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Comment by jpollock | Hacker News Reader

I don't understand how this is possible:

"Merchants hand over some $138bn in fees each year; according to the National Retail Federation, a lobby group, it is their second-biggest cost after wages."

Unless they're talking about more than just credit card fees? From the same article:

"But credit-card fees are unregulated and meatier, usually sitting at about 2% of the transaction and rising to 3.5% for some premium-reward cards."

Are they saying that retailers pay less than 4% of the retail price to acquire their goods? They pay more for credit cards than rent?

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That jumped out at me too -- so I looked up what appears to be the source [1] and it does indeed state:

> "Regardless of size, the fees are most merchants’ highest operating cost after labor"

but I'm as incredulous as you are. Obviously things like cost of goods, and also usually rent, are also going to be higher.

I can only assume it's based on some really misleading survey, and I'm honestly surprised to see The Economist, of all publications, repeat something so obviously economically questionable. (To be sure, they attribute the claim rather than state it, but they present it as if it's true.)

[1] https://nrf.com/media-center/press-releases/retailers-say-sm...

I would assume that in this context, the cost of goods is not measured in the operating expense. Notice the keyword 'operating cost'. It is common to have the COGS vs OpEx separated in the financial balance sheet.

I presume inventory is not considered an "operating cost", which is fair enough. Rent absolutely should be one though.

Not sure what criteria they used. But I totally believe this for any e-commerce store or company that doesn't have a physical presence.

You also get charged for each chargeback, which is likely included in that $138bn number. And if you have a high enough chargeback rate you will be fined an additional amount.

    I don't understand how this is possible

Here's the explanation:

    according to the National Retail Federation, a lobby group

Spoiler alert: most lobbyists are professional liars. If pressed they'll put up a smokescreen of "well I meant _operating_ costs, which of course are far smaller than cost-of-goods" but the lie is still printed in the article...

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