Re: Merchants may be allowed to charge extra for credit cards[ Edited ]
07-14-2012 12:05 PM - edited 07-14-2012 07:09 PM
To this point, credit card companies have made money by charging swipe fees to merchants and interest fees to consumers. They have also offered some fraud protection, warranty extensions, and rental car insurance as part of the card agreement with consumers. Consumers with rewards cards have been given a small rebate from part of the swipe fees merchants have been charged as their fee for being able to accept the convenience of credit cards. Merchants who accepted credit cards had the convenience of not having to handle actual cash, which could be stolen from them by employees and outside thieves. Merchants increased their prices to account for the swipe fees and everybody should have been happy.
Now, merchants have gotten extra greedy. They will keep the prices at their current level, but also pass on the swipe fees to the consumers. In essence, they are keeping the benefits of being able to process transactions electronically, but they aren't taking on any of the financial responsibility. Anybody who thinks prices will be reduced due to this policy are fools.
Here's what is going to happen from this change: Big box retailers will keep things exactly as they are, because they don't want to alienate customers. Smaller retailers will start charging extra for credit cards and they will lose consumers' business to the larger retailers. Lots of small businesses will go out of business and our economy will be increasingly concentrated in larger and larger businesses, while the middle class shrinks even more.
I'm pissed off about this because I care about my own financial self-interest. It's not in my interest to hand over more of my hard-earned money to greedy merchants.
With no disrespect meant towards the poster, I don't believe you have any idea of the costs of running a small business. Swipe fees are way way over priced for what they give in return. Rather than argue the post, I'd suggest you look up the corporate SEC financials for MC/V/AE/Disc and look at how much those companies make from swipe fees. By "make" I mean profit over costs of all the so called benefits. AE and Discover are 100% self contained, MC/V add a layer on top of bank issuers (network costs).
Swipe fees are one of the greatest costs to merchants, more than rent, less than wages, but still a major cost factor for the small merchant. We heard all this "BS" with the debt card swipe fee issue, once capped the world didn't end and prices have not increased.