4 ms·

I know that getting a very visible 2% back from an invisible 4% fee is psychologically fun in a way that a European-style 0.5% fee isn't, but the net effect of

I know that getting a very visible 2% back from an invisible 4% fee is psychologically fun in a way that a European-style 0.5% fee isn't, but the net effect of the American style is still to transfer more money from you to the credit card company.

throwawayboise 6y ago
The fact of the matter is that retail goods and services cost the same whether I pay cash or use a credit card. So might as well take the benefits the card offers. Every great once in a while I will run into a small business that doesn't take credit cards, or offers a discount for cash. But it's quite rare.
- jjoonathan 6y ago
  Yeah, which the CC oligopoly has conveniently arranged through merchant contracts. The Europeans negotiated around this with legislation and won a better deal. In the US, I'm sure people would scream and cry if the evil government tried to take their 2% rewards, even if it meant 3.5% lower prices. We don't like math very much over here -- as this thread is proving.
  - Tempest1981 6y ago
    Or resigned to the massive power of lobbyists.
  - fredophile 6y ago
    I doubt prices on most common purchases would change at all. That extra money would just go to the retailers instead.
- xeromal 6y ago
  This was exactly my point. The amount of cash discount places are dwindling so you're actively losing money if you pay cash.
- bogomipz 6y ago
  >"The fact of the matter is that retail goods and services cost the same whether I pay cash or use a credit card. So might as well take the benefits the card offers" The merchant costs for processing the purchase of those products is baked into price though. The net effect is that the fees the merchant pays push your retail price up. You're not really getting a benefit if you get 2% back and the retail price is 2% higher to account for the merchants processing fees.
btilly 6y ago
The invisible fee is paid by the merchant, not the consumer. And fees aren't 4%, they are generally 1.3% to 3.5%. With higher fees for American Express, and merchant types with higher fraud rates. (American Express also offers greater rewards to consumers...) In the end, aside from the complicated consumer reward part, the amount that the credit card companies get isn't that different from the European system.
- jstanley 6y ago
  > The invisible fee is paid by the merchant, not the consumer. But the customer pays the merchant. It's all paid by the customer.
  - btilly 6y ago
    The customer is paying whether or not they use a credit card. However actual businesses have overhead for dealing with physical cash as well. It is slower at the teller, needs to be manually counted and recounted, transported (sometimes with security) and so on. It is not clear whether real costs of handling money are greater or less than merchant fees.

throwawayboise 6y ago

The fact of the matter is that retail goods and services cost the same whether I pay cash or use a credit card. So might as well take the benefits the card offers. Every great once in a while I will run into a small business that doesn't take credit cards, or offers a discount for cash. But it's quite rare.

jjoonathan 6y ago
Yeah, which the CC oligopoly has conveniently arranged through merchant contracts. The Europeans negotiated around this with legislation and won a better deal. In the US, I'm sure people would scream and cry if the evil government tried to take their 2% rewards, even if it meant 3.5% lower prices. We don't like math very much over here -- as this thread is proving.
- Tempest1981 6y ago
  Or resigned to the massive power of lobbyists.
- fredophile 6y ago
  I doubt prices on most common purchases would change at all. That extra money would just go to the retailers instead.
xeromal 6y ago
This was exactly my point. The amount of cash discount places are dwindling so you're actively losing money if you pay cash.
bogomipz 6y ago
>"The fact of the matter is that retail goods and services cost the same whether I pay cash or use a credit card. So might as well take the benefits the card offers" The merchant costs for processing the purchase of those products is baked into price though. The net effect is that the fees the merchant pays push your retail price up. You're not really getting a benefit if you get 2% back and the retail price is 2% higher to account for the merchants processing fees.

btilly 6y ago

The invisible fee is paid by the merchant, not the consumer. And fees aren't 4%, they are generally 1.3% to 3.5%. With higher fees for American Express, and merchant types with higher fraud rates. (American Express also offers greater rewards to consumers...) In the end, aside from the complicated consumer reward part, the amount that the credit card companies get isn't that different from the European system.

jstanley 6y ago
> The invisible fee is paid by the merchant, not the consumer. But the customer pays the merchant. It's all paid by the customer.
- btilly 6y ago
  The customer is paying whether or not they use a credit card. However actual businesses have overhead for dealing with physical cash as well. It is slower at the teller, needs to be manually counted and recounted, transported (sometimes with security) and so on. It is not clear whether real costs of handling money are greater or less than merchant fees.