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Comment by anoncoward111 | Hacker News Reader

Ironically my credit card info literally got stolen at a restaurant last night and most of the purchases they tried to make were declined hahahahah

Honestly, I really enjoy using my credit card. I can buy anything, anytime, online, the customer service department always resolves fraud quickly, and they even pay me to use the damn thing

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I know, it seems great. But who is paying for that fraud protection? Who is paying for that customer service team? Who is paying for the fact you get paid to use it?

In the end.. It's you, through slightly higher prices on everything you buy every day because retailers have to price in the cost of credit card fees that pay for all that.

I've seen an estimate that credit cards are actually slightly cheaper overall for the economy than cash, when you factor in everything. The physical infrastructure to deal with cash is not cheap.

Even without the physical infrastructure it might be cheaper to use credit cards. How much cash is lost in loose change after small transactions every year? I'd bet more than 2%

Of cash used in every day transactions? Maybe.

Of cash used in bigger transactions that are replaced by credit cards? No way

This is actually a benefit because it subtly counteracts inflation.

Those two aren't the only options, though. Many other electronic payment methods exist that are better than credit cards in almost every way.

Which payment methods are readily available to consumers and business owners that is 'better than credit cards in almost every way'?

That depends on where you are. In Europe, electronic payments directly from bank accounts or using various types of card that debit directly are much more reliable and have much lower fees, for example.

Can you imagine the queue forming in the morning at the coffee place, where someone is trying to pay them with a bank transfer... ? Just typing in the IBAN Takes ages.. Card/Phone Contactless payments are super fast and efficient.

But you don't make a bank transfer in that environment. I can make a contactless payment with my bank's debit card, and it comes straight from my bank account. Many people here in the UK do this routinely for minor purchases, and the technology has been available for several years now. As you say, it's fast and efficient.

In the end it's the (usually) poor people who bought more than they could afford (either because they needed food or because they couldn't control their impulse buys) and are stuck paying interest on things they bought years ago

Credit card interest payments go to the bank. Visa/MasterCard don’t get any of that.

I thought the bank was the one that provided the fraud protection, customer service, etc.

Fraud protection is not really “provided” by anyone, it is simply a reversal of the charge, leaving the affected merchant holding the bag.

It's not just the merchants, but also the number of people who are not paying the full amount owed each month and accruing interest.

Most of the time there's no explicit CC charge so you'd still be paying for it whether you paid cash or not.

That means you're paying it when you pay cash too....

Subsidizing card users.

In fact I'm pretty sure Visa and Mastercard forbid charging a different price if customers pay in cash.

They don't forbid charging a different price, or even advertising a different price; they only forbid advertising a surcharge for using a card. An advertised cash discount is acceptable. States may have further requirements, for example, California requires gas stations report credit prices in at least the same size numbers as cash prices, but enforcement is light.

In the US, that is no longer true. They can at least have a minimum, not sure if they can charge differently, but for small purchases it is effectively the same

That's how insurance works. Spread the damage to across many so no one gets hurt real bad.

> retailers have to price in the cost of credit card fees

Do retailers actually do this? I briefly worked in retail a while back and the payment processing fees(online and offline) were all considered to be part of the cost of doing business and essentially taken up by the merchant.

Today I provide ecommerce solutions and all my merchants haven't priced in the cost of payment processing either. They aren't necessarily happy about it but they consider it to be part of the cost of engaging in commerce in the modern world otherwise they'll be annihilated by their competitors if they don't provide easy ways to accept payments from their patrons.

> and they even pay me to use the damn thing

I understand you are referring to Cashback "Rewards" but at the end of the day, a credit card is still a Loan.

You are borrowing money from the company to pay for goods and services and for all legal purposes you are a debtor.

How does this matter (apart from semantics) if one pays the balance therefore doesn't accrue any interest. They are still 'getting paid', right?

It's more than semantics. I once cancelled my Chase credit card and paid (or thought I paid off ) the balance in full. Turns out, it accrued some interest ( $8.56 to be precise) from the time of cancellation to the end of the billing cycle. Chase claimed that they sent me a statement (this was circa 2005) but I never got it. A month later I moved, and it kept going to the old address. A year later, a collection agent found me in San Francisco, just to collect that $8.56 amount and the whole thing ended up ruining my credit score for a few years. I asked them why they didn't call me, it's not like it was a huge debt that I ran away from. They gave me the cookie cutter answer "We sent you multiple statements."

TL;DR: The "pay off balance within the month grace period" works only if you are on top of it all the time. Miss something even once, or you move or are overseas or something, then their penalties, fees and everything else kicks in.

Again, it's a Loan, so all the operations and consequences of taking on a debt applies to credit cards, and to you as the borrower.

>The "pay off balance within the month grace period" works only if you are on top of it all the time.

If you think about how many people using the "maxed out CC" as a loan because they cant get anything else, the financial model looks rather sound. The interest rate on those things is drastic if you are no longer in the grace period, and its an easy trap to fall into, especially if you are falling on bad times or are simply gullible.

I dont think people who have their CC balanced at the end of the month are the business model. They are in the business of providing high interest loans.

Correct.

If you pay off your card every month, the credit card companies consider you to be a bad investment, and they even have names to describe customers like you -- "deadbeat", among others.

I doubt that. Card companies surely make good money on interest, but there is risk baked into that.

A customer paying off their full balance means little risk yet they still make the 1-3% processing fee.

That works fine until people sleepwalk into cashless society and then someone from the government will think you are undesirable and delete your assets.

Do you suggest we keep savings in cash and physical bonds, stock certificates and gold ingots under the mattress?

I pay cash often but even so I very rarely have more than $1000 in cash at any given time.

Which is smart because at least in the US there's a large portion of the country where police can use civil forfeiture to take your money, even if you are not guilty of any crime.

Not necessarily under the mattress but it is smart to diversify your liquid assets location

I do all my day to day in-person payments in cash, yet all my assets would be just as vulnerable to that kind of attack as those of a completely cashless person.

Look, I really despise the government too, but...

... FDR confiscated the gold lol. If they want something of yours, they will take it.

https://en.wikipedia.org/wiki/Executive_Order_6102

When cash was used for most retail transactions, you were still going to have a couple thousand on hand at most. That won’t last long. It’s the payroll side, not the POS side, where that matters.

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