Quote:
Credit card companies charge a merchant about 2%.
And higher when the transaction is tiny (ie coffee).
Productive companies with only an 8% profit margin means credit cards do a serious profit reduction.
The profits were so large that credit card companies took a 'remove all stops' attitude
when Walmart tried to create their own bank and credit card company.
That 2% charge was something like 25% of Walmart's profit on a transaction.
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I realize it's a bit more complicated than this, but I think we are mixing apples, oranges AND bananas.
Not counting long/short term loans ... there are 3 basic sales modes:
Cash: You pay the merchant in cash $
Debit card: You use a plastic card to pay cash $ directly from your bank account
Credit card: You use a plastic card to
borrow $ from the card company.
For a debt card, the merchant immediately has the $ in his/her account,
and for all intents and purposes the transaction is just like cash $.
The actual cost is the miniscule cost of a computer transaction.
For a credit card, the company is entitled to a fee for making
that short term advance of cash $ to the merchant.
Since the merchant still immediately has the cash $ in his/her account,
that fee is a "cost of doing this kind of business"
If the merchant doesn't like this "cost of business", it becomes a his/her decision.
Will he/she lose customers if they don't accept "credit" cards.
But there should be no significant fee for any "debit" card.
For the customer, the decision is only whether to patronize a business that charges more for using a "credit" card.
IMO, customers need not worry about what % of profit the merchant
is paying for a "credit card" transaction ... that is his/her decision.
But where the issue for customers lies is if the merchant charges less for cash $
than for BOTH "debit" AND "credit" kinds of plastic transactions.
Remember:
If your credit card is hacked, it's the plastic card company's problem.
If your debit card is hacked, it's your problem to prove to your bank it's entirely their fault ... Lot's of Luck !
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