The intersection between the people that have random overdrafts and those that just pay off their credit card debt in full every time is the empty set. Why make up excuses for a few rent seekers that tax the entire economy?
https://www.ftc.gov/tips-advice/business-center/guidance/new...
https://en.wikipedia.org/wiki/Expressions_Hair_Design_v._Sch...
It is very clear that most merchants earn more from people using credit cards more often, otherwise they would try to dissuade or offset it by adding a premium for using credit cards.
Target sort of does this by giving a 5% discount if you pay via ACH from your bank account (via a debit target redcard account), and in the western US, a grocery store company called Winco advertises it does not take credit cards at all in order to provide the lowest prices.
On the other hand, Aldi in the US used to only take debit cards, and they started taking credit cards 5 or so years ago, so they are obviously assuming they will earn more money by lifting prices a little and attracting credit card users.
Can you elaborate? IME merchants do NOT want people to use credit cards; transaction fees eat into the sale price. I remember a time when some electronics stores would explicitly advertise a cash discount, so as to avoid the transaction fees. I once worked in a bar that accepted every major credit card, save American Express, because of their several-points-higher transaction fee. The premium is added to offset this.
How is it very clear that most merchants earn more?
Because they do not offer discounts for cash/debit, and they also do not charge a fee for using credit card.
As I showed in my post, legally, merchants are clear to advertise higher prices for credit card users. The fact that they do not means they do not want to dissuade credit card use. From there, it follows that since businesses are interested in earning more money, that if they do not want to dissuade credit card use, then they must be earning more money (or at least breaking even) due to people using credit cards.
People spend more money when they use credit cards than debit/cash. Note that my above post specified “most merchants”, not all merchants. Obviously, some merchants do benefit from dissuading credit card use, such as the examples I gave, or many gas stations and small restaurants or convenience stores.
Or they just prefer to deal in cash so they don't have to pay as much in taxes.
Except they do. Especially smaller, mom & pop stores, as I mentioned here[0].
> Note that my above post specified “most merchants”, not all merchants. Obviously, some merchants do benefit from dissuading credit card use, such as the examples I gave, or many gas stations and small restaurants or convenience stores.
https://www.nerdwallet.com/article/credit-cards/credit-cards...
The obviously silly analogue would be that a merchant who dislikes guns could choose to hang a sign in their texas cafe with "no guns allowed", but they probably won't. That doesn't mean they WANT people to bring in guns, but that they think it would do too much harm within the market they're in to reject them. It would be a case of "reluctant acceptance of reality".
I think credit cards are the same. It should be self-evident that a merchant would want customers to pay with debit cards since the lack of interchange fees means the merchant makes strictly more money. Of course they want to make more money. But they also must accept that charging more fees for credit card users or rejecting them entirely would reduce overall customer base and profit, and so they accept that people can use credit cards. They want customers, not credit card usage.
I'm not sure if this is still the case, but if it is, then that is one situations where accepting credit cards pays for itself.
It is helpful to keep in mind that different businesses can pay wildly different fees for CC transactions. Walmart can sell you a $0.50 item for basically nothing, while a corner market might be better off if you stole it instead. So Walmart might absolutely want everyone to use credit cards while the corner market would likely prefer nobody did.
Many small retail stores in my area (delis, bodegas, restaurants) incentivize cash/debit. Not by charging less for them, but by charging extra for using a credit card.
Small retailers pay significantly more for CC processing than large retailers. 5-10x more, in some cases.
It is not. It's the converse.
And the effect is likely quite different -- discounts for cash are usually significantly less than surcharges for credit cards.
Perhaps, but as I said:
...discounts for cash are usually significantly
less than surcharges for credit cards.
> Note that my above post specified “most merchants”, not all merchants. Obviously, some merchants do benefit from dissuading credit card use, such as the examples I gave, or many gas stations and small restaurants or convenience stores.
Is my comment unwelcome because you said something similar?
I went back and re-read your comment, and yes I did read the bottom of it.
The stores I'm talking about aren't large retailers (like Target and Aldi) as you mentioned.
Most of the small stores I'm talking about pay 3-5% on CC transactions, unlike those chain stores who likely pay 1.5% or less.
What's more, the volume/revenue of such small stores makes such fees prohibitively expensive, unlike Target or Aldi, who already pay less and whose customers are more likely to spend larger sums.
The profit on a sandwich and a beer ($10-12) for such a small store might be a couple dollars. Having to pay 1/3 of that in CC processing fees isn't viable.
Which is why those stores have credit card surcharges.
That was my point, which is, at least AFAICT, a much different one than you made.
Apologies if I misunderstood.
https://www.law.cornell.edu/supremecourt/text/16-1454
> The antisteering provisions do not, however, prevent merchants from steering customers toward debit cards, checks, or cash.
So Ohio v Amex is about having different prices for AmEx compared to Visa/MC/Discover, whereas Expressions Hair design was about having different prices for cash/debit compared to credit cards.
I think what happened was due to Dodd Frank in 2010 explicitly allowing cash/debit card discounts, and political focus on credit card processors from states to drop their requirements that merchants not have different prices for cash/debit/credit card purchases, all the processors backed off from preventing merchants to not give lower pricing to cash/debit card users. However, Visa/MC even backed off from preventing merchants from giving lower pricing for any other card processor, since they wanted to avoid anti trust scrutiny since they are already so prominent. However, AmEx decided to fight it, and won big not just for AmEx but other two sided markets.
It definitely leads to a logically inconsistent result where merchants can display different prices, but the route taken to get to each decision was wildly different. Amex could have maintained in its contracts that merchants could not offer lower pricing for cash/debit cards, but I think AmEx wanted to avoid the way that would make them look (Amex versus Visa/MC is a David v Goliath case, whereas AmEx vs cash/debit is rich people versus poor people).
Here is a good comparison of both rulings:
https://jobs.luc.edu/media/lucedu/law/centers/antitrust/pdfs...
It's really only a matter of time until I remove credit cards completely in favour of non-US, local, low fee, secure, banking alternatives which already make up the far majority of transactions.