5 ms·

The intersection between the people that have random overdrafts and those that just pay off their credit card debt in full every time is the empty set. Why make

The intersection between the people that have random overdrafts and those that just pay off their credit card debt in full every time is the empty set. Why make up excuses for a few rent seekers that tax the entire economy?

lotsofpulp 5y ago
Merchants WANT people to use credit cards. There is nothing stopping merchants from offering a cash/debit price and a credit price since 10 years ago. The frank dodd legislation made illegal for card networks to ban offering discounts for debit card payments, and in Mar 2017, the Supreme Court said merchants cannot be barred from advertising higher prices for credit cards. https://www.ftc.gov/tips-advice/business-center/guidance/new-rules-electronic-payments-lower-costs-retailers https://www.ftc.gov/tips-advice/business-center/guidance/new... https://en.wikipedia.org/wiki/Expressions_Hair_Design_v._Schneiderman https://en.wikipedia.org/wiki/Expressions_Hair_Design_v._Sch... It is very clear that most merchants earn more from people using credit cards more often, otherwise they would try to dissuade or offset it by adding a premium for using credit cards. Target sort of does this by giving a 5% discount if you pay via ACH from your bank account (via a debit target redcard account), and in the western US, a grocery store company called Winco advertises it does not take credit cards at all in order to provide the lowest prices. On the other hand, Aldi in the US used to only take debit cards, and they started taking credit cards 5 or so years ago, so they are obviously assuming they will earn more money by lifting prices a little and attracting credit card users.
- revolvingocelot 5y ago
  >It is very clear that most merchants earn more from people using credit cards more often, otherwise there is no reason they would try to dissuade or offset it by adding a premium for using credit cards. Can you elaborate? IME merchants do NOT want people to use credit cards; transaction fees eat into the sale price. I remember a time when some electronics stores would explicitly advertise a cash discount, so as to avoid the transaction fees. I once worked in a bar that accepted every major credit card, save American Express, because of their several-points-higher transaction fee. The premium is added to offset this. How is it very clear that most merchants earn more?
  - lotsofpulp 5y ago
    > How is it very clear that most merchants earn more? Because they do not offer discounts for cash/debit, and they also do not charge a fee for using credit card. As I showed in my post, legally, merchants are clear to advertise higher prices for credit card users. The fact that they do not means they do not want to dissuade credit card use. From there, it follows that since businesses are interested in earning more money, that if they do not want to dissuade credit card use, then they must be earning more money (or at least breaking even) due to people using credit cards. People spend more money when they use credit cards than debit/cash. Note that my above post specified “most merchants”, not all merchants. Obviously, some merchants do benefit from dissuading credit card use, such as the examples I gave, or many gas stations and small restaurants or convenience stores.
    - nobody9999 5y ago
      >Because they do not offer discounts for cash/debit, and they also do not charge a fee for using credit card. Except they do. Especially smaller, mom & pop stores, as I mentioned here[0]. [0] https://news.ycombinator.com/item?id=29128007 https://news.ycombinator.com/item?id=29128007
      - lotsofpulp 5y ago
        I also mentioned it… > Note that my above post specified “most merchants”, not all merchants. Obviously, some merchants do benefit from dissuading credit card use, such as the examples I gave, or many gas stations and small restaurants or convenience stores.
    - perl4ever 5y ago
      >Obviously, some merchants do benefit from dissuading credit card use Or they just prefer to deal in cash so they don't have to pay as much in taxes.
  - kasey_junk 5y ago
    Cash management is also very expensive for most merchants. There are effectively 3 reasons merchants might prefer cards to cash these days a) their volume is so low that cash management is not an issue (that is the transaction fees) b) their margins are so low on a particular item that the transaction fee eats all of it but the broader business still uses credit cards or c) they do not want an electronic record of the sale.
- TheDong 5y ago
  I don't think "WANT" is the right word there. "WANT" is active, and I would posit that merchants "reluctantly accept reality" when it comes to credit cards. The obviously silly analogue would be that a merchant who dislikes guns could choose to hang a sign in their texas cafe with "no guns allowed", but they probably won't. That doesn't mean they WANT people to bring in guns, but that they think it would do too much harm within the market they're in to reject them. It would be a case of "reluctant acceptance of reality". I think credit cards are the same. It should be self-evident that a merchant would want customers to pay with debit cards since the lack of interchange fees means the merchant makes strictly more money. Of course they want to make more money. But they also must accept that charging more fees for credit card users or rejecting them entirely would reduce overall customer base and profit, and so they accept that people can use credit cards. They want customers, not credit card usage.
  - mywittyname 5y ago
    Retailers do track spend based on payment type. It was the case several years ago that people who paid with credit cards tended to spend more and buy higher margin items than other payment types. I'm not sure if this is still the case, but if it is, then that is one situations where accepting credit cards pays for itself. It is helpful to keep in mind that different businesses can pay wildly different fees for CC transactions. Walmart can sell you a $0.50 item for basically nothing, while a corner market might be better off if you stole it instead. So Walmart might absolutely want everyone to use credit cards while the corner market would likely prefer nobody did.
- nobody9999 5y ago
  > Merchants WANT people to use credit cards. There is nothing stopping merchants from offering a cash/debit price and a credit price since 10 years ago. The frank dodd legislation made illegal for card networks to ban offering discounts for debit card payments, and in Mar 2017, the Supreme Court said merchants cannot be barred from advertising higher prices for credit cards. Many small retail stores in my area (delis, bodegas, restaurants) incentivize cash/debit. Not by charging less for them, but by charging extra for using a credit card. Small retailers pay significantly more for CC processing than large retailers. 5-10x more, in some cases.
  - djleni 5y ago
    Charging less for cash is identical to charging more for credit, is it not?
    - nobody9999 5y ago
      >Charging less for cash is identical to charging more for credit, is it not? It is not. It's the converse. And the effect is likely quite different -- discounts for cash are usually significantly less than surcharges for credit cards.
      - lotsofpulp 5y ago
        It is the same thing if the end result is prices differing by the same amount.
        nobody9999 5y ago
        >It is the same thing if the end result is prices differing by the same amount. Perhaps, but as I said: ...discounts for cash are usually significantly less than surcharges for credit cards. At least that's been my experience.
  - lotsofpulp 5y ago
    I specifically noted it at end of my comment: > Note that my above post specified “most merchants”, not all merchants. Obviously, some merchants do benefit from dissuading credit card use, such as the examples I gave, or many gas stations and small restaurants or convenience stores.
- Thorrez 5y ago
  I'm confused. Your comment seems to directly contradict the top comment in this thread. You say the Supreme Court ruled merchants cannot be barred from charging higher prices to card users, whereas treyfitty[1] says the Supreme Court ruled merchants can be barred from charging higher prices. [1] https://news.ycombinator.com/item?id=29126521 https://news.ycombinator.com/item?id=29126521
  - lotsofpulp 5y ago
    Good question. Ohio v AmEx ruling specifically states: https://www.law.cornell.edu/supremecourt/text/16-1454 https://www.law.cornell.edu/supremecourt/text/16-1454 > The antisteering provisions do not, however, prevent merchants from steering customers toward debit cards, checks, or cash. So Ohio v Amex is about having different prices for AmEx compared to Visa/MC/Discover, whereas Expressions Hair design was about having different prices for cash/debit compared to credit cards. I think what happened was due to Dodd Frank in 2010 explicitly allowing cash/debit card discounts, and political focus on credit card processors from states to drop their requirements that merchants not have different prices for cash/debit/credit card purchases, all the processors backed off from preventing merchants to not give lower pricing to cash/debit card users. However, Visa/MC even backed off from preventing merchants from giving lower pricing for any other card processor, since they wanted to avoid anti trust scrutiny since they are already so prominent. However, AmEx decided to fight it, and won big not just for AmEx but other two sided markets. It definitely leads to a logically inconsistent result where merchants can display different prices, but the route taken to get to each decision was wildly different. Amex could have maintained in its contracts that merchants could not offer lower pricing for cash/debit cards, but I think AmEx wanted to avoid the way that would make them look (Amex versus Visa/MC is a David v Goliath case, whereas AmEx vs cash/debit is rich people versus poor people). Here is a good comparison of both rulings: https://jobs.luc.edu/media/lucedu/law/centers/antitrust/pdfs/publications/newsviews/45351726_ohio_v_amex_butler_final_draft_.pdf https://jobs.luc.edu/media/lucedu/law/centers/antitrust/pdfs... https://www.law.cornell.edu/supremecourt/text/15-1391 https://www.law.cornell.edu/supremecourt/text/15-1391
- herbst 5y ago
  Merchant here, not only are credit cards the least used option in my shop, but next to PayPal also the most expensive for me as merchant. This is Switzerland tho mind you and most people have what you'd call debit cards. It's really only a matter of time until I remove credit cards completely in favour of non-US, local, low fee, secure, banking alternatives which already make up the far majority of transactions.
mindslight 5y ago
Everybody finds different local maximums. I autopay credit cards in full every statement, while most charges that hit my checking account are overdrafts - it autopulls from the companion savings account with a better rate. Credit cards coalescing many small charges into one allows me to easily stay within 6 transactions per month (Reg D). Although I look forward to returning to using cash wherever possible after the pandemic has cleared up a bit more.
- secabeen 5y ago
  Yep. I'm the same way. The only thing to be careful about (in the US) is that banks can force convert a savings account to a checking account if you make more than 6 withdrawals a month. It hasn't ever happened to me, but they warn me regularly about it.
  - perl4ever 5y ago
    Wasn't there a suspension of the rule related to the pandemic?
- jkhdigital 5y ago
  I’m not sure I’d still call it an overdraft if the cash is just sitting in an adjacent savings account and gets pulled automatically.

lotsofpulp 5y ago

Merchants WANT people to use credit cards. There is nothing stopping merchants from offering a cash/debit price and a credit price since 10 years ago. The frank dodd legislation made illegal for card networks to ban offering discounts for debit card payments, and in Mar 2017, the Supreme Court said merchants cannot be barred from advertising higher prices for credit cards. https://www.ftc.gov/tips-advice/business-center/guidance/new-rules-electronic-payments-lower-costs-retailers https://www.ftc.gov/tips-advice/business-center/guidance/new... https://en.wikipedia.org/wiki/Expressions_Hair_Design_v._Schneiderman https://en.wikipedia.org/wiki/Expressions_Hair_Design_v._Sch... It is very clear that most merchants earn more from people using credit cards more often, otherwise they would try to dissuade or offset it by adding a premium for using credit cards. Target sort of does this by giving a 5% discount if you pay via ACH from your bank account (via a debit target redcard account), and in the western US, a grocery store company called Winco advertises it does not take credit cards at all in order to provide the lowest prices. On the other hand, Aldi in the US used to only take debit cards, and they started taking credit cards 5 or so years ago, so they are obviously assuming they will earn more money by lifting prices a little and attracting credit card users.

revolvingocelot 5y ago
>It is very clear that most merchants earn more from people using credit cards more often, otherwise there is no reason they would try to dissuade or offset it by adding a premium for using credit cards. Can you elaborate? IME merchants do NOT want people to use credit cards; transaction fees eat into the sale price. I remember a time when some electronics stores would explicitly advertise a cash discount, so as to avoid the transaction fees. I once worked in a bar that accepted every major credit card, save American Express, because of their several-points-higher transaction fee. The premium is added to offset this. How is it very clear that most merchants earn more?
- lotsofpulp 5y ago
  > How is it very clear that most merchants earn more? Because they do not offer discounts for cash/debit, and they also do not charge a fee for using credit card. As I showed in my post, legally, merchants are clear to advertise higher prices for credit card users. The fact that they do not means they do not want to dissuade credit card use. From there, it follows that since businesses are interested in earning more money, that if they do not want to dissuade credit card use, then they must be earning more money (or at least breaking even) due to people using credit cards. People spend more money when they use credit cards than debit/cash. Note that my above post specified “most merchants”, not all merchants. Obviously, some merchants do benefit from dissuading credit card use, such as the examples I gave, or many gas stations and small restaurants or convenience stores.
  - nobody9999 5y ago
    >Because they do not offer discounts for cash/debit, and they also do not charge a fee for using credit card. Except they do. Especially smaller, mom & pop stores, as I mentioned here[0]. [0] https://news.ycombinator.com/item?id=29128007 https://news.ycombinator.com/item?id=29128007
    - lotsofpulp 5y ago
      I also mentioned it… > Note that my above post specified “most merchants”, not all merchants. Obviously, some merchants do benefit from dissuading credit card use, such as the examples I gave, or many gas stations and small restaurants or convenience stores.
  - perl4ever 5y ago
    >Obviously, some merchants do benefit from dissuading credit card use Or they just prefer to deal in cash so they don't have to pay as much in taxes.
- kasey_junk 5y ago
  Cash management is also very expensive for most merchants. There are effectively 3 reasons merchants might prefer cards to cash these days a) their volume is so low that cash management is not an issue (that is the transaction fees) b) their margins are so low on a particular item that the transaction fee eats all of it but the broader business still uses credit cards or c) they do not want an electronic record of the sale.
TheDong 5y ago
I don't think "WANT" is the right word there. "WANT" is active, and I would posit that merchants "reluctantly accept reality" when it comes to credit cards. The obviously silly analogue would be that a merchant who dislikes guns could choose to hang a sign in their texas cafe with "no guns allowed", but they probably won't. That doesn't mean they WANT people to bring in guns, but that they think it would do too much harm within the market they're in to reject them. It would be a case of "reluctant acceptance of reality". I think credit cards are the same. It should be self-evident that a merchant would want customers to pay with debit cards since the lack of interchange fees means the merchant makes strictly more money. Of course they want to make more money. But they also must accept that charging more fees for credit card users or rejecting them entirely would reduce overall customer base and profit, and so they accept that people can use credit cards. They want customers, not credit card usage.
- mywittyname 5y ago
  Retailers do track spend based on payment type. It was the case several years ago that people who paid with credit cards tended to spend more and buy higher margin items than other payment types. I'm not sure if this is still the case, but if it is, then that is one situations where accepting credit cards pays for itself. It is helpful to keep in mind that different businesses can pay wildly different fees for CC transactions. Walmart can sell you a $0.50 item for basically nothing, while a corner market might be better off if you stole it instead. So Walmart might absolutely want everyone to use credit cards while the corner market would likely prefer nobody did.
nobody9999 5y ago
> Merchants WANT people to use credit cards. There is nothing stopping merchants from offering a cash/debit price and a credit price since 10 years ago. The frank dodd legislation made illegal for card networks to ban offering discounts for debit card payments, and in Mar 2017, the Supreme Court said merchants cannot be barred from advertising higher prices for credit cards. Many small retail stores in my area (delis, bodegas, restaurants) incentivize cash/debit. Not by charging less for them, but by charging extra for using a credit card. Small retailers pay significantly more for CC processing than large retailers. 5-10x more, in some cases.
- djleni 5y ago
  Charging less for cash is identical to charging more for credit, is it not?
  - nobody9999 5y ago
    >Charging less for cash is identical to charging more for credit, is it not? It is not. It's the converse. And the effect is likely quite different -- discounts for cash are usually significantly less than surcharges for credit cards.
    - lotsofpulp 5y ago
      It is the same thing if the end result is prices differing by the same amount.
      - nobody9999 5y ago
        >It is the same thing if the end result is prices differing by the same amount. Perhaps, but as I said: ...discounts for cash are usually significantly less than surcharges for credit cards. At least that's been my experience.
- lotsofpulp 5y ago
  I specifically noted it at end of my comment: > Note that my above post specified “most merchants”, not all merchants. Obviously, some merchants do benefit from dissuading credit card use, such as the examples I gave, or many gas stations and small restaurants or convenience stores.
Thorrez 5y ago
I'm confused. Your comment seems to directly contradict the top comment in this thread. You say the Supreme Court ruled merchants cannot be barred from charging higher prices to card users, whereas treyfitty[1] says the Supreme Court ruled merchants can be barred from charging higher prices. [1] https://news.ycombinator.com/item?id=29126521 https://news.ycombinator.com/item?id=29126521
- lotsofpulp 5y ago
  Good question. Ohio v AmEx ruling specifically states: https://www.law.cornell.edu/supremecourt/text/16-1454 https://www.law.cornell.edu/supremecourt/text/16-1454 > The antisteering provisions do not, however, prevent merchants from steering customers toward debit cards, checks, or cash. So Ohio v Amex is about having different prices for AmEx compared to Visa/MC/Discover, whereas Expressions Hair design was about having different prices for cash/debit compared to credit cards. I think what happened was due to Dodd Frank in 2010 explicitly allowing cash/debit card discounts, and political focus on credit card processors from states to drop their requirements that merchants not have different prices for cash/debit/credit card purchases, all the processors backed off from preventing merchants to not give lower pricing to cash/debit card users. However, Visa/MC even backed off from preventing merchants from giving lower pricing for any other card processor, since they wanted to avoid anti trust scrutiny since they are already so prominent. However, AmEx decided to fight it, and won big not just for AmEx but other two sided markets. It definitely leads to a logically inconsistent result where merchants can display different prices, but the route taken to get to each decision was wildly different. Amex could have maintained in its contracts that merchants could not offer lower pricing for cash/debit cards, but I think AmEx wanted to avoid the way that would make them look (Amex versus Visa/MC is a David v Goliath case, whereas AmEx vs cash/debit is rich people versus poor people). Here is a good comparison of both rulings: https://jobs.luc.edu/media/lucedu/law/centers/antitrust/pdfs/publications/newsviews/45351726_ohio_v_amex_butler_final_draft_.pdf https://jobs.luc.edu/media/lucedu/law/centers/antitrust/pdfs... https://www.law.cornell.edu/supremecourt/text/15-1391 https://www.law.cornell.edu/supremecourt/text/15-1391
herbst 5y ago
Merchant here, not only are credit cards the least used option in my shop, but next to PayPal also the most expensive for me as merchant. This is Switzerland tho mind you and most people have what you'd call debit cards. It's really only a matter of time until I remove credit cards completely in favour of non-US, local, low fee, secure, banking alternatives which already make up the far majority of transactions.

mindslight 5y ago

Everybody finds different local maximums. I autopay credit cards in full every statement, while most charges that hit my checking account are overdrafts - it autopulls from the companion savings account with a better rate. Credit cards coalescing many small charges into one allows me to easily stay within 6 transactions per month (Reg D). Although I look forward to returning to using cash wherever possible after the pandemic has cleared up a bit more.

secabeen 5y ago
Yep. I'm the same way. The only thing to be careful about (in the US) is that banks can force convert a savings account to a checking account if you make more than 6 withdrawals a month. It hasn't ever happened to me, but they warn me regularly about it.
- perl4ever 5y ago
  Wasn't there a suspension of the rule related to the pandemic?
jkhdigital 5y ago
I’m not sure I’d still call it an overdraft if the cash is just sitting in an adjacent savings account and gets pulled automatically.