Anyone ever gamed the credit card bonuses?

[Mr.Macinstache]

This completely ignores that processing cash isn't free either. In Germany this is no longer a government paid process. Now at market price stores have to pay up to 50 cents to process 50 one cent coins. Suddenly credit cards do not seem that expensive anymore and more stores accept them.

They charge to use cash? Crazy. The dollar is an instrument of debt as it is. It's loaned to us at interest from the Fed. So I guess in a way that's already done here. And a 2% annual devaluation rate too. We pay for "cash" in more than one way already.

[seattlecyclone]

Banks in the US charge businesses nominal fees for getting cash and coins in and out of the bank. It's still cheaper than credit cards. If I owned a business and the bank charged me two cents for every penny, I would start rounding all prices down to the nearest nickel.

[Christof]

They charge to use cash? Crazy.

I was talking about businesses. The situation is different in the US than in Europe, because we use a lot more coins than you do. Our smallest bill is 5 Euros (between $6 and $7 at the current exchange rate), anything lower is coins. Businesses that only need small amounts pay comparatively high fees since banks often charge a minimum transaction fee. In addition to these fees, businesses have to pay to get cash from and to the bank, pay more insurance premiums as the risk of theft is higher, and so on.

[Jamesqf]

This completely ignores that processing cash isn't free either. In Germany this is no longer a government paid process. Now at market price stores have to pay up to 50 cents to process 50 one cent coins.

One would think, however, that there would be little need for a store to process coins through a bank, as on average what's taken in as change on one purchase is returned to a different customer on another purchase. 

This is echoed in small by the fact that I seldom have more than a dollar or two in coins in my pocket despite doing the bulk of my grocery shopping at WinCo* - sometimes I give exact change, sometimes I get coins back.  My cash flow is occasionally getting a bunch of $20 bills from the ATM, which then dribble away in various-sized increments, never really accumulating more than a few bills or coins of any smaller denomination.


*The great thing(s) about WinCo isn't the prices, it's the number of things they have in bulk (did you even know there are a dozen types of flour, or 20 types of rice?), and that I don't have to listen to damned Muzak while I shop.

[Paul der Krake]

It's pretty frequent to see cashiers open up new stacks of coins, and even more so in most of Europe where plastic hasn't fully penetrated the market yet.

Interestingly enough, the nineties had a wave of sometimes lethal attacks on the crews transporting the funds from stores to the bank, but that trend has largely stopped now. Most store managers don't even have the keys to access the funds anymore, which renders hold-ups useless unless one is willing to risk spending 30 years in jail for a few thousands.

[smedleyb]

I have to admit, I'm curious to know how many of my fellow mustachians who think they're gaming their credit cards and the returns are aware of the changes to credit card fees with merchants in this nation and the possibility of getting billed an extra 1.5-4% during "checkout" transaction processing.

In the context of I.P. Daley's observations, I found this article interesting:

A discount grocery chain is being called "Wal-Mart's worst nightmare."
WinCo, a Western grocery chain with about 100 stores, has a business model that allows for cheaper prices than Wal-Mart, writes Brad Tuttle at Time.

WinCo keeps costs low by buying directly from suppliers and eliminating middlemen, according to Tuttle. It also doesn't accept credit cards and has customers bag their own groceries.

Read more: http://www.businessinsider.com/win-chain-is-wal-marts-worst-nightmare-2013-8#ixzz2c5fpyzJY

In a world of compressed profit margins, how long until the revolt against these financial parasites hits full stride?

Building practically world-wide payment processing networks is hardly parasitic. When I (in the U.S.) buy something from abroad via the internet (which I do a couple of dozen times a year), I can use a credit card to make that payment, instantly, and the seller can send my good on their way. Pretty convenient (I also don't pay a foreign transaction fee with the cards I use for those purchases, and I get a reasonable currency conversion rate). When I travel, I can do the same thing, minimizing the need to convert into or withdraw local currency. If I want to purchase a download, payment by credit card allows me to do that from virtually any seller without the need to have some sort of payment account with that seller. I get a comprehensive record of my purchases.

And nothing you've said undermines my point.  Don't think for one moment the ease or convenience of the transaction does not come at a cost (merchant charging higher prices to compensate for CC fee).   And what % of U.S./Canadian CC use involves "international" purchases anyways?  Moreover, the majority of CC's do indeed charge a foreign transaction fee (it takes a little effort to find those that don't, especially ones that do not charge a yearly fee).

And the idea that cash "costs" money is obviously relative.  I deposit multiple 7 figure amounts of cash in my business bank accounts every year, get all the coin I need, and pay no fees whatsoever. 

[Christof]

One would think, however, that there would be little need for a store to process coins through a bank, as on average what's taken in as change on one purchase is returned to a different customer on another purchase.

Yes, one would think, those coins would average out... In reality, though, most people pay with bills in shops where the purchase price is higher, and use coins in shops that have low prices such as newspaper shops and train tickets. As I said, this might be more the case in Europe than in the US.

For reasons that I don't understand many people seem to derive enormous pleasure by collecting change money in a jar and returning the full jar every couple of months to a bank...

[Undecided]

I have to admit, I'm curious to know how many of my fellow mustachians who think they're gaming their credit cards and the returns are aware of the changes to credit card fees with merchants in this nation and the possibility of getting billed an extra 1.5-4% during "checkout" transaction processing.

In the context of I.P. Daley's observations, I found this article interesting:

A discount grocery chain is being called "Wal-Mart's worst nightmare."
WinCo, a Western grocery chain with about 100 stores, has a business model that allows for cheaper prices than Wal-Mart, writes Brad Tuttle at Time.

WinCo keeps costs low by buying directly from suppliers and eliminating middlemen, according to Tuttle. It also doesn't accept credit cards and has customers bag their own groceries.

Read more: http://www.businessinsider.com/win-chain-is-wal-marts-worst-nightmare-2013-8#ixzz2c5fpyzJY

In a world of compressed profit margins, how long until the revolt against these financial parasites hits full stride?

Building practically world-wide payment processing networks is hardly parasitic. When I (in the U.S.) buy something from abroad via the internet (which I do a couple of dozen times a year), I can use a credit card to make that payment, instantly, and the seller can send my good on their way. Pretty convenient (I also don't pay a foreign transaction fee with the cards I use for those purchases, and I get a reasonable currency conversion rate). When I travel, I can do the same thing, minimizing the need to convert into or withdraw local currency. If I want to purchase a download, payment by credit card allows me to do that from virtually any seller without the need to have some sort of payment account with that seller. I get a comprehensive record of my purchases.

And nothing you've said undermines my point.  Don't think for one moment the ease or convenience of the transaction does not come at a cost (merchant charging higher prices to compensate for CC fee).   And what % of U.S./Canadian CC use involves "international" purchases anyways?  Moreover, the majority of CC's do indeed charge a foreign transaction fee (it takes a little effort to find those that don't, especially ones that do not charge a yearly fee).

And the idea that cash "costs" money is obviously relative.  I deposit multiple 7 figure amounts of cash in my business bank accounts every year, get all the coin I need, and pay no fees whatsoever.

By your use, any company that offers a service for a fee is parasitic, which seems overly broad, to me. What's parasitic about it, in a sense that differs from most other services? People are free to pay other than by card, but often choose to use one, so the market seems to have spoken on the subject of whether the cost can be worth it.

Of course, even discarding international purchases, just buying from an online seller that is geographically remote is greatly facilitated by having an instant and open payment processing network.

[Riceman]

It's not that hard to find cards without international transaction fees.  I've had 5 myself (since cancelled one): penfed Amex, Marriot rewards Visa, SDFCU Visa, NFCU Visa, Capital One Quicksilver.

[seattlecyclone]

I have to admit, I'm curious to know how many of my fellow mustachians who think they're gaming their credit cards and the returns are aware of the changes to credit card fees with merchants in this nation and the possibility of getting billed an extra 1.5-4% during "checkout" transaction processing.

In the context of I.P. Daley's observations, I found this article interesting:

A discount grocery chain is being called "Wal-Mart's worst nightmare."
WinCo, a Western grocery chain with about 100 stores, has a business model that allows for cheaper prices than Wal-Mart, writes Brad Tuttle at Time.

WinCo keeps costs low by buying directly from suppliers and eliminating middlemen, according to Tuttle. It also doesn't accept credit cards and has customers bag their own groceries.

Read more: http://www.businessinsider.com/win-chain-is-wal-marts-worst-nightmare-2013-8#ixzz2c5fpyzJY

In a world of compressed profit margins, how long until the revolt against these financial parasites hits full stride?

Building practically world-wide payment processing networks is hardly parasitic. When I (in the U.S.) buy something from abroad via the internet (which I do a couple of dozen times a year), I can use a credit card to make that payment, instantly, and the seller can send my good on their way. Pretty convenient (I also don't pay a foreign transaction fee with the cards I use for those purchases, and I get a reasonable currency conversion rate). When I travel, I can do the same thing, minimizing the need to convert into or withdraw local currency. If I want to purchase a download, payment by credit card allows me to do that from virtually any seller without the need to have some sort of payment account with that seller. I get a comprehensive record of my purchases.

And nothing you've said undermines my point.  Don't think for one moment the ease or convenience of the transaction does not come at a cost (merchant charging higher prices to compensate for CC fee).   And what % of U.S./Canadian CC use involves "international" purchases anyways?  Moreover, the majority of CC's do indeed charge a foreign transaction fee (it takes a little effort to find those that don't, especially ones that do not charge a yearly fee).

And the idea that cash "costs" money is obviously relative.  I deposit multiple 7 figure amounts of cash in my business bank accounts every year, get all the coin I need, and pay no fees whatsoever.

By your use, any company that offers a service for a fee is parasitic, which seems overly broad, to me. What's parasitic about it, in a sense that differs from most other services? People are free to pay other than by card, but often choose to use one, so the market seems to have spoken on the subject of whether the cost can be worth it.

Of course, even discarding international purchases, just buying from an online seller that is geographically remote is greatly facilitated by having an instant and open payment processing network.

Credit card fees differ from most services in the sense that the consumer is not directly charged for it. People respond to incentives. When the price on your receipt is the same regardless of payment method, but paying with your credit card gets you some cash back, which one do you think most people are going to choose? The fact that people choose the credit card most of the time in this situation is hardly a sign that the market has spoken on whether the cost is worthwhile.

The fact that most merchants accept credit cards is a sign that the market feels these fees are bearable, in a sense. Even there, the choice to accept credit cards is a nasty balancing act between how much you would pay to process credit card transactions and how much you would lose from turning away all your potential customers who don't make a habit of carrying cash.

Now that the courts have said the credit card companies can't forbid merchants from offering differential cash pricing, we as consumers might actually see a real choice. You'll still be able to have the convenience of paying with a card, or you can pay with cash to save yourself and the business some money.

[Undecided]

Credit card fees differ from most services in the sense that the consumer is not directly charged for it. People respond to incentives. When the price on your receipt is the same regardless of payment method, but paying with your credit card gets you some cash back, which one do you think most people are going to choose? The fact that people choose the credit card most of the time in this situation is hardly a sign that the market has spoken on whether the cost is worthwhile.

The fact that most merchants accept credit cards is a sign that the market feels these fees are bearable, in a sense. Even there, the choice to accept credit cards is a nasty balancing act between how much you would pay to process credit card transactions and how much you would lose from turning away all your potential customers who don't make a habit of carrying cash.

Now that the courts have said the credit card companies can't forbid merchants from offering differential cash pricing, we as consumers might actually see a real choice. You'll still be able to have the convenience of paying with a card, or you can pay with cash to save yourself and the business some money.

You're mixing an argument about how consumers respond to incentives offered by issuing banks (e.g., Chase) with my defense of the payment processing system (e.g., Visa) and adding a critique of payment processing and merchant bank behavior regarding pricing differentials. Visa and MasterCard are no longer controlled by the issuing banks (historically, they were, but no longer).

I do agree that the possibility of differential pricing altering behavior would provide an interesting choice, but California, at least, had already required that merchants could offer a "cash discount," and as far as I'm aware there were no major usage differences there vs. elsewhere as a result of that.

[beltim]

Credit card fees differ from most services in the sense that the consumer is not directly charged for it. People respond to incentives. When the price on your receipt is the same regardless of payment method, but paying with your credit card gets you some cash back, which one do you think most people are going to choose? The fact that people choose the credit card most of the time in this situation is hardly a sign that the market has spoken on whether the cost is worthwhile.

The fact that most merchants accept credit cards is a sign that the market feels these fees are bearable, in a sense. Even there, the choice to accept credit cards is a nasty balancing act between how much you would pay to process credit card transactions and how much you would lose from turning away all your potential customers who don't make a habit of carrying cash.

Now that the courts have said the credit card companies can't forbid merchants from offering differential cash pricing, we as consumers might actually see a real choice. You'll still be able to have the convenience of paying with a card, or you can pay with cash to save yourself and the business some money.

You're mixing an argument about how consumers respond to incentives offered by issuing banks (e.g., Chase) with my defense of the payment processing system (e.g., Visa) and adding a critique of payment processing and merchant bank behavior regarding pricing differentials. Visa and MasterCard are no longer controlled by the issuing banks (historically, they were, but no longer).

I do agree that the possibility of differential pricing altering behavior would provide an interesting choice, but California, at least, had already required that merchants could offer a "cash discount," and as far as I'm aware there were no major usage differences there vs. elsewhere as a result of that.

Indeed, I'm pretty sure allowing discounts for paying in cash has always been allowed in every state, at least with Mastercard and Visa.  I've seen decades of mail-order catalogs with prices quoted as "including cash discount."  And in person, they're commonplace among gas stations.

Credit card companies (again, at least Mastercard and Visa) have never forbid differential cash pricing.