Reply to post: Re: Time for the Fed to fix ALL CC Processing

Big Retail: We don't hate Apple, we hate the credit card companies

Joel 1

Re: Time for the Fed to fix ALL CC Processing

"If you have a debit card there should be no "processing fee" because that debit card is the same as cash. You are effectively writing an electronic check each time you use the card."

Sorry, what? Cash processing isn't free - businesses have to pay to deposit cash. This is why they started doing all the cash back offerings at the till - it allows them to deposit some cash for free, as the debit card charge is a fixed amount, so no marginal cost for doing a bigger transaction.

Even electronic transactions often aren't free for businesses. Banks charge for all transactions, just less for an electronic one.

The fact that consumers have "free banking" is a relatively recent phenomenon.

Where credit card companies are prepared to sacrifice margin, they often do this via bribes (sorry, cashback) to the customer. Thus Amex do very good customer bribes, but charge high fees to retailers. So, customers want to use Amex, but retailers don't want to accept it. Small retail outlets often don't accept Amex at all.

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