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Comment by davnicwil | Hacker News Reader

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.

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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.

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

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.

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.

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