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#231379 - 07/30/12 02:28 AM Re: Retailers To Force Consumers To Pay 全wipe Fee' [Re: loganrbt]
logtroll Offline
veteran

Registered: 04/26/10
Posts: 8799
Loc: New Mexico (not old Mexico)
Forgot to mention another factor in the equation - supporting local businesses. Sending money outside of your community erodes the vitality of your community. It's very easy to underestimate the importance of this principle when the allure of a "good deal" is dangling in front of you on the computer screen.
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#231381 - 07/30/12 09:08 AM Re: Retailers To Force Consumers To Pay 全wipe Fee' [Re: logtroll]
Ted Remington Offline
old hand

Registered: 07/09/08
Posts: 4939
Originally Posted By: logtroll
I think that there are some important secondary numbers to crunch here. I am a frequent user of credit cards, though almost never carry a balance. My favorite card has been paying me a rebate of around 2% for a long time. It's actually a large part of the reason I choose to use it instead of cash or checks.

Some of the financials associated with the use of credit cards include fees that the card company receives, interest and late fees, money handling conveniences and efficiencies, probable increased sales due to purchase convenience and impulse facilitation, etc. I can't begin to do the math, but there is more to it than the spot transaction factors. Somehow, my credit card company seems to be satisfied with our arrangement, as am I.

If retailers start to charge me more than the rebate, I will probably significantly reduce my card use, based on a very limited perceptive judgement. I should probably do my own more comprehensive analysis before adjusting my behaviour. You can bet that the credit card companies will do one, and maybe many businesses, as well.

The possibility for unintended consequences appears to be high regarding a gross adjustment in the current credit card swiping fees system.


The 2% comes from the card vigorish. Many Merchants pay 5% in discount -- for a $100 charge they get $95 in cash, while the bank tries to get the $100 out of you. There are other charges but this is the largest one that I know of.

The banks can then use most for income and in some cases send some back to you.

And don't forget the charge-offs the banks have to absorb for bad accounts and fraud. That comes out of those fees.

The merchant is getting squeezed. And that ends up with the customer taking a share of the pain.

When you look at it from the perspective of the merchant, there is something entirely different going on:

The merchant knows most people want to use plastic. Plastic costs, so he sets his prices to cover those costs. That means that the person paying with cash is helping to cover the costs of his credit transactions. So the merchant can now differentiate: he can pass all the credit costs onto his credit customer and the cash customer gets a break.

There's an example locally. Two gas stations, on opposite corners. They both charge exactly the same for gas. One takes plastic, the other takes cash. Which one do I go to now? The one who takes plastic, because, like you, I get 2% back. Which one will I honor with my business when the one starts charging 5% extra? I don't know, but I know I will be paying cash or using my debit card, from which I receive no cash back.
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#231383 - 07/30/12 09:44 AM Re: Retailers To Force Consumers To Pay 全wipe Fee' [Re: logtroll]
loganrbt Offline
old hand

Registered: 02/20/08
Posts: 5850
Loc: Massaphuggintwoshirts
Originally Posted By: logtroll
Forgot to mention another factor in the equation - supporting local businesses. Sending money outside of your community erodes the vitality of your community. It's very easy to underestimate the importance of this principle when the allure of a "good deal" is dangling in front of you on the computer screen.


ceteris paribus, I agree. The essential corollary is that local business support the local community. for example, many areas of Michigan still are wiped out economically and many business that are not totally driven by external costs of inventory, materials, etc., continue to sell at prices way below the norm in other areas. They will get my business. Some, however, don't care about local consumers and charge the national rate or nearly so. They don't see me.

Likewise, the swipe fee.
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#231440 - 07/30/12 09:01 PM Re: Retailers To Force Consumers To Pay 全wipe Fee' [Re: pdx rick]
pondering_it_all Offline
veteran

Registered: 02/27/06
Posts: 7613
Loc: North San Diego County
Swipe fee = quick economic suicide, as far as I can see. Why wouldn't consumers just go down the street to a store that doesn't charge that fee?

But then again, expensive gas stations seem to stay in business and people choose to pay hundreds per month for texts, GPS locations of all their friends, and so forth.

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#231453 - 07/30/12 11:39 PM Re: Retailers To Force Consumers To Pay 全wipe Fee' [Re: pdx rick]
jgw Offline
member

Registered: 05/22/06
Posts: 1950
Loc: Port Angeles, WA
Gas stations are already doing and putting on their signs! Low price - cash, high price - credit card. I don't even see a problem with doing that. The problem is really on the side of the retailer, unless EVERYBODY does it they will lose business. If they lose enough they will stop it. Up to now, except for gas stations, its always been built into the price and considered another price of doing business.

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