The cost of the product should be what's on the label. If that's not enough, raise the price.
If you pay via a medium that does not return some of the margin to you in the form of rewards or a 'cash/debit' rebate, then functionally you're paying an invisible tax.
This means everyone should be using credit, ideally the highest reward options, which themselves have the highest processing fees, which result in higher prices all around. The creation of higher tiers of rewards and super-premium cards just repeats this cycle, whereby normal cardholders and cash/debit users are now subsidizing high-spend premium card users.
Further, large retailers negotiate significantly preferential rates and lower processing fees for their book of business. This means small and medium sized businesses pay significantly more per transaction for processing, meaning they're less competitive and less pricing pressure is placed on large retailers, which again raises prices for you.
There's also the card issuer side of things, but in short if you're not changing your credit cards regularly, companies will depreciate rewards and benefits over time in previous lines to move you into a higher margin segment of their portfolio.
In short, there's already a divergence, and you're already paying for it in multiple ways.
even with your optimal strategy, you're still paying for it: those points might as well be already spent at the network of vendors you've agreed to sell your purchase history to
it says so in their balance sheets :)
Or put another way: the list price must be reasonably achievable, but charging more for "extras" (eg. a more expensive card with benefits) is always permitted.
The best answer is probably a combination of the two: break out the bullshit costs the customer has to pay so that the consumer can see them, but still give them the upfront cost as early in the transaction as possible.
Unfortunately it has become a popular idea to ban the surcharging of these costs by retailers, so it's likely to be outlawed by next year, which is completely asinine. Now we'll be back to a situation where customers who use a cheap payment method will be subsidizing customers who use an expensive payment method.
And guess who wins there...
Just curious, how is this not painfully obvious and so there's opposition to it? Nobody is expecting this to lower prices, right...
Why the same logic does not apply to cash payments? They have costs too.
> Unfortunately it has become a popular idea to ban the surcharging of these costs by retailers, so it's likely to be outlawed by next year, which is completely asinine.
It's completely sane. Surcharges are now outlawed in Australia (from 1 Oct) and I finally paid for my coffee exactly the same amount that was written in the blackboard. Businesses that do not want to absorb the 0.5% fees are free to stop accepting credit cards or can raise prices (none near me did that so far). That's fine, the most important thing is if coffee is 5.50, you pay 5.50, not some random amount.
Last week, I visited two unrelated non-profit museums, and when there is free admission I strive to make a freewill donation to show my appreciation and lend support to the mission. I offered the same amount to each location, and the second one, according to my bank statement, has involuntarily charged me for the fees as well. No wonder they greatly prefer tossing cash into the Plexiglas box.
They can* and they do.
*It is capped to the actual processing fee, the card network must be notified, and the fee must be disclosed upfront to the consumer. A couple of states like CT and MA disallow consumer fees.
On most planned larger purchases (like more than $1000), I've seen CC fees recently.
> Merchants should be allowed to pick and choose which cards they accept without penalty.
To be clear for readers, merchants can choose their accepted card networks -- Visa, Mastercard, Amex (or alternatives like PayPal).
Networks requires merchants to accept all of the card within that network (hence the name "network"). Visa has three tiers; Mastercard has four. Something like ~90% of CCs fall in the traditional rewards tier, so there's less card variation than you might think. Though higher tiers tend to spend disproportionately more.
Stripe and the flat x% + $y are of course popular because of the simplicity and predictability of it.
“Pick and choose which cards they accept without penalty” won’t do anything in a market where 3-4 card processors and 3-5 banks have a near-monopoly on transactions.
If I sell ice cream and decide I won’t accept Chase credit cards because the fees are too high I’ve just lost 1/4 of my customers or something crazy high like that.
Let’s quit trying to find weird workarounds to keep capitalist failures propped up and use regulatory teeth.
Cap transaction fees at something reasonable like 0.5% and the problem disappears overnight.
Yes, you’ll lose your rewards, and that’s a good thing. Rewards cards are a massive wealth transfer mechanism that shouldn’t be legal.
What there aren't are rampant cash-back rewards for using a particular card. Or easy access to credit cards with usurorious rates. I think missing out on those is a societally good outcome.
What does that have to do with CC fees? In the EU, you get all of these with any payment method, and in many EU countries credit cards are the least used payment option because there are better alternatives.