Quote:
Originally Posted by GGG
The cost of goods is increased (assuming an efficient market exists)by the higher premium a business pays on all credit card transactions. Each person pays this premium regardless of transaction method. Therefore those with higher points paying cards which also charge businesses higher premiums benefit more when the average cost of cards is past on to the consumer. Right now a person with a no points lower premium card is subsidizing my purchase with a fancy card.
It adds transparency to costs because people think getting “free points” isn’t costing them anything when in fact it’s costing everyone something. A few dollars for a plane ticket isn’t a cost like rent, power, wages, as a cost of delivering the product or service. Instead it’s an arbitrary fee added onto every transaction to purchase hotel rooms and plane tickets.
Now if all cards had a fixed fee that was regulated THEN I would agree with you that should be baked into the price as the cost of processing a transaction or handling cash or processing debit. But when fees are variable and it is prohibited to pass on this variable fee and prohibited to not accept specific visas then transparency and attacking the monopoly is good.
Hopefully sectors of business agree together to pass these fees onto consumers as a method of fighting back against the credit card companies.
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Nobody thinks rewards points are free. They know it costs the merchant, they just don’t care.
The fee charged to consumers won’t be dependent on the type of credit card. Everyone will pay the same fee. So the people with non rewards cards will still be subsidizing the rewards cards.
This helps no one, including merchants. It’s incredibly naive to think this will result in merchants banding together to fight credit card companies. All this does is cost customers more and make merchants look bad. The credit card companies are laughing at people who think this is to their benefit.
The fact that merchants have been hoodwinked into thinking this is the solution and not banding together with consumers for better consumer protection is a sign of how poorly the average business owner and customer understand what’s happening. Hardly surprising though.