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The US needs to get on top of this. Most other places I know of don't have the cashback cards because they limit the fees that can be charged. The flip side of
by Nursie 4y ago
The US needs to get on top of this. Most other places I know of don't have the cashback cards because they limit the fees that can be charged.
The flip side of this, of course, is that in places with limited fees it is now cheaper for the merchant to use a card than to deal in cash, as cash has to be counted, reconciled and banked, has security requirements for transport etc. In places like the UK and Australia, lots of small merchants now operate in a cashless way because it costs less.
- lotsofpulp 4y agoThe US already caps debit card fees at near zero. There is no need to regulate credit cards fees. Merchants are free to charge credit card users whatever extra fee they want.
- mortenjorck 4y agoThis is a surprising point I never see raised, that cash has its own overhead costs, just that they're diffuse (training and paying employees to close and count the registers, hiring Garda trucks to transport cash) versus explicit (processor fees). 3% is presumably still far higher than cash's overhead, but the rate is so entrenched in the US that I wonder what it would take to get it dislodged.
- lotsofpulp 4y ago3% is not for electronic payment, 3% is for accepting credit card payment. Debit cards are much, much cheaper. And merchants are free to charge credit card payers an extra 3% or whatever they want to cover credit card costs. https://www.ftc.gov/business-guidance/resources/new-rules-electronic-payments-lower-costs-retailers https://www.ftc.gov/business-guidance/resources/new-rules-el... > Beginning October 1, 2011, interchange fees for certain debit cards are capped at 21 cents plus 0.05% of the transaction value. https://www.federalreserve.gov/paymentsystems/regii-average-interchange-fee.htm https://www.federalreserve.gov/paymentsystems/regii-average-... > In 2020, the average interchange fee per covered transaction was equal to $0.23. This value has not changed significantly since Regulation II took effect on October 1, 2011. Hopefully, the upcoming FedNow system will make electronic payments effectively free. https://www.federalreserve.gov/paymentsystems/fednow_about.htm https://www.federalreserve.gov/paymentsystems/fednow_about.h...
- Nursie 4y ago> 21 cents plus 0.05% This would seem to make it potentially quite expensive on small transactions? People use cards for the most trivial amounts here in Australia. Apparently the typical transaction fees are apparently 0.5% for debit and 0.9% for credit, which means that yeah, I just wave my phone to buy a donut...
- lotsofpulp 4y agoIt is definitely too high for small dollar amounts. This website has links to payment processors that show the different price for merchants with small dollar amount transactions: https://www.cardpaymentoptions.com/credit-card-processing/debit-fees-explained/ https://www.cardpaymentoptions.com/credit-card-processing/de... For banks not covered until the regulations that cap fee, the cost is only 1% + $0.04. But it seems the banks that are covered under the regulations are charging the max allowed, 0.05% + $0.21.
- Daedren 4y agoOver here in Portugal, many small merchants don't accept card because of this, or at least have a notice mentioning "5€ minimum to pay by card".