've never heard this and it runs contrary to what I've read. Do you have a reference?
  - ryanlol 10y ago
    As far as I am aware the higher interchange fees for premium cards are independent of the cashback, I assume that is what you're referring to.
muninn_ 10y ago
Pretty sure that Visa et all. charges a fee regardless of debit/credit cards. There is a difference in the amount charged, perhaps. If a business wants to give me a discount for using cash that might make me consider doing so. Supporting small business, which is something I try to do, is still business. Keep that in mind.
- vertex-four 10y ago
  Debit cards are cheaper to process, regular credit cards that don't do anything are a bit more expensive, and credit cards that give bonuses are the most expensive. Some processors will charge a set rate for everything - although that's more common with card-not-present payment processing than card-present.
- hibikir 10y ago
  There is no perhaps about it: Every card out there that gives a decent amount of cash back has a very large interchange fee. The very best ones are easily a percent and a half more than the cheapest ones. Now, the small business might not be paying the fees in such a way that paying with a different credit card costs a different amount of money, but then that just means their payment processor is averaging fees out, and different averages would make the processor charge more overall. Still, using a credit card with foot benefits to you means higher prices in the long run. This doesn't really happen in the EU due to a relative recent ruling standardizing fees, but that's also what makes America's super cards not be issued by their banks. Credit cards, and payments in general, might seem really easy to model on the outside, but the whole space is a gigantic rabbit hole. That is why companies that abstract much of it away are valuable for even large merchants.
  - muninn_ 10y ago
    Hmm. So I don't disagree with your premise but details like "America's super cards are not issued by their banks" is incorrect. Cards like the Chase Sapphire Reserve exist
    - deleted 10y ago
      [deleted]
aianus 10y ago
They're free to offer me a discount (smaller than the interchange) to pay cash but they usually don't so it's their own fault.
- deleted 10y ago
  [deleted]
closeparen 10y ago
You seem to be using the words "small" and "local" as if they are intrinsically good things, and implying that I should pad a business's profit margin because it has those characteristics. How about, let's patronize the businesses that offer the best products and services at the lowest cost, and save our "donations" for legitimate charities.

ryanlol 10y ago

There's 0 difference between using a "cash back" card and using a non "cash back" card.

rsync 10y ago
That's not true at all. A merchant that takes a big-bonus cashback card pays more in total fees than if they were paid with a "normal" card. The merchant is charged additional (sometimes substantial) additional fees, on top of the normal processing fees, for transactions done with those cards. That is true with any big bonus card - whether it is cash back or miles back or triple-points or gas-bonus or whatever ...
- zeroer 10y ago
  I've never heard this and it runs contrary to what I've read. Do you have a reference?
- ryanlol 10y ago
  As far as I am aware the higher interchange fees for premium cards are independent of the cashback, I assume that is what you're referring to.

muninn_ 10y ago

Pretty sure that Visa et all. charges a fee regardless of debit/credit cards. There is a difference in the amount charged, perhaps. If a business wants to give me a discount for using cash that might make me consider doing so. Supporting small business, which is something I try to do, is still business. Keep that in mind.

vertex-four 10y ago
Debit cards are cheaper to process, regular credit cards that don't do anything are a bit more expensive, and credit cards that give bonuses are the most expensive. Some processors will charge a set rate for everything - although that's more common with card-not-present payment processing than card-present.
hibikir 10y ago
There is no perhaps about it: Every card out there that gives a decent amount of cash back has a very large interchange fee. The very best ones are easily a percent and a half more than the cheapest ones. Now, the small business might not be paying the fees in such a way that paying with a different credit card costs a different amount of money, but then that just means their payment processor is averaging fees out, and different averages would make the processor charge more overall. Still, using a credit card with foot benefits to you means higher prices in the long run. This doesn't really happen in the EU due to a relative recent ruling standardizing fees, but that's also what makes America's super cards not be issued by their banks. Credit cards, and payments in general, might seem really easy to model on the outside, but the whole space is a gigantic rabbit hole. That is why companies that abstract much of it away are valuable for even large merchants.
- muninn_ 10y ago
  Hmm. So I don't disagree with your premise but details like "America's super cards are not issued by their banks" is incorrect. Cards like the Chase Sapphire Reserve exist
  - deleted 10y ago
    [deleted]

aianus 10y ago

They're free to offer me a discount (smaller than the interchange) to pay cash but they usually don't so it's their own fault.

deleted 10y ago
[deleted]

closeparen 10y ago

You seem to be using the words "small" and "local" as if they are intrinsically good things, and implying that I should pad a business's profit margin because it has those characteristics. How about, let's patronize the businesses that offer the best products and services at the lowest cost, and save our "donations" for legitimate charities.