Retail merchants have capital tied up in product; what difference does it make if its on the shelf or already in customer's hands? ... sure cash strapped people always pay more. But the reason the rate is so high; 3% on month > 36% APR b/c of network leverage and government regulations.
> what difference does it make if its on the shelf or already in customer's hands?
Actually, it makes a huge difference:
1) I pay property taxes on all inventory held on the shelf at the beginning of the year
2) I can offer a discount to move product off of the shelf now at a lower rate (equivalent to paying a higher transaction rate) to achieve actually present cash-flows
3) I can write-off inventory that sits on the shelf too long and depending on my accounting method, I may have to claim income on a sale today, even though I haven't been paid yet.
> % on month > 36% APR b/c of network leverage and government regulations.
No, it's 3%. Period. Not 3*12, just 3%. Don't conflate accrual of interest with acquisition costs. That'd be like saying that since labor on production is 2% of COGS, firing everyone increases my yearly margin by 24% (at best, it would be 2%, if you could still produce). Consider that any method of capturing payment, whether cash or credit card, has an acquisition cost (time, money, labor, etc.). Paying a 3% fee on CC optimizes time and labor in exchange for money.
