3 ms·

This is a huge feature of CCs that most people don't recognize. You're paying an extra ~3% to credit card companies in exchange for the ability to dispute a cha

by mbesto 2y ago

This is a huge feature of CCs that most people don't recognize. You're paying an extra ~3% to credit card companies in exchange for the ability to dispute a charge. If a merchant (in this case Hertz) accepted cash, you would get an invoice in your hand that you could dispute on the spot and just simply not pay. The reverse would be true for Hertz who could try to sue you for not complying.

reaperman 2y ago
They'd end up doing something like you pay $2000 in cash upfront and then you get the unused portion back at the end, and GDP would lower significantly because most people can't afford to give businesses a line of credit like this.
- mbesto 2y ago
  There'd be no market for $2000 cash upfront.
pests 2y ago
But then don't you get that back as cashback and such? Most complaints are people who don't pay with CC are paying a premium.
- mbesto 2y ago
  > But then don't you get that back as cashback and such? Huh? You mean in the example scenario if I charge $500 for a car rental and get 2% cashback from my CC. I find out the car rental is charging me an extra $100 for gas that I never used. I'd complain because I'd lose out on the 2% * $100 difference for the $100 that my CC company gave me back as a result of the dispute charge?
  - pests 2y ago
    > You're paying an extra ~3% to credit card companies in exchange for the ability to dispute a charge. I was responding to this. I also don't understand after re-reading where the "extra ~3%" comes from. If I go to the store and spend $100 on my CC, I'll get $2 cashback. I can pay the $100 off immediately with no interest for a savings of 2%. How are they getting 3% extra from me? I know I get at least 2% back on all purchases and sometimes more depending on the card and category. This is also why I brought up that usually I hear people who pay in cash get overcharged - they pay the full $100. (leaving out how credit card fees require merchants to increase prices leading to even more expenses for cash buyers)
    - mbesto 2y ago
      The "~" is important. Most merchants are incurring anywhere from 3~6% on charges made via CC. Likewise, your actual cashback varies (for example the highest I'm aware of is BoA's 2.65% cashback) and the average consumer is likely only getting about 1.5% cashback. So there is your delta. FYI - For people who work in payments, they know it's not as simple as this, but the point is that there is a delta between the two, and it does help pay for both of the convenience AND the ability to dispute.
      - pests 2y ago
        I thought your original post made it seem like only CC users get the extra 3~6% for the ability to dispute. My point in the thread was everyone pays it and it ends up being cheaper for the CC holder due to cashback.
        mbesto 2y ago
        > everyone pays it "pays it" is relative. The merchant is generally charging 3~6% more than they would otherwise if they didn't use a CC. Said differently, assuming all other things equal, buying the same good for the same price from two identical stores, one who only accepts CCs and one who accepts cash, the one who accepts cash will profit more. Therefore they can, in theory, charge less for their good. > being cheaper for the CC holder due to cashback "cheaper" how? The spread is effectively paid for by the merchant (their processing fee is 99% of the time higher than the cashback bonus a consumer earns) which in turn goes to vendors (like credit card providers, payment processors, etc) who then allocate costs against things like customer service for charge disputes. EDIT: The spread is the original ~3% I'm referring to, which would be an average 1.5% cashback against a 4.5% payment processing charge for a delta of 3%. In many cases this is lower (or null) but you get the point.
        pests 2y ago
        If both customers are shopping at the same store, and one pays in card and one pays in cash, the card holder pays less due to cashback. I agree the prices will be higher than at a store that does not accept credit cards due to not having to pay the fees. The only way I see the extra 3% for cardholders is because they are "forced" to shop in card-accepting establishments which will have higher costs to cover fees while the cash user can choose the cheaper cash vendor.
saagarjha 2y ago
If you refuse to pay they're probably going to send you to collections…
- mbesto 2y ago
  Sure, but collections for something they have no justifiable reason to collect on? To be clear, what I'm suggesting is (a) hypothetical to understand the business rationale and (b) is under the premise that what is on the bill matches the service you retained. In my theoretical scenario, the onus is on the merchant to prove they've provided the service you've paid for. The reason car rentals provide the convenience of charging your credit card without the immediate authority of you reviewing the charges is a feature of credit cards over cash, and a benefit to consumers. The other feature is that you can dispute those said charges if the merchant is also charging you for services/goods you never received (e.g., gas for an EV).
  - saagarjha 2y ago
    My understanding is you can get sent to collections for basically any reason and debt collectors will hound you without regard to whether it is something you should be obligated to pay or not
    - mbesto 2y ago
      And I can create a class action lawsuit for literally anything I want. Doesn't mean I'm going to win. What's your point?
      - saagarjha 2y ago
        Yes, but against a person?
        mbesto 2y ago
        A consumer can sue or join a class-action lawsuit to recoup fees where goods/services weren't provider. A business can sue a consumer for not paying. They are two sides of the same coin.
sneak 2y ago
Yeah, this is mostly a fiction, much like the idea that if someone steals from you, your tax dollars fund the police, and you can call them and they'll do anything meaningful. It's a belief held by people who don't actually try to use these systems. Major credit card companies aren't in the business of consumer protection. Many times I've tried to do chargebacks, only to be denied by the card issuer with some unsubstantiated claim by the vendor that they held up their end of the transaction. No recourse short of spending four or five figures on a lawyer and a lawsuit. As a result, if they cheat you out of less than $5k, they win.
deleted 2y ago
[deleted]

by mbesto 2y ago

reaperman 2y ago

They'd end up doing something like you pay $2000 in cash upfront and then you get the unused portion back at the end, and GDP would lower significantly because most people can't afford to give businesses a line of credit like this.

mbesto 2y ago
There'd be no market for $2000 cash upfront.

pests 2y ago

But then don't you get that back as cashback and such? Most complaints are people who don't pay with CC are paying a premium.

mbesto 2y ago
> But then don't you get that back as cashback and such? Huh? You mean in the example scenario if I charge $500 for a car rental and get 2% cashback from my CC. I find out the car rental is charging me an extra $100 for gas that I never used. I'd complain because I'd lose out on the 2% * $100 difference for the $100 that my CC company gave me back as a result of the dispute charge?
- pests 2y ago
  > You're paying an extra ~3% to credit card companies in exchange for the ability to dispute a charge. I was responding to this. I also don't understand after re-reading where the "extra ~3%" comes from. If I go to the store and spend $100 on my CC, I'll get $2 cashback. I can pay the $100 off immediately with no interest for a savings of 2%. How are they getting 3% extra from me? I know I get at least 2% back on all purchases and sometimes more depending on the card and category. This is also why I brought up that usually I hear people who pay in cash get overcharged - they pay the full $100. (leaving out how credit card fees require merchants to increase prices leading to even more expenses for cash buyers)
  - mbesto 2y ago
    The "~" is important. Most merchants are incurring anywhere from 3~6% on charges made via CC. Likewise, your actual cashback varies (for example the highest I'm aware of is BoA's 2.65% cashback) and the average consumer is likely only getting about 1.5% cashback. So there is your delta. FYI - For people who work in payments, they know it's not as simple as this, but the point is that there is a delta between the two, and it does help pay for both of the convenience AND the ability to dispute.
    - pests 2y ago
      I thought your original post made it seem like only CC users get the extra 3~6% for the ability to dispute. My point in the thread was everyone pays it and it ends up being cheaper for the CC holder due to cashback.
      - mbesto 2y ago
        > everyone pays it "pays it" is relative. The merchant is generally charging 3~6% more than they would otherwise if they didn't use a CC. Said differently, assuming all other things equal, buying the same good for the same price from two identical stores, one who only accepts CCs and one who accepts cash, the one who accepts cash will profit more. Therefore they can, in theory, charge less for their good. > being cheaper for the CC holder due to cashback "cheaper" how? The spread is effectively paid for by the merchant (their processing fee is 99% of the time higher than the cashback bonus a consumer earns) which in turn goes to vendors (like credit card providers, payment processors, etc) who then allocate costs against things like customer service for charge disputes. EDIT: The spread is the original ~3% I'm referring to, which would be an average 1.5% cashback against a 4.5% payment processing charge for a delta of 3%. In many cases this is lower (or null) but you get the point.
        pests 2y ago
        If both customers are shopping at the same store, and one pays in card and one pays in cash, the card holder pays less due to cashback. I agree the prices will be higher than at a store that does not accept credit cards due to not having to pay the fees. The only way I see the extra 3% for cardholders is because they are "forced" to shop in card-accepting establishments which will have higher costs to cover fees while the cash user can choose the cheaper cash vendor.

saagarjha 2y ago

If you refuse to pay they're probably going to send you to collections…

mbesto 2y ago
Sure, but collections for something they have no justifiable reason to collect on? To be clear, what I'm suggesting is (a) hypothetical to understand the business rationale and (b) is under the premise that what is on the bill matches the service you retained. In my theoretical scenario, the onus is on the merchant to prove they've provided the service you've paid for. The reason car rentals provide the convenience of charging your credit card without the immediate authority of you reviewing the charges is a feature of credit cards over cash, and a benefit to consumers. The other feature is that you can dispute those said charges if the merchant is also charging you for services/goods you never received (e.g., gas for an EV).
- saagarjha 2y ago
  My understanding is you can get sent to collections for basically any reason and debt collectors will hound you without regard to whether it is something you should be obligated to pay or not
  - mbesto 2y ago
    And I can create a class action lawsuit for literally anything I want. Doesn't mean I'm going to win. What's your point?
    - saagarjha 2y ago
      Yes, but against a person?
      - mbesto 2y ago
        A consumer can sue or join a class-action lawsuit to recoup fees where goods/services weren't provider. A business can sue a consumer for not paying. They are two sides of the same coin.

sneak 2y ago

Yeah, this is mostly a fiction, much like the idea that if someone steals from you, your tax dollars fund the police, and you can call them and they'll do anything meaningful. It's a belief held by people who don't actually try to use these systems. Major credit card companies aren't in the business of consumer protection. Many times I've tried to do chargebacks, only to be denied by the card issuer with some unsubstantiated claim by the vendor that they held up their end of the transaction. No recourse short of spending four or five figures on a lawyer and a lawsuit. As a result, if they cheat you out of less than $5k, they win.

deleted 2y ago

[deleted]