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That's a one sided view of it. Credit cards increase customer spending behavior which benefits merchants. For low end customers, the appeal is access to credit,

That's a one sided view of it. Credit cards increase customer spending behavior which benefits merchants. For low end customers, the appeal is access to credit, either long-term or just in between paychecks. For high end customers, the appeal is the rewards and perks they get, and the convenience and safety of payments. This is why you are most likely to see credit card surcharges for tax payments, court costs, and other non-discretionary charges. Anything that either is optional to pay, or isn't but they really want you to pay now (ex. a debt collector) has every incentive to subsidize the card acceptance fee as it will increase their sales.

lostlogin 3y ago
> This is why you are most likely to see credit card surcharges for tax payments, court costs, and other non-discretionary charges. This will vary depending on where you are. Most retailers here in New Zealand pass the fee on to customers. Even paywave gets the percentage fee.
Spivak 3y ago
The other side is also that this is great for card users because we're the price sensitive side of the transaction. I feel like this dynamic is rarely talked about when it comes to two sided transactions. Businesses can't "just pass it to the consumer" is a lot of cases and just have to eat it because businesses don't have that kind of pricing power. This is how Doordash works on the restaurant side, they can't charge you the customer 20-30% of gross on orders, everyone would stop ordering. So mostly they just have to eat it or lose those sales. Some places choose to lose, some choose to raise prices on DD if they can but mostly they eat it.
ghaff 3y ago
I think the other thing that happens is that governments outsource electronic payment collection to a third party which imposes a surcharge for its collection and remits the full nominal amount to the government. Which can lead to seemingly ludicrous results somethings. I paid a "convenience" fee for parking the other night because presumably collecting a bunch of quarters from a meter was cheaper for the municipality than getting a bit less money transferred from the parking app people?
TRDRVR 3y ago
A huge aspect people ignore is how expensive it is to handle cash. From storage, administration, transportation, loss, etc. it's usually a little more expensive to take cash vs. card. This is why your grocery store partners with an ATM network to let you take out extra cash at the POS. As long as you're paying the fee, they'll do whatever they can to trade you cash for a digital deposit into their bank account.
- aeyes 3y ago
  I worked at several small businesses and we always preferred cash, we even accepted multiple currencies. The handling was no problem but I admit that it must be more difficult for larger businesses. Card payments made the price of the service more expensive for all customers because we weren't allowed to have a card payment fee.
  - TRDRVR 3y ago
    >we even accepted multiple currencies You accepted multiple currencies without taking a spread on Forex? How did you convert it for free? Not even actual forex businesses can do that...
    - thaumasiotes 3y ago
      > How did you convert it for free? Not even actual forex businesses can do that... Actual forex businesses convert currency at negative cost. That's what it means to be a forex business.
    - a_vanderbilt 3y ago
      Plenty of places in the world accept currencies besides the local ones because they are more stable or just worth more in general. Depending on the business, they might handle currency the same way too.
      - maxcoder4 3y ago
        I usually see this only in tourist traps, where the EUR/USD price is 120% or more of the "local" price.
insane_dreamer 3y ago
A large segment (in the US) that does _not_ subsidize credit card fees are gas stations, where, for the most part, the price for paying in cash is lower than with credit, or there is a per transaction surcharge for using a credit or debit card. Car-centric as it is, gas prices are arguably the commodity that US consumers are most price sensitive to (and which is also most commonly evoked in politics). So this shows that consumers would prefer to discriminate between card and no-card purchases if given the option, except that the vast majority of retail outlets do not give them that option.
- panzagl 3y ago
  Is this still true somewhere? I thought this went out decades ago, except maybe for a few Mom and Pop places.
  - deleted 3y ago
    [deleted]
  - yyhhsj0521 3y ago
    Still true even for bigger brands like Shell or BP. They usually have two numbers on their price display, one is often about 5 cents higher than the other per gallon (guess which is credit/cash). It's interesting that the number for credit is usually way larger than the number for cash, implying most people use credit cards.
  - jabroni_salad 3y ago
    I only see it for diesel in my area, and the fee is probably worth it for truckers as opposed to carrying cash.

lostlogin 3y ago

> This is why you are most likely to see credit card surcharges for tax payments, court costs, and other non-discretionary charges. This will vary depending on where you are. Most retailers here in New Zealand pass the fee on to customers. Even paywave gets the percentage fee.

Spivak 3y ago

The other side is also that this is great for card users because we're the price sensitive side of the transaction. I feel like this dynamic is rarely talked about when it comes to two sided transactions. Businesses can't "just pass it to the consumer" is a lot of cases and just have to eat it because businesses don't have that kind of pricing power. This is how Doordash works on the restaurant side, they can't charge you the customer 20-30% of gross on orders, everyone would stop ordering. So mostly they just have to eat it or lose those sales. Some places choose to lose, some choose to raise prices on DD if they can but mostly they eat it.

ghaff 3y ago

I think the other thing that happens is that governments outsource electronic payment collection to a third party which imposes a surcharge for its collection and remits the full nominal amount to the government. Which can lead to seemingly ludicrous results somethings. I paid a "convenience" fee for parking the other night because presumably collecting a bunch of quarters from a meter was cheaper for the municipality than getting a bit less money transferred from the parking app people?

TRDRVR 3y ago

A huge aspect people ignore is how expensive it is to handle cash. From storage, administration, transportation, loss, etc. it's usually a little more expensive to take cash vs. card. This is why your grocery store partners with an ATM network to let you take out extra cash at the POS. As long as you're paying the fee, they'll do whatever they can to trade you cash for a digital deposit into their bank account.

aeyes 3y ago
I worked at several small businesses and we always preferred cash, we even accepted multiple currencies. The handling was no problem but I admit that it must be more difficult for larger businesses. Card payments made the price of the service more expensive for all customers because we weren't allowed to have a card payment fee.
- TRDRVR 3y ago
  >we even accepted multiple currencies You accepted multiple currencies without taking a spread on Forex? How did you convert it for free? Not even actual forex businesses can do that...
  - thaumasiotes 3y ago
    > How did you convert it for free? Not even actual forex businesses can do that... Actual forex businesses convert currency at negative cost. That's what it means to be a forex business.
  - a_vanderbilt 3y ago
    Plenty of places in the world accept currencies besides the local ones because they are more stable or just worth more in general. Depending on the business, they might handle currency the same way too.
    - maxcoder4 3y ago
      I usually see this only in tourist traps, where the EUR/USD price is 120% or more of the "local" price.

insane_dreamer 3y ago

A large segment (in the US) that does _not_ subsidize credit card fees are gas stations, where, for the most part, the price for paying in cash is lower than with credit, or there is a per transaction surcharge for using a credit or debit card. Car-centric as it is, gas prices are arguably the commodity that US consumers are most price sensitive to (and which is also most commonly evoked in politics). So this shows that consumers would prefer to discriminate between card and no-card purchases if given the option, except that the vast majority of retail outlets do not give them that option.

panzagl 3y ago
Is this still true somewhere? I thought this went out decades ago, except maybe for a few Mom and Pop places.
- deleted 3y ago
  [deleted]
- yyhhsj0521 3y ago
  Still true even for bigger brands like Shell or BP. They usually have two numbers on their price display, one is often about 5 cents higher than the other per gallon (guess which is credit/cash). It's interesting that the number for credit is usually way larger than the number for cash, implying most people use credit cards.
- jabroni_salad 3y ago
  I only see it for diesel in my area, and the fee is probably worth it for truckers as opposed to carrying cash.