Why are payments costing more? Isn't technology lowering costs more and more for these companies? Is this just execs needing another summer home so they raise the prices to whatever they like?
Actually - it's mostly because of cost / benefit shifting.
A card can attract USERS by increasing the rewards it offers -> and charging MERCHANTS for the reward.
So visa infinite cards might charge a much higher swipe fee to a merchant, and then make available cash back + first party car insurance + lots of bennies to the holders of these "elite" cards.
They justify this to merchants by claiming that these "elite" users spend big bucks.
The reality - if users of cards were charged the actual swipe fee their card incurred -> they would push for SUPER low fees or switch to debit cards.
Many lucrative business depend on the person picking the service not being the one paying for it or the kickback going to someone other than one paying.
Pretty evil! I imagine the card companies have an explicit rule that, in order to accept their cards, a merchant can't charge their users any extra fee? I wonder if some regulation were created that bans rules like that from existence whether this would change tomorrow.
Kroger stopped supporting Visa cards for a minute and I realized that's literally all I carry.
Meanwhile it's become the new hot thing locally (Southern USA) to charge credit and debit card users a "convenience fee" sometimes as high as 35 cents a transaction. Everyone went from offering discounts to cash users to simply charging card users more.
Interestingly, in 2013 both credit card minimums (up to a maximum of $10) and surcharges (up to a maximum of 4%) became legally federally, although there are 10 states that still prohibit surcharges (including New York, California, and Texas).
So seems like $0.35 is allowable on any transaction of $8.75 or more.
What is the difference between a "discount for cash payers" and "convenience fee for card users", when the only two options are cash and card? In both scenarios, price for purchasing with cash is less than price for purchasing with card. Seems like semantics to me.
I've started seeing this trend in a lot of small shops here in NYC as well. There used to be a ton of "cash only" places, but now I'm seeing more places that I would expect to be cash only accepting credit cards with a "convenience fee."
I'm wondering if it has something to do with the increasing prevalence of rewards, which is driven by competition between issuers?
I mean, I get somewhere between 2% and 5% back on virtually everything I buy. On top of signup bonuses.
Whereas when I think back to 10 or 15 years ago, it seems like I usually got 1% back, and I still had cards that didn't offer any rewards back at all -- which is unthinkable to me today.
Just my anecdote, and I don't know if it's the main driver, but it certianly seems like rewards have become a much bigger thing.
" I get somewhere between 2% and 5% back on virtually everything I buy."
This is more a function of the extreme power that VISA etc. have over the transactions. They are locked into their fees and make it impossible to do things like 'pay this other way and save 2% etc.' i.e. trying to do anything to obfuscate to the consumer that they are in fact responsible for 3% of every purchase you make.
So various entities find ways around those controls by giving you money back in another direction.
Basically, there's immense 'market pressure' on those 3% fees, but the oligarchy has control over it, so those fees will nature be eaten away by any and all other angles.
If there was no oligarchy, those '2% back' programs would be less likely to happen and what we would see is material margin erosion for such fees.
AFAIK payments are only really costing more in the US. Europe, Australia, Canada have all regulated or negotiated lower interchange rates in the past years.
