4 ms·

> without a credit card company in the middle extracting rents. This is way too reductive. In the US, credit cards are complicated. For instance, I get about 2

> without a credit card company in the middle extracting rents. This is way too reductive. In the US, credit cards are complicated. For instance, I get about 2.5% of every purchase back, either in cash or kind. Yes, the merchant pays 4%, and VISA/matercard take a bit, and my issuing bank takes a bit, but calling that "extracting rents" feels like pure rhetoric. FedNow is awesome and will make the market more efficient, but merchants aren't going to lower prices due to lower fees, especially while there's a mix of fee-less transactions and credit card transactions. At least in the short term, adopting FedNow is just giving money to the places you buy from (for retail transactions).

jessriedel 2y ago
That you are getting a kickback does not mean they aren’t extracting monopoly rent. The rents, and your kickback, is in fact supported by slightly higher prices, which for you will roughly cancel out, but which are paid in full by people not using credit cards. One can certainly argue that this system is net positive due, e.g., to greater credit availability for people who need it, chargeback discipline, etc. It’s a very complicated system that impacts a bunch of stuff. But it being merely a ~3% surcharge (on most retail transactions nationwide!) does not deflect the monopoly charge.
wlesieutre 2y ago
And anyone that ever uses cash for anything is overpaying, because prices everywhere have been jacked up to include headroom for "give back 2.5% as credit card rewards"
- AngryData 2y ago
  Well for corporate stores yes. Still a good number of rural area small businesses that give a discount for cash, or only accept cash.
- sandmn 2y ago
  Processing cash might cost retailers even more than cards (miscalculations, keeping change, counterfeit bills, cash collection every day) unless it allows them to evade taxes.
  - Bognar 2y ago
    Unless there were some sort of government-provided zero fee digital system for money transfer. Oh well, surely such a thing will never exist.
    - sandmn 2y ago
      Not sure if people who prefer to use cash will consider that an adequate substitute.
nixosbestos 2y ago
> but calling that "extracting rents" feels like pure rhetoric. How? Because you just spelled out oligopolistic rent seeking behavior to a T...? Oh but you like it because you get a kickback. Jeez. Credit cards are literally a tax on the poor but people don't want to hear that. Don't get me wrong, I use the hell out of my credit card, and feel guilty knowing that system specifically means less well off folks are paying higher prices to subsidize card usage.
- Loughla 2y ago
  I see you edited your comment. How is credit a tax on the poor? My very poor family members all are able to access credit cards. They have lower limits, and higher interest because of their credit scores. But they can use them exactly how I do for gas and groceries. How?
  - blharr 2y ago
    Because when you have decent savings. It's easy to never pay a credit card late fee in your life. When you are living paycheck to paycheck, it's a lot harder to avoid going over. Then, even a small amount over can incur late fees, and if you can't pay it off for even a month, it results in a decent amount of interest.
    - roenxi 2y ago
      I don't think that is getting at the main confusion. It is pretty clear how, if someone can't pay their debt back, they're worse off. The confusion is that a credit card is a short-term smoothing tool. The point is to let merchants assume customers are good for it instead of going through the whole process of checking with a specific bank or expecting people to carry physical proof that they have the money. Using a card can't get someone ahead, the bank is expecting to charge the customers more than they give them. So why is it necessary for these people to be using a credit card if they can't pay it back? Especially if they have an average income that is sufficient to cover their lifestyle. If they're going to be strictly worse off after engaging with a system, why are they engaging with it?
BeetleB 2y ago
> This is way too reductive. In the US, credit cards are complicated. For instance, I get about 2.5% of every purchase back, either in cash or kind. Yes, the merchant pays 4%, and VISA/matercard take a bit, and my issuing bank takes a bit, but calling that "extracting rents" feels like pure rhetoric. You just described "extracting rents". For people like me who treat a credit card as a debit card, I see no reason for vendors to pay that "tax" if there are almost free alternatives. I'm ok losing the cashback which you and I are paying for anyway.
- frumper 2y ago
  Almost no retailers offer a discount for using cash or a debit card. You're paying the retailer either way. Whether they pay a transaction fee or pocket it isn't much of a difference to you.
  - BeetleB 2y ago
    Isn't that the point of the lawsuit - that because they have a monopoly there's a floor on the price that consumers see?
  - cubefox 2y ago
    Retailers compete with each other. In the long run, credit card fees will lead to higher prices, and (basically non-existent) FedNow fees to lower prices.
    - frumper 2y ago
      I don’t disagree, but I also don’t trust that retailers will pass on the savings. Many higher priced items sell based on MSRP anyway.
      - BeetleB 2y ago
        Retailers don't "pass on the savings". One retailer will lower the price if they don't have to pay as high a Visa fee - to attract more customers. Other retailers will then follow suit. Free shipping wasn't much of a thing until one retailer decided to make it one :-)
withinboredom 2y ago
You should look up railroad vouchers and why they became illegal. This is basically the same shit, different century.
lxgr 2y ago
> [...] 2.5% of every purchase back, either in cash or kind. Yes, the merchant pays 4% [...] Who doesn't love a good negative-sum game!

jessriedel 2y ago

That you are getting a kickback does not mean they aren’t extracting monopoly rent. The rents, and your kickback, is in fact supported by slightly higher prices, which for you will roughly cancel out, but which are paid in full by people not using credit cards. One can certainly argue that this system is net positive due, e.g., to greater credit availability for people who need it, chargeback discipline, etc. It’s a very complicated system that impacts a bunch of stuff. But it being merely a ~3% surcharge (on most retail transactions nationwide!) does not deflect the monopoly charge.

wlesieutre 2y ago

And anyone that ever uses cash for anything is overpaying, because prices everywhere have been jacked up to include headroom for "give back 2.5% as credit card rewards"

AngryData 2y ago
Well for corporate stores yes. Still a good number of rural area small businesses that give a discount for cash, or only accept cash.
sandmn 2y ago
Processing cash might cost retailers even more than cards (miscalculations, keeping change, counterfeit bills, cash collection every day) unless it allows them to evade taxes.
- Bognar 2y ago
  Unless there were some sort of government-provided zero fee digital system for money transfer. Oh well, surely such a thing will never exist.
  - sandmn 2y ago
    Not sure if people who prefer to use cash will consider that an adequate substitute.

nixosbestos 2y ago

> but calling that "extracting rents" feels like pure rhetoric. How? Because you just spelled out oligopolistic rent seeking behavior to a T...? Oh but you like it because you get a kickback. Jeez. Credit cards are literally a tax on the poor but people don't want to hear that. Don't get me wrong, I use the hell out of my credit card, and feel guilty knowing that system specifically means less well off folks are paying higher prices to subsidize card usage.

Loughla 2y ago
I see you edited your comment. How is credit a tax on the poor? My very poor family members all are able to access credit cards. They have lower limits, and higher interest because of their credit scores. But they can use them exactly how I do for gas and groceries. How?
- blharr 2y ago
  Because when you have decent savings. It's easy to never pay a credit card late fee in your life. When you are living paycheck to paycheck, it's a lot harder to avoid going over. Then, even a small amount over can incur late fees, and if you can't pay it off for even a month, it results in a decent amount of interest.
  - roenxi 2y ago
    I don't think that is getting at the main confusion. It is pretty clear how, if someone can't pay their debt back, they're worse off. The confusion is that a credit card is a short-term smoothing tool. The point is to let merchants assume customers are good for it instead of going through the whole process of checking with a specific bank or expecting people to carry physical proof that they have the money. Using a card can't get someone ahead, the bank is expecting to charge the customers more than they give them. So why is it necessary for these people to be using a credit card if they can't pay it back? Especially if they have an average income that is sufficient to cover their lifestyle. If they're going to be strictly worse off after engaging with a system, why are they engaging with it?

BeetleB 2y ago

> This is way too reductive. In the US, credit cards are complicated. For instance, I get about 2.5% of every purchase back, either in cash or kind. Yes, the merchant pays 4%, and VISA/matercard take a bit, and my issuing bank takes a bit, but calling that "extracting rents" feels like pure rhetoric. You just described "extracting rents". For people like me who treat a credit card as a debit card, I see no reason for vendors to pay that "tax" if there are almost free alternatives. I'm ok losing the cashback which you and I are paying for anyway.

frumper 2y ago
Almost no retailers offer a discount for using cash or a debit card. You're paying the retailer either way. Whether they pay a transaction fee or pocket it isn't much of a difference to you.
- BeetleB 2y ago
  Isn't that the point of the lawsuit - that because they have a monopoly there's a floor on the price that consumers see?
- cubefox 2y ago
  Retailers compete with each other. In the long run, credit card fees will lead to higher prices, and (basically non-existent) FedNow fees to lower prices.
  - frumper 2y ago
    I don’t disagree, but I also don’t trust that retailers will pass on the savings. Many higher priced items sell based on MSRP anyway.
    - BeetleB 2y ago
      Retailers don't "pass on the savings". One retailer will lower the price if they don't have to pay as high a Visa fee - to attract more customers. Other retailers will then follow suit. Free shipping wasn't much of a thing until one retailer decided to make it one :-)

withinboredom 2y ago

You should look up railroad vouchers and why they became illegal. This is basically the same shit, different century.

lxgr 2y ago

> [...] 2.5% of every purchase back, either in cash or kind. Yes, the merchant pays 4% [...] Who doesn't love a good negative-sum game!