3 ms·

It's less the availability of credit cards (they're highly available in a good many countries), it's more the assertion that if you're not using a credit card e

It's less the availability of credit cards (they're highly available in a good many countries), it's more the assertion that if you're not using a credit card every day, there's something wrong with you. It's the fact that if you're not using a credit card in everyday purchases, you're losing the rewards and so essentially paying more for everything you buy - you're structurally punished for not participating. Debit cards have much the same protections as credit cards in much of Europe. It's more likely that any benefits your bank wants to give you will come attached to your bank account (in return for depositing a certain amount of money per month) than that they'll push a credit card on you. Interchange fees are low enough (0.3% for credit cards and 0.2% for debit) that there's not much they can profitably provide, anyway - which means our prices aren't quite so inflated to cover the expense of serving credit card users. Credit cards aren't bad, but the system of incentives that leads consumers in the US to believe they're the most rational choice is.

morgante 9y ago
People regularly assert that credit cards are factored into the cost of goods, but I posit that's mostly untrue. The cost of most things, especially "luxury" goods like restaurants, is set by the price the market will bear—not the cost of providing that good. Anecdotally, it's certainly not cheaper that equivalent goods and services are cheaper in Europe despite the lower credit card usage.
- vertex-four 9y ago
  It's very common for supermarkets in the UK, for example, to compete on margins on common food - not necessarily packaged/prepared food, but definitely the basics, fruit/vegetables/bread/milk/flour/eggs/etc. People have little loyalty to a specific supermarket and often have 2-3 within reasonable distance, so there's a very strong pressure to keep down the cost on these items - they're pretty much the proverbial widgets. The lower the cost to sell an item, the lower the supermarket can charge. Some supermarkets take technical losses every year, with most having falling profits every year. This sort of thing affects poor people more than it affects people who are eligible for a credit card with a good rewards program in the first place. I'm sure you really don't care that your potatoes are 2-3% higher in price than they otherwise would be.
- JauntTrooper 9y ago
  Right. The amount a producer can pass on to consumers via a higher price depends on the price elasticity of demand.

morgante 9y ago

People regularly assert that credit cards are factored into the cost of goods, but I posit that's mostly untrue. The cost of most things, especially "luxury" goods like restaurants, is set by the price the market will bear—not the cost of providing that good. Anecdotally, it's certainly not cheaper that equivalent goods and services are cheaper in Europe despite the lower credit card usage.

vertex-four 9y ago
It's very common for supermarkets in the UK, for example, to compete on margins on common food - not necessarily packaged/prepared food, but definitely the basics, fruit/vegetables/bread/milk/flour/eggs/etc. People have little loyalty to a specific supermarket and often have 2-3 within reasonable distance, so there's a very strong pressure to keep down the cost on these items - they're pretty much the proverbial widgets. The lower the cost to sell an item, the lower the supermarket can charge. Some supermarkets take technical losses every year, with most having falling profits every year. This sort of thing affects poor people more than it affects people who are eligible for a credit card with a good rewards program in the first place. I'm sure you really don't care that your potatoes are 2-3% higher in price than they otherwise would be.
JauntTrooper 9y ago
Right. The amount a producer can pass on to consumers via a higher price depends on the price elasticity of demand.