Last edited Sun Nov 24, 2024, 07:46 AM - Edit history (1)

The merchant is charging a 3.5% fee for card transactions and that includes debit cards. I refuse to pay so I pay in cash to get my hair cut.

We hate the cc fees, and hate there being a record of everywhere we go, everywhere and everything we eat, entertain ourselves with, what small presents we buy for our friends or family and a lot of etc.

The socialist states of eastern Europe, as well as their fascist soul brothers of earlier, were the control freak states—much like our current Republicans—and finally collapsed under the weight of all the information they amassed on their citizens. Universal use of credit cards practically relieves governments of the task. They can summon a person’s life history with one credit card record subpoena. We both visited the former East Germany, with its Nazi-style goose-stepping soldiers, sniper towers at the wall, the people we knew there terrified to meet us in the open because the socialist regime forbade more than four people to sit together at an open venue (café, etc.) and confiscated all newspapers and magazines from any westerners who came to visit. Can’t allow any free exchange of ideas or information can we? Credit cards facilitate that kind of state, and if I never liked it before, I sure as hell don’t like the idea of it when the Trumpanzees run our government agencies.

how can it be a driver of inflation? And if Mastercard/Visa were to decrease swipe fees, what guarantees do we have that the NRFs retailers would pass those "savings" on? None, actually, because lobbyists have no say in the operations of the folks they represent. While I will admit not knowing precisely who/what constitutes the membership of NRF, this sounds like lobbyists for greedy retailers trying to obfuscate blame. Wouldn't it be better to socialize the process and remove profit from such transactions entirely via a government agency? We could nationalize both retail businesses and Visa/Mastercard (reducing CC interest rates to just what is needed to cover staff salaries) to reduce inflation, if the first step doesn't work.

There, that ought to give the NRF nightmares, but perhaps you folks in virtual DUland can think of more ways to ruin the NRF's day.

That's ridiculous.

Meet ridiculous assertions with ridiculousness.

Whether that's because of a direct rise in fees, or a change in the mix of the type of card, or the values of transactions (in Oct 2023, the normal fee structure was $0.10 plus a percentage of the value - and the percentage varied depending on the retailer size - large ones might pay 1.43%, and smaller 1.51% - and also on card (transaction?) type - "Visa Infinite Spend Qualified" is charged at 2.3%. If anyone can explain what "Infinite Spend Qualified" means, it might help. But that fee increase is only 0.1% extra inflation for the total price.

The US charges seem significantly higher than in the EU:

Which makes some sense - I seem to remember asking why a shop in the EU didn't take American Express (many years ago), and they explained that it charged an extortionate 2%.

It's a statistic built on lots of numbers.

Is that the base rate? The result of more, smaller transactions? What?

I mean, I hate CCing any transaction under $10 and avoid those under $20. There's a set fee component to the swipe fee and I cringe when I see somebody charging $0.75 to Visa--the store's taking a loss and that's just allowed for "good will."

Otherwise it sounds like an old complain poured into a new container for popular or populist consumption.

If the rate at which swipe fees had stayed constant, then the total credit card charges would have gone up the same amount as the sales.

So the relative increase in fees was 116.7 / 112.3 times = 1.0392 times, or 3.92%. The article says it was 2.24% when it was written, so it had been, in 2021, (1 - 0.392) * 2.24% = 2.15%. A difference of about 0.1%.

Yes, there's a set fee of 10 cents (I forgot to give my source for that - https://crsreports.congress.gov/product/pdf/R/R48216 ). Though this has some different figures, for supermarkets at least, in which the credit card fixed fee is just 5 cents: https://www.swipesum.com/insights/visa-interchange-rates - maybe 7 cents as in "All Other Products: 1.50% + $0.07 (Supermarket Tier III)". According to that, the fixed fee for debit cards is typically 21 cents, but the percentage fee 0.05% (for "regulated" debit cards issue by banks with over $10bn in assets).

So in 2015 we had $3,050 billion in CC sales, and 33.7 billion transactions, which equates to an average of $90.50 per transaction.

And in 2022 we had $4,880 billion in CC sales, and 51.1 billion transactions, which equates to an average of $95.50 per transaction.

So actually, the amount per transaction went up. Though I suppose one should inflation-adjust these --
between July 2015 and July 2022 the CPI increased 1.2392 fold (that's a 3.11% average inflation rate, BTW)
https://data.bls.gov/timeseries/CUSR0000SA0

So in 2015 dollars it went from an average of $90.50 per transaction to $77.06 per transaction, a 14.9% decrease in the purchasing power of a transaction on average

I'd be using more cash, but the ATM's spit out $100 bills, and when I hand someone at McDonalds a $100 bill, they turn green and disappear into the back room, and I read a lot of restaurants and retailers don't like $50 bills either, sigh. Just easier to swipe, that's what most people do these days, and is faster for everyone than digging for coins and all that and making change.

I always go for $20 from ATMs and have refused to even consider a $100 or $50 bill (and I used to see people in the supermarket routinely handing over a $100). It's bad enough when some stores will use their counterfeit detection marker to do mark-ups of a $20, even if they can just put the bill up to a light to see the "thread" in it.

It's $100's or bust.

In truth, I can ask for withdrawals lower than $100 (in multiples of $20, i.e. $20, 40, 60, 80), and get $20's, and do multiple withdrawals that way if say I want to withdraw $300 or so. But with people waiting in line behind me... to do this 4 times (four $80 withdrawals) ...

and then without a car, don't like walking a long time with a lot of cash after ATM'ing - somebody can observe me with my backpack and maybe tote bags and figure I'm walking somewhere beyond the parking lot and follow...

I can make multiple smaller-amount trips, but my time is valuable to me anyway. And I'd still be a target for anyone watching.

Another reason I've just thrown up my hands and use my credit card for anything over $15 or so.

I primarily use a debit or credit card (the latter that gets paid off every month). But I *do* try to keep some cash. So although I'm not continually at an ATM, I try to do about a $200 withdrawal every couple months as there are places I might go to that are "cash only" or may have had past issues with illicit "skimmers" found on their terminals, and it's not worth the risk (notably the convenience stores).

no cards can be used. I've seen that happen in a restaurant. Or in case my card is declined (but I carry another credit card from the same bank, and a debit card from another -- I probably really should limit that to one CC and one debit card for walking around long distances). And for small purchases when I'm in the mood I pay cash.

I've never had an outright decline of my card that I remember, but I've had card readers sometimes not able to read my main card, so I've used a backup card.

(where my debit card is also considered a credit card - which activates a different process when used). I know many food trucks do cash only so if I happen to see one I want to try (they are rare where I live) or am downtown and go to one of the food carts, I'll have the cash. Similarly with parking around the city - some of those private "open" lots don't have kiosks (but use attendants) and thus require cash.

So percentages based swipe fees gare up. Also it seems businesses have largely figured out they can pass along the transaction fees legally in most cases. Notice how gas stations display their cash discounted gasoline prices. Profit motive all around.

As hard as it is to break with a convenience, we'd be better off with less debt. We've mostly used our credit union for banking over the years. The fees are generally lower. So far, it is convenient to go in the lobby to get cash. I have a debit card and I think using it is free. I'll have to check.

Credit card debt is another garden path. It used to be hard to get credit and credit cards, then the card companies opened the gates. Stores followed. We never carried a lot of credit card debt, but for awhile, I got an ego boost over having a stack of cards, even if they were all 0 balance. We let them expire when we learned the interest rates and security risks were higher. I cancelled a card by phone, and the rep I was talking to did her utmost to try to keep me active. She said that if I cancelled a card, my credit score would go down. At that time, I didn't know what a credit score was and I cancelled in spite of her dire warnings. I've friends who paid cash for everything, and then decided to get a loan for a car. They had trouble because they had no credit history. I'm old enough to remember that it was a point of pride to pay cash for everything. I don't like how the corporations have made credit so easy to get, so pervasive to use, and then charge more for the privilege of using their product. I will probably live to see fees on cash transactions. Maybe I already have. On my high school trip in 1970, I wanted change a dollar to use a vending machine at the Statue of Liberty and was charged 10 cents. I felt rooked.

The major challenge to businesses is a thing called cashflow.

I make widgets and the sales/delivery goes thusly:

I buy the components to build the widgets.
You buy the widgets from me.
You buy my installation and training services.
I install.
I bill you
You pay.

Now, let's put some time lines on this:

You order 10 widgets.
I order the components to build them (day 1)
The components ship (day 3 - the 30 day clock starts to pay my supplier)
Components arrive (day 5 - 28 days until the bill from my supplier comes due).
We build the widgets (+ 6 days or day 11. 22 days until my supplier comes due).
We pack them up and send them to you (+ 2 days or day 13. 19 days until my supplier comes due).
My installers arrive (+6 days, 13 days until my supplier comes due)
My installers finish the install 1 day per widget (+10 days or 3 days until my supplier comes due).
My people train your people (+3 days or the day my supplier comes due).
Job done.
Send you the bill (+1 day and the clock starts ticking on the terms between you and me but I am 1 day after the 30 days to my supplier)
You receive bill
You pay the bill (minimum of 30 days. My bill from my supplier is now 60 days out).

See a problem?
Now add in all the other costs that come in over the 60 days:
- Rent x 2
- utilities x 2
- salaries x 5 (every two weeks)
- insurances x 2
- equipment x2

How do I pay all of these bills when I won't get paid by you for 60(ish) days from the order?

There are plenty of ways small businesses manage cash flow and credit cards (both to accept and receive payments) are certainly one way to do it. Without some method of factoring, a lot of businesses would go TU so making blanket statements like "CC companies that contribute nothing to the economy" are made out of ignorance.

2.6% + 10 cents for in person swipe/tap.
3.5% + 15 cents for manual entry

My finance guys suggests that I should pass that thru (it makes the accounting easier) but I don't.
I also know that my numbers are high as I don't have huge volumes.

Credit card fees normally impact the last and/or second last steps of the supply chain.

End user pays buy CRC
Small business *might* buy via CRC but past a certain point? Not scalable.

I just did this math last month prepping for the Xmas season so I can see what my inflation was y/y.

Excluding my credit card fees (which started to get added in in 2021), my annual inflation rates have been
2020 - minimal