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A merchant's ~3% cost is passed on to the customers, one way or another. (It's not costing the customer "negative amounts of money".)

• akshatpradhan 12y ago
  They don't and it's a common misconception. Merchants need to stay competitive and they'll lose business by not keeping prices competitive. That's why spicy peanuts cost $.59 and only $.59 at every convenience store. The merchant fee isn't tagged on and you'll notice this on most products when you compare across stores.
  • fitchjo 12y ago
    Not sure how that has anything to do with passing the cost onto the consumer. If, for instance, the processing fee increased to 10% across the board, you would see an increase in prices to cover that expense. It will certainly not be instantaneous and may not ultimately ever cover the full increase in cost, but Company's cannot make a profit without passing on their costs to the consumer.
  • treehau5 12y ago
    Don't all convenience stores put up a small handwritten sign that says "Minimum Purchase Amount for Credit/Debit Transactions: $<whatever they need you to spend to offset the cost>
    • Phlarp 12y ago
      My understanding is that these signs are more "polite recommendations" than they are enforceable rules. My suspicion is that the card companies have a clause against this in the merchant agreement and don't want their payment method to be perceived as "costing more" to consumers.
  • treehau5 12y ago
    Don't all convenience stores put up a small handwritten sign that says "Minimum Purchase Amount for Debit Transactions: $<whatever they need you to spend to offset the cost>
• deciplex 12y ago
  A merchant will not always be in a position to pass along that cost. They may have to accept a decrease in profit margin per customer in exchange for increased business. They may also have to accept a decreased profit margin overall in exchange for staying in business, if all their competitors are accepting cards and they aren't. The only way what you say is universally true is if you hold that all costs of doing business are passed along to the customer "one way or another" which is sort of true but not a really useful way of thinking about it.
• CPLX 12y ago
  That's not necessarily true. All payment options, including cash, have associated costs. It's certainly within the realm of possibility that the credit card networks, as a whole, are more efficient than any next best alternative, and indeed likely that they are so for certain specific actors within the marketplace.
• encoderer 12y ago
  Yes, of course customers are ultimately covering all costs of doing business, this included. But not specific customers. Affluent consumers often use credit in advantageous ways. That behavior is subsidized by consumers of more limited means. I get 5% cashback every time I shop at amazon, 6% at every grocery store, 5% on every tank of gas and 2.5% on every restaurant, etc. (Sallie Mae Rewards Card, Amex Blue Preferred, Sallie Mae again, and Chase Sapphire, respectively). Access to credit most certainly costs me "negative money."
  • pktgen 12y ago
    If you don't max out the BCP $6k, make sure you buy Visa gift cards at a grocery store to max it out. :)