Who thinks it is unfair for businesses to be charged service fee's for credit cards/debit cards? It takes a lot out of their bottom line and in some areas, it is being used MORE than cash, more so in specific businesses. If in the future cash becomes obsolete, and let us say 90% of payments are made by some form of digital payment that incurs a service fee to retail owners, will there still be service charges? Isn't this just an evolution in the form of payment? How much longer will credit cards be considered a "convenience?" An example of how CC's can ruin a business: When gas prices were reaching $5, gas stations were actually LOSING money when customers would purchase gas with cards. There bottom line is about 12 cents/gallon and the 2% + commission fee they pay for CC's came out to about 13 cents/gallon. When will credit cards/debit cards be considered just like cash, another form of payment? Keep in mind the money Credit Card companies make from this is more than Late Fees, Interest, and any other "fee" combined. It is in the billions.
I'm not up to date on this issue but Wall Mart wanted a bank charter for just that purpose, to get rid of cc fees. If they were successful there'd be big change in the banking business.
It's completely fair, so long as a competitive environment is allowed to keep market prices in check. But isn't that why retail companies offer their own CCs? Remember, there is a cost involved in all cash transactions as well, although this cost is probably not entirely accounted for.
The cost and risk to bring cash to the bank, or have it picked up, is minimal when compared to the cost of credit cards. Unfortunately the cost of not taking CC is impossible to calculate for most small businesses and giving credit to clients is more expensive than CC so they are here to stay.
I'm talking about most small businesses that do not have the means nor capability to offer their own credit card. I'd be happy if Walmart would be able to get that going as that would be a step in the right direction. But the main problem is a lot of small business family owners of FRANCHISES (mcdonalds, baskin robbins, chevron, etc.) will have no choice as they are binded to their franchise contract to use whatever merchant the franchise tells them to use. And yes, franchises like Mobil do get a portion of the CC fees as part of the deal they made with the CC companies to exclusivly use them. Think about how much MORE money small businesses would make without CC fees and how it could help the economy. I personally know some business owners that would have stayed afloat (gas station owners) if not for these fees. If you are successful and have a lot of volume you could pay up to $500 a day just in CC fees. And yes, you are right, the fees for handling cash are MUCH more minimal than CC fees. Especially since most small businesses deposit the money themselves.
I worked in retail lumber and hardware when mc and visa were gaining acceptance, we had 2 lg contractors default on our in house charge accounts, for all practical purposes it bk'ed the company. Never would have happened with a cc scenaio. The cc companies take the risk.
The benefit of thse fees is extraordinarily higher than the risk of default by CC holders. All the costs for CC companies have gone down, but the fees go up. http://www.consumeraffairs.com/news04/2005/credit_card_fees.html
Those offering credit should not be allowed to charge more than 5% above prime. They can't make money at that rate they don't deserve to be in business. Government needs to fully regualte all lending institutions from this point forward. In a capitalist system a company should be given the opportunity to self govern and regualte their business in a ethical way. When they demonstrate that they can't, or won't, the government needs to step in and do it for them. Our government must protect us from home grown financial terrorists just as they do from those outside our borders.
In the olden days, when most people wrote checks, the CC companies argued that the businesses came out ahead after fees due to the percentage of bad checks that were passed.
Exactly my point. "The Olden Days" where people wrote checks. It wont be long till we say "The Olden Days" where people paid with cash. It wouldn't surprise me if within the next 20 years 90% of people paid with some form of digital payment. So my question is, is it fair just because the form of payment has now switched from cash to digital, that businesses be esentially "taxed" 2% or more?