Am I just being a fool?

[johnridley]

Got a new Discover card today, and they of course took the opportunity to tell me what a great opportunity that I'm missing by not using my Discover card to get cash back.

I got into a bit of an argument with the guy, during which time he tried to tell me that he'd never heard of the merchant paying a fee when customers use credit cards. Eventually he relented on that.

But he seemed to be utterly without clue as to why anyone would care that the merchant is getting hit with those fees. "They're paying those fees anyway, and they're going to raise prices as a result." "Yes, but the more people who use their credit card, particularly ones with a higher fee structure such as Discover, the more and quicker they'll have to raise prices."

He actually insisted that the fees that merchants pay are FIXED and are not based on sales. I don't know if he figured that a main street shop with 2 employees paid the same as a mall store doing $100k/day, at that point he was clearly not worth arguing with. I did tell him that I've run retail shops before and I knew what fees were paid. There ARE generally fixed fees but they're minimal when compared to the percentages.

I stopped short of suggesting that he google "Tragedy of the Commons." I did tell him that I'd been sucked into that game fairly recently but that I'd decided that it just wasn't actually that moral to do so, and I wasn't going to play the game anymore.

After the call, I got to thinking that actually, due to marketing and data sharing agreements, merchants actually may not make out that badly, at least, large merchants. I still pay in cash/check when I go to the feed store in town and buy dog food. And I'd really rather just opt out of the whole thing.

Maybe even frequent flier plans are the same, I don't know, I've never investigated them since I don't fly enough to take advantage of any of them.

Comments?

Comments

[drsulak.livejournal.com]

You are correct. If you have a card that pays cash back, airline miles, or *anything*, that *anything* comes out of the merchant via additional fees.

As far fixed fees - I have a 130+ page fee schedule that says otherwise. Oh, and a monthly billing to back up that schedule with real numbers.

Now, there are turnkey processor that might charge you a fixed rate, but that would be like a seller charging a fixed 11% sales tax for a purchase anywhere in the country.

[johnridley.livejournal.com]

I think the fixed fees that I'm remembering are membership fees. We joined the small business alliance or some such, for $250/year, and they got us a very low rate, like < 2%, and a free terminal.

[c0nsumer.livejournal.com]

A few days after I'd made this post I happened to have a Fifth Third person try to promote this service to me. Amongst other things he managed to insist that that my using APR to compare it to other loans was a bad metric because the loan isn't taken out for a year.

[drsulak.livejournal.com]

Truly evil. At my CU, I can take an unsecured loan personal for 9.24% I'm not sure how much in total, but I'm sure at least for the amount of one paycheck.

[kevinnickerson.livejournal.com]

Hm, you're saying the merchant pays different Visa fees based on which Visa card any given person uses? I suppose that's possible, but I find it hard to believe. The bookkeeping would be horrendous.

[johnridley.livejournal.com]

It's usually the fees that get you. They're limited by law on APR but they can charge you a $100 "origination fee" on a $1000, 5 day loan.

[johnridley.livejournal.com]

No, not to my knowledge, but it could be different between Visa and Discover. I know it's different between debit and credit. Neither are free but credit has higher fees.

[kevinnickerson.livejournal.com]

I meant what Dale was saying. The point being that you shouldn't get a Discover, but a Visa or MC, that gives you something back isn't hurting the merchant.

[johnridley.livejournal.com]

Well, any card hurts the merchant to some extent, versus cash. For checks, the merchant has to weigh the possibility of bounced checks, so it probably works out about the same. Discover is probably the worst way to pay, for the merchant. I don't know about AmEx and such.