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Do you though? Except for gas, everything I buy costs the same whether I pay cash or credit. If a store started accepting bitcoins, I doubt they're going to rec
by wlesieutre 8y ago
Do you though? Except for gas, everything I buy costs the same whether I pay cash or credit. If a store started accepting bitcoins, I doubt they're going to recalculate the price to be lower than the cash price because you don't have a credit card transaction fee.
- darawk 8y agoWe collectively pay, as a society. Credit card fees are a tax on commerce.
- pbreit 8y agoExcept that the bulk of the fees to the merchant are paid back out to cardholders in the form of rewards and cashback. So it's closer to a wash.
- darawk 8y agoVisa still managed to make $15 billion in gross profit last year. Seems pretty significant to me.
- magnetic 8y agoSomeone seems to have computed the cash vs CC money flow: https://www.bostonfed.org/publications/public-policy-discussion-paper/2010/who-gains-and-who-loses-from-credit-card-payments-theory-and-calibrations.aspx https://www.bostonfed.org/publications/public-policy-discuss... "On average, each cash-using household pays $149 to card-using households and each card-using household receives $1,133 from cash users every year."
- nradov 8y agoCash transactions aren't free either. The merchant has to pay for security, transport, and typically suffers some "leakage". Depending on the type of business and location those can end up being even more expensive than payment card fees.
- darawk 8y agoYep, absolutely true. No free lunch.
- gray_-_wolf 8y agoYou do. The store just gets higher margin on cash-paying customers.
- magnetic 8y agoHe is the consumer, so he doesn't, because as you pointed out, it's the store that is on the hook for CC "transaction fees", not the consumer.
- PretzelPirate 8y agoMany small businesses raise their prices to offset credit card processing fees. Because of that, the consumer is paying the fee regardless of whether they pay in cash or with a card.
- magnetic 8y agoApparently not: https://www.bostonfed.org/publications/public-policy-discussion-paper/2010/who-gains-and-who-loses-from-credit-card-payments-theory-and-calibrations.aspx https://www.bostonfed.org/publications/public-policy-discuss... "Merchant fees and reward programs generate an implicit monetary transfer to credit card users from non-card (or "cash" ) users because merchants generally do not set differential prices for card users to recoup the costs of fees and rewards. On average, each cash-using household pays $149 to card-using households and each card-using household receives $1,133 from cash users every year."
- PretzelPirate 8y agoThis is interesting. I was going off of the information I've received from small business owners in the Seattle area who I've formed personal relationships with, and who have told me how they increased their prices specifically to offset the cost of credit card fees.