We will continue to disagree. Merchants can build in the cost of credit and uncollectible accounts into their prices. Any cost accountant can do this for you.

You're argument is that it's convenient for the customer so they should pay for the convenience. Well, it's convenient for the merchant also, yet they are passing the fee along as a surcharge, and getting additional sales from credit. The 3% on those sales is the price to outsource credit, collection, and the loss on uncollectible sales. Why should a the consumer pay for the merchant's credit function and bad debts?

If there is an issue with the fee, the merchants should put pressure back on the processor, not screw the customer.

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Posted by tigersmanager

Member since Jun 2010

7537 posts

Posted on 2/3/24 at 1:59 pm to ATL_Tigerfan

most places aren't paying 3% except on amex or discover visa and mastercard are 1.5% and can be lower the more volume you do

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Posted by lostinbr

Baton Rouge, LA

Member since Oct 2017

9673 posts

Posted on 2/3/24 at 2:27 pm to ATL_Tigerfan

quote:
You're argument is that it's convenient for the customer so they should pay for the convenience.

My argument is that the ability to offer credit (in the traditional buy now, pay later sense) has very little to do with most merchants’ decisions to accept credit cards as a payment method. It’s not a choice between offering managing their own credit system and outsourcing. It’s a choice between accepting credit cards or not offering credit at all. It’s not the 1940’s when a family might have had a running tab at their local grocery store.

Meanwhile on the consumer side, the reasons people pay with credit cards at gas stations and restaurants often have very little to do with deferring payment. I would argue that for a very large portion of overall transactions, people use credit cards because A) they’re more convenient, B) they’re more secure in the event of a breach/identity theft/etc., and C) they get rewards on every purchase.

quote:
Merchants can build in the cost of credit and uncollectible accounts into their prices. Any cost accountant can do this for you.

Of course they can, which brings me to my next point..

quote:
The 3% on those sales is the price to outsource credit, collection, and the loss on uncollectible sales. Why should a the consumer pay for the merchant's credit function and bad debts?

Are you under the impression that the consumer isn’t paying for it without a surcharge?

Let’s think about that. You pointed out that the merchant can easily build the cost of collections into prices if they run their own credit service. I agree. And they are doing the exact same thing with credit card transaction fees. My argument is that the credit costs should be worked out between the cardholder and the bank, rather than being subsidized by cash and debit customers.

I understand that there are always going to be some costs at the merchant level due to the need to access the networks and process payment, but it’s pretty easy to compare AMEX fees to Visa/MC (much less debit transactions) and see that there’s more to the story.

Reasonable people can disagree, though.