6 ms·

Assuming that's correct, that effectively boils down to the same thing? Prices would be somewhat lower if merchants didn't need to consider the ~3% disappearing

Assuming that's correct, that effectively boils down to the same thing? Prices would be somewhat lower if merchants didn't need to consider the ~3% disappearing in the payment processor.

deleted 3y ago
[deleted]
zoky 3y ago
That doesn’t necessarily follow though. Consumers are more likely to go to a store that takes credit cards and spend more once they are there than a store that accepts only cash. If the merchant has to pay 3% in credit card fees for a 20% increase in revenue, that’s likely a good deal for the merchant.
- nirvdrum 3y ago
  There's a huge network effect that's effectively led to a 3% tax on the economy. Since every other store accepts credit cards, you need to too. It's not a case where a credit card allows someone that was going to buy a $500 TV to now spend $1,500. It's that you won't sell anything if you're a cash only business. And with Covid fewer people want to handle cash. Debit cards exist and partially solve the inconvenience of holding cash. But, they're really inconvenient in other ways. As a consumer I'll prefer credit cards most of the time just for the security benefits. If there's a breach at a merchant and my number is stolen I don't have to worry about my checking account being screwed up for however long it takes to sort things out. It'd be nice if we had another option for cashless payments. Particularly, one that doesn't impose such a large financial burden on everyone. Yeah, rewards are nice but they're disproportionately allocated as well. I think it's fairly evident going forward cash will be handled less and less. Credit card companies are the incumbents and path to least resistance to accepting cashless payments, but they don't need to be the only option. With real competition I suspect we'll see those swipe fees suddenly decrease. Unfortunately, some of the bigger attempts at non-credit card payments (e.g., PayPal) charge commensurate fees. So, maybe I'm off and 3% is the minimum needed by the middlemen to stay afloat.
  - lotsofpulp 3y ago
    > There's a huge network effect that's effectively led to a 3% tax on the economy. Since every other store accepts credit cards, you need to too. The point of the whole sub thread is that a merchant can always accept a credit card but still incentivize use of debit or cash by giving a discount. > Debit cards exist and partially solve the inconvenience of holding cash. But, they're really inconvenient in other ways. What inconveniences?
    - nirvdrum 3y ago
      > The point of the whole sub thread is that a merchant can always accept a credit card but still incentivize use of debit or cash by giving a discount. I was replying to the point made by the parent; it wasn't a meta comment for the whole thread. Most merchants aren't happily accepting a 3% surcharge because it's causing customers to spend more. While that happens and it's a big reason store-branded cards exist, I'd hazard to say most credit card transactions are for the same amount someone would pay with cash and the store just needs to eat the 3% because people don't like carrying cash. >> Debit cards exist and partially solve the inconvenience of holding cash. But, they're really inconvenient in other ways. > What inconveniences? I gave an example further down in that paragraph: "If there's a breach at a merchant and my number is stolen I don't have to worry about my checking account being screwed up for however long it takes to sort things out." It doesn't even need to be a security issue. There's been no shortage of incidents where a merchant double-charges, charges the wrong amount, doesn't release a hold in a timely manner, etc. where my cash is locked up with no recourse. To limit such impact, I have a daily spending limit set. That's helpful, up until I need to make a large ticket purchase. I'd love to see a debit card system that addresses these problems.
lotsofpulp 3y ago
My point is that merchants do not NEED to consider the 3% disappearing. They can post a sign right now telling people “3% discount for using debit”. The merchants that do not offer lower debit prices choose to pay the extra 3%. It is up to the customer to decide if prices at merchant that gives debit discount or merchant that does not give debit discount are better.
- deleted 3y ago
  [deleted]
- xwolfi 3y ago
  The merchants never pay, you do: prices all increase by exactly 3%. You think employees accept a 3% salary decrease because suddenly all clients pay by cash ? Absolutely not: prices will increase to cover the risk of this happening, and neuter the cost of the payment processor: it's one more cost, and you are the one paying. The merchant RECEIVES your money. He will not OFFER anything to you or the payment processor just for the sake of it.

Assuming that's correct, that effectively boils down to the same thing? Prices would be somewhat lower if merchants didn't need to consider the ~3% disappearing in the payment processor.

deleted 3y ago

[deleted]

zoky 3y ago

That doesn’t necessarily follow though. Consumers are more likely to go to a store that takes credit cards and spend more once they are there than a store that accepts only cash. If the merchant has to pay 3% in credit card fees for a 20% increase in revenue, that’s likely a good deal for the merchant.

nirvdrum 3y ago
There's a huge network effect that's effectively led to a 3% tax on the economy. Since every other store accepts credit cards, you need to too. It's not a case where a credit card allows someone that was going to buy a $500 TV to now spend $1,500. It's that you won't sell anything if you're a cash only business. And with Covid fewer people want to handle cash. Debit cards exist and partially solve the inconvenience of holding cash. But, they're really inconvenient in other ways. As a consumer I'll prefer credit cards most of the time just for the security benefits. If there's a breach at a merchant and my number is stolen I don't have to worry about my checking account being screwed up for however long it takes to sort things out. It'd be nice if we had another option for cashless payments. Particularly, one that doesn't impose such a large financial burden on everyone. Yeah, rewards are nice but they're disproportionately allocated as well. I think it's fairly evident going forward cash will be handled less and less. Credit card companies are the incumbents and path to least resistance to accepting cashless payments, but they don't need to be the only option. With real competition I suspect we'll see those swipe fees suddenly decrease. Unfortunately, some of the bigger attempts at non-credit card payments (e.g., PayPal) charge commensurate fees. So, maybe I'm off and 3% is the minimum needed by the middlemen to stay afloat.
- lotsofpulp 3y ago
  > There's a huge network effect that's effectively led to a 3% tax on the economy. Since every other store accepts credit cards, you need to too. The point of the whole sub thread is that a merchant can always accept a credit card but still incentivize use of debit or cash by giving a discount. > Debit cards exist and partially solve the inconvenience of holding cash. But, they're really inconvenient in other ways. What inconveniences?
  - nirvdrum 3y ago
    > The point of the whole sub thread is that a merchant can always accept a credit card but still incentivize use of debit or cash by giving a discount. I was replying to the point made by the parent; it wasn't a meta comment for the whole thread. Most merchants aren't happily accepting a 3% surcharge because it's causing customers to spend more. While that happens and it's a big reason store-branded cards exist, I'd hazard to say most credit card transactions are for the same amount someone would pay with cash and the store just needs to eat the 3% because people don't like carrying cash. >> Debit cards exist and partially solve the inconvenience of holding cash. But, they're really inconvenient in other ways. > What inconveniences? I gave an example further down in that paragraph: "If there's a breach at a merchant and my number is stolen I don't have to worry about my checking account being screwed up for however long it takes to sort things out." It doesn't even need to be a security issue. There's been no shortage of incidents where a merchant double-charges, charges the wrong amount, doesn't release a hold in a timely manner, etc. where my cash is locked up with no recourse. To limit such impact, I have a daily spending limit set. That's helpful, up until I need to make a large ticket purchase. I'd love to see a debit card system that addresses these problems.

lotsofpulp 3y ago

My point is that merchants do not NEED to consider the 3% disappearing. They can post a sign right now telling people “3% discount for using debit”. The merchants that do not offer lower debit prices choose to pay the extra 3%. It is up to the customer to decide if prices at merchant that gives debit discount or merchant that does not give debit discount are better.

deleted 3y ago
[deleted]
xwolfi 3y ago
The merchants never pay, you do: prices all increase by exactly 3%. You think employees accept a 3% salary decrease because suddenly all clients pay by cash ? Absolutely not: prices will increase to cover the risk of this happening, and neuter the cost of the payment processor: it's one more cost, and you are the one paying. The merchant RECEIVES your money. He will not OFFER anything to you or the payment processor just for the sake of it.