re: 3% Credit Card Fee

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Think about what you just said. Especially the last part.

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I’m not arguing that there’s zero value for the merchant to accept credit cards. I’m arguing that the cost of collections plays very little role in that value.

A gas station doesn’t accept credit cards to outsource the cost of credit. They accept credit cards because customers expect to be able to use their credit cards everywhere. I thought I made that pretty clear.

Yes - there is still a mutual benefit because the merchant will lose business without accepting credit cards. But the value for the merchant in most cases isn’t any different than the value of accepting debit cards, which have lower merchant fees. I would guess that the average merchant actually has more debit transactions, but that’s just a guess.

At the end of the day the merchant is going to cover their costs one way or another, and the customers are going to pay the costs one way or another. The only questions are 1) who pays for the costs (all customers vs. only credit customers) and 2) where the fees are paid (point of sale vs. direct with the bank).

My opinion is that the entire system would be a lot cleaner if debit and credit fees were uniform, and the additional costs associated with credit were built into the cardholder interest rates and/or monthly fees. This would probably reduce the number of $0 monthly fee cards with cash back / miles / whatever, but would also mean that other customers would no longer be subsidizing those rewards.