4 ms·

This is obviously horrible for merchants, but what's really gross is how regressive it is when it comes to poor people and small businesses. Unlike national cha

This is obviously horrible for merchants, but what's really gross is how regressive it is when it comes to poor people and small businesses. Unlike national chains, local outfits don't have the ability to negotiate favourable fee arrangements, so accepting CC payment puts them at another built-in disadvantage relative to well-heeled competitors. And of course, those fees end up baked into the price of everything, and are then carried by anyone who doesn't have a big-spender cashback/rewards card, but especially by people paying cash (whether by choice or because they are unbanked). Hilarious to have this state of affairs going on while there's simultaneously a right wing panic about how carbon pricing will make everything a few percentage points more expensive. But I guess making everything a few percentage points more expensive so that executive credit card holders can get thousands per year in cashback and travel rewards is no biggie.

Scirra_Tom 7y ago
"The Payment Card Interchange Fee and Merchant Discount Antitrust Litigation is a United States class-action lawsuit filed in 2005 by merchants and trade associations against Visa, MasterCard, and numerous financial institutions that issue payment cards. The suit was filed due to price fixing and other allegedly anti-competitive trade practices in the credit card industry." Another area where giving freedom to these businesses ends up screwing the average person. This is why I like the EU, they are strong on consumer rights. The naive would assume these businesses would naturally want to compete on these fees.
- Silhouette 7y ago
  Sometimes the EU can be a bit too strong on consumer rights. For example, while charging excessive "processing fees" for accepting payment by card was a common scam, cards often do cost more to process than various other forms of payment here, and under the EU's latest PSD rules all surcharges for card use have been banned, even those that really did only cover the additional cost of the transaction.
  - mikepurvis 7y ago
    I'd rather they err on the pro-consumer side, to be honest. I doubt those big banks and credit card companies will struggle to fight this and make their case for the appropriate exemptions if their scenarios warrant them.
    - Silhouette 7y ago
      It's not the big businesses I'm worried about. It's all the small ones, who are now obliged to take a hit of potentially 5% or more of a small transaction, because they have neither the power to negotiate the much lower fees that big companies have nor any longer the right to pass on the actual cost to their own customers to incentivize paying by a more cost-effective method.
      - AnssiH 7y ago
        Out of interest, where in EU are 5%+ rates a thing? Here in Finland the base card-present rates of traditional merchant card service providers are around 0.3% for debit and 1% for credit, with no per-transaction fees so these apply to even small transactions. Hmm, or maybe you were talking about card payments over internet? You might have a point there as per-transaction fees are more common there (e.g. Stripe takes €0.25).
        Silhouette 7y ago
        Out of interest, where in EU are 5%+ rates a thing? Hmm, or maybe you were talking about card payments over internet? Yes, I was. For example, Stripe's current pricing here in the UK is 20p + 1.4% for European cards (so a transaction of around £5 has a 5% fee) or 20p + 2.9% for non-European cards (so a transaction of around £10 has a 5% fee). Other online card payment services are broadly similar for small businesses paying the standard advertised rates.
    - neilparikh 7y ago
      Banning processing fees is anti-consumer, because it means that consumers who pay by a cheaper method have to subsidize the consumers who pay by the more expensive method (since companies will have to raise the prices for everyone). Credit card companies won't fight bans on processing fees, because it actually helps them (the extra cost of the credit card is now hidden, and reduced, which means more people will use credit cards). Additionally, this is a regressive policy, since it's easier to access financial products like credit cards when you're richer.
wiggles_md 7y ago
Depending on the industry sector, cash can effectively be several times more expensive to handle than the US market interchange fees. I don’t think it’s obviously horrible for merchants.
- ceejayoz 7y ago
  Visa interchange fees for the higher end rewards cards top 2.5% of the transaction. That's cost that the merchant has to pass on to the consumer in the form of higher prices. The EU caps it at 0.3%, and the banks still manage to stay in business.
- r00fus 7y ago
  Can you explain what makes handling cash is so expensive? honest question.
  - ceejayoz 7y ago
    If you handle enough of it, you probably wind up contracting with an armored car company to come collect it. Some gets lost or stolen, coins have to be rolled up for deposit, etc.
  - wiggles_md 7y ago
    Till theft, the physical act of counting it and securely storing it, screening counterfeits, securely transporting it to the bank, etc. I don’t have direct links handy, but there have been some good insightful comments on the topic on this site previously. Hopefully they will turn up without much difficulty with a search. Sorry to have to pass the buck on a more detailed answer.
  - astura 7y ago
    Handling cash is very labor intensive, you're paying your highest paid employees (managers) to count cash multiple times before/after shifts, bank runs to deposit, making change, rolling coins, etc. Plus the cost of physical security for that cash. https://www.businesswire.com/news/home/20180130005244/en/New-Research-IHL-Group-Shows-Retailers%E2%80%99-Cash-handling https://www.businesswire.com/news/home/20180130005244/en/New... >New Research from IHL Group Shows Retailers’ Cash-handling Costs Range from 4.7% to 15.3%, Depending on Retail Segment Loss from theft is a huge deal as well, there was a coffee shop in Baltimore that went cash-free because they were getting robbed so much. https://baltimore.cbslocal.com/2017/02/02/cashless-coffee-shop/ https://baltimore.cbslocal.com/2017/02/02/cashless-coffee-sh...

Scirra_Tom 7y ago

"The Payment Card Interchange Fee and Merchant Discount Antitrust Litigation is a United States class-action lawsuit filed in 2005 by merchants and trade associations against Visa, MasterCard, and numerous financial institutions that issue payment cards. The suit was filed due to price fixing and other allegedly anti-competitive trade practices in the credit card industry." Another area where giving freedom to these businesses ends up screwing the average person. This is why I like the EU, they are strong on consumer rights. The naive would assume these businesses would naturally want to compete on these fees.

Silhouette 7y ago
Sometimes the EU can be a bit too strong on consumer rights. For example, while charging excessive "processing fees" for accepting payment by card was a common scam, cards often do cost more to process than various other forms of payment here, and under the EU's latest PSD rules all surcharges for card use have been banned, even those that really did only cover the additional cost of the transaction.
- mikepurvis 7y ago
  I'd rather they err on the pro-consumer side, to be honest. I doubt those big banks and credit card companies will struggle to fight this and make their case for the appropriate exemptions if their scenarios warrant them.
  - Silhouette 7y ago
    It's not the big businesses I'm worried about. It's all the small ones, who are now obliged to take a hit of potentially 5% or more of a small transaction, because they have neither the power to negotiate the much lower fees that big companies have nor any longer the right to pass on the actual cost to their own customers to incentivize paying by a more cost-effective method.
    - AnssiH 7y ago
      Out of interest, where in EU are 5%+ rates a thing? Here in Finland the base card-present rates of traditional merchant card service providers are around 0.3% for debit and 1% for credit, with no per-transaction fees so these apply to even small transactions. Hmm, or maybe you were talking about card payments over internet? You might have a point there as per-transaction fees are more common there (e.g. Stripe takes €0.25).
      - Silhouette 7y ago
        Out of interest, where in EU are 5%+ rates a thing? Hmm, or maybe you were talking about card payments over internet? Yes, I was. For example, Stripe's current pricing here in the UK is 20p + 1.4% for European cards (so a transaction of around £5 has a 5% fee) or 20p + 2.9% for non-European cards (so a transaction of around £10 has a 5% fee). Other online card payment services are broadly similar for small businesses paying the standard advertised rates.
  - neilparikh 7y ago
    Banning processing fees is anti-consumer, because it means that consumers who pay by a cheaper method have to subsidize the consumers who pay by the more expensive method (since companies will have to raise the prices for everyone). Credit card companies won't fight bans on processing fees, because it actually helps them (the extra cost of the credit card is now hidden, and reduced, which means more people will use credit cards). Additionally, this is a regressive policy, since it's easier to access financial products like credit cards when you're richer.

wiggles_md 7y ago

Depending on the industry sector, cash can effectively be several times more expensive to handle than the US market interchange fees. I don’t think it’s obviously horrible for merchants.

ceejayoz 7y ago
Visa interchange fees for the higher end rewards cards top 2.5% of the transaction. That's cost that the merchant has to pass on to the consumer in the form of higher prices. The EU caps it at 0.3%, and the banks still manage to stay in business.
r00fus 7y ago
Can you explain what makes handling cash is so expensive? honest question.
- ceejayoz 7y ago
  If you handle enough of it, you probably wind up contracting with an armored car company to come collect it. Some gets lost or stolen, coins have to be rolled up for deposit, etc.
- wiggles_md 7y ago
  Till theft, the physical act of counting it and securely storing it, screening counterfeits, securely transporting it to the bank, etc. I don’t have direct links handy, but there have been some good insightful comments on the topic on this site previously. Hopefully they will turn up without much difficulty with a search. Sorry to have to pass the buck on a more detailed answer.
- astura 7y ago
  Handling cash is very labor intensive, you're paying your highest paid employees (managers) to count cash multiple times before/after shifts, bank runs to deposit, making change, rolling coins, etc. Plus the cost of physical security for that cash. https://www.businesswire.com/news/home/20180130005244/en/New-Research-IHL-Group-Shows-Retailers%E2%80%99-Cash-handling https://www.businesswire.com/news/home/20180130005244/en/New... >New Research from IHL Group Shows Retailers’ Cash-handling Costs Range from 4.7% to 15.3%, Depending on Retail Segment Loss from theft is a huge deal as well, there was a coffee shop in Baltimore that went cash-free because they were getting robbed so much. https://baltimore.cbslocal.com/2017/02/02/cashless-coffee-shop/ https://baltimore.cbslocal.com/2017/02/02/cashless-coffee-sh...