8 ms·

> Right, it's hard to see what the advantage of debit would ever be. Not being able to indebt yourself is THE major advantage of debit card. Not everybody in

by adev_ 5y ago

> Right, it's hard to see what the advantage of debit would ever be. Not being able to indebt yourself is THE major advantage of debit card. Not everybody in this world is reasonable when it is about spending and finance management. In some European countries with a more conservative mindset related to debts (Germany, France, ...), people will tend to have the exact opposite stance : "Why would I ever need a credit card ? It is dangerous. My debit card is accepted everywhere"

emodendroket 5y ago
I am more comfortable with exercising self control than with the idea that if my card is somehow misused I don't have access to my funds until it's straightened out. In fact, if you don't trust yourself, I'd say cash is even better, because the physical act of taking out the money makes you less likely to spend it frivolously.
perl4ever 5y ago
There are a number of credit card issuers in the US offering 1.5% cash back. Suppose you charge $1000 each month at the rate of about $33 per day, and also pay it off when the bill is due. In a year, you've gotten 1.5% of $12,000 back which is $180, but you could also look at it as though they are paying you 36% per year to use (on average) $500 of their money. The latter interpretation makes it seem irresistible to me.
- Jensson 5y ago
  And you pay 3% on every transaction to get 1.5% back. Seems like a pretty bad deal. Or do you really think businesses just gives you 3% for free on every purchase rather than raising prices on everything to make up for that 3% loss? A raw 3% of revenue is huge, there is no way businesses can take that without raising prices as consumer sales is pretty efficient and has small margins already. So they raise prices for everyone or they raise prices for people paying for cards, but either way you are paying more than you get back for that 1.5%.
  - rsj_hn 5y ago
    > A raw 3% of revenue is huge The business doesn't lose 3 percent of revenue, because it also saves money not dealing with cash: - eliminates cash theft - always a chronic problem for business. - reduces costs of transporting/dealing with cash - improves bookkeeping and paper work and it gains revenue by dealing with people who don't use cash. A large number of customers don't make routine purchases with cash, and these are higher income customers. So the choice isn't "pay 3% on X or don't pay 3% of X" The choice is "pay 3% on X" or "don't pay 3% on .9X".
    - Jensson 5y ago
      > The business doesn't lose 3 percent of revenue, because it also saves money not dealing with cash: Debit cards circumvents the need for cash as well and are much cheaper. Everyone uses debit cards where I live, cash is very rare so companies doesn't need to deal with it much. So the difference is really just a straight 3% vs 0.15% with no other consequences.
      - rsj_hn 5y ago
        That's an interesting point. I'm not aware of any POS payment processor used by business that accepts debit cards but not credit cards. Not sure why that is.
        Jensson 5y ago
        I think it is mostly that it confuses buyers and that confusion costs more than credit cards costs. You'd need regulations to get around this.
      - perl4ever 5y ago
        I think 3% is an exaggeration. And in fact, you can get 2% cash back. I don't think there's very much being charged when all is said and done. This seems to show the fees can be considerably less than 3%, although PayPal or Square will charge nearly that: https://www.fool.com/the-ascent/research/average-credit-card-processing-fees-costs-america/ https://www.fool.com/the-ascent/research/average-credit-card... https://www.mastercard.us/en-us/business/overview/support/merchant-interchange-rates.html https://www.mastercard.us/en-us/business/overview/support/me...

by adev_ 5y ago

emodendroket 5y ago

I am more comfortable with exercising self control than with the idea that if my card is somehow misused I don't have access to my funds until it's straightened out. In fact, if you don't trust yourself, I'd say cash is even better, because the physical act of taking out the money makes you less likely to spend it frivolously.

perl4ever 5y ago

There are a number of credit card issuers in the US offering 1.5% cash back. Suppose you charge $1000 each month at the rate of about $33 per day, and also pay it off when the bill is due. In a year, you've gotten 1.5% of $12,000 back which is $180, but you could also look at it as though they are paying you 36% per year to use (on average) $500 of their money. The latter interpretation makes it seem irresistible to me.

Jensson 5y ago
And you pay 3% on every transaction to get 1.5% back. Seems like a pretty bad deal. Or do you really think businesses just gives you 3% for free on every purchase rather than raising prices on everything to make up for that 3% loss? A raw 3% of revenue is huge, there is no way businesses can take that without raising prices as consumer sales is pretty efficient and has small margins already. So they raise prices for everyone or they raise prices for people paying for cards, but either way you are paying more than you get back for that 1.5%.
- rsj_hn 5y ago
  > A raw 3% of revenue is huge The business doesn't lose 3 percent of revenue, because it also saves money not dealing with cash: - eliminates cash theft - always a chronic problem for business. - reduces costs of transporting/dealing with cash - improves bookkeeping and paper work and it gains revenue by dealing with people who don't use cash. A large number of customers don't make routine purchases with cash, and these are higher income customers. So the choice isn't "pay 3% on X or don't pay 3% of X" The choice is "pay 3% on X" or "don't pay 3% on .9X".
  - Jensson 5y ago
    > The business doesn't lose 3 percent of revenue, because it also saves money not dealing with cash: Debit cards circumvents the need for cash as well and are much cheaper. Everyone uses debit cards where I live, cash is very rare so companies doesn't need to deal with it much. So the difference is really just a straight 3% vs 0.15% with no other consequences.
    - rsj_hn 5y ago
      That's an interesting point. I'm not aware of any POS payment processor used by business that accepts debit cards but not credit cards. Not sure why that is.
      - Jensson 5y ago
        I think it is mostly that it confuses buyers and that confusion costs more than credit cards costs. You'd need regulations to get around this.
    - perl4ever 5y ago
      I think 3% is an exaggeration. And in fact, you can get 2% cash back. I don't think there's very much being charged when all is said and done. This seems to show the fees can be considerably less than 3%, although PayPal or Square will charge nearly that: https://www.fool.com/the-ascent/research/average-credit-card-processing-fees-costs-america/ https://www.fool.com/the-ascent/research/average-credit-card... https://www.mastercard.us/en-us/business/overview/support/merchant-interchange-rates.html https://www.mastercard.us/en-us/business/overview/support/me...