How credit cards make money

Post by lotsofpulp » Sat, Nov 06, 2021, 2:36 AM UTC

ollien wrote: post #260

lotsofpulp wrote: post #116

Earlier quoted context omitted.

You can send money via Zelle instantly, but I would stick to check or ACH purposes for legal dispute reasons in the case of conducting business, especially paying rent.

Zelle is actually not supposed to be used for anything other than personal payments, despite that rule not being followed by many, many people. My bank told me that Zelle will ban people for it Also, the "instant" limit on Zelle is too low for any reasonable rent in an urban area. It's $1000/day for my bank

Post by rsj_hn » Sat, Nov 06, 2021, 2:39 AM UTC

Jensson wrote: post #258

perl4ever wrote: post #237

Earlier quoted context omitted.

There are a number of credit card issuers in the US offering 1.5% cash back. Suppose you charge $1000 each month at the rate of about $33 per day, and also pay it off when the bill is due. In a year, you've gotten 1.5% of $12,000 back which is $180, but you could also look at it as though they are paying you 36% per year to use (on average) $500 of their money. The latter interpretation makes it seem irresistible to…

And you pay 3% on every transaction to get 1.5% back. Seems like a pretty bad deal. Or do you really think businesses just gives you 3% for free on every purchase rather than raising prices on everything to make up for that 3% loss? A raw 3% of revenue is huge, there is no way businesses can take that without raising prices as consumer sales is pretty efficient and has small margins already. So they raise prices for…

Post by clairity » Sat, Nov 06, 2021, 2:43 AM UTC

voidfunc wrote: post #254

clairity wrote: post #148

Earlier quoted context omitted.

yes, never use your debit card and use only credit cards online, but cash is better for non-major in-person purchases as it's inherently private and anonymous. it's also better for the payee (hopefully a local retailer not a mega-corp), since they don't have to pay the fees. for major in-person purchases, the extra (fraud, warranty, etc.) protections provided by the credit card may be worth the privacy/anonymity trad…

Cash is wonderful too for tax evasion. Hence cash only businesses.

Post by smnrchrds » Sat, Nov 06, 2021, 2:44 AM UTC

throwawaycities wrote: post #256

airstrike wrote: post #244

Earlier quoted context omitted.

I suppose you can multiply that effect by some unknown but really large number and you'll arrive at the total impact caused by favoring Common Law over Civil Law

What does that even mean? Credit card companies exist (and make money) in both common law and civil law countries. Or you could even look within the US and examine the singular state that is a civil law jurisdiction and there is no real impact vs the other 49 states. In fact I’d wager a guess very few people even know 1 of the states is a civil law jurisdiction because it has very little impact in practice.

Post by rsj_hn » Sat, Nov 06, 2021, 2:47 AM UTC

Jensson wrote: post #264

rsj_hn wrote: post #263

Earlier quoted context omitted.

> A raw 3% of revenue is huge The business doesn't lose 3 percent of revenue, because it also saves money not dealing with cash: - eliminates cash theft - always a chronic problem for business. - reduces costs of transporting/dealing with cash - improves bookkeeping and paper work and it gains revenue by dealing with people who don't use cash. A large number of customers don't make routine purchases with cash, and th…

> The business doesn't lose 3 percent of revenue, because it also saves money not dealing with cash: Debit cards circumvents the need for cash as well and are much cheaper. Everyone uses debit cards where I live, cash is very rare so companies doesn't need to deal with it much. So the difference is really just a straight 3% vs 0.15% with no other consequences.