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Comment by UncleEntity | Hacker News Reader

> What would you do with that cash for one month which is so profitable and risk free to compensate for the quite high risk of missing one of those BNPL invoices?

Not arguing for this credit scheme but in my personal case I use my credit card for everything and pay it off in full on the due date. The money sits in my savings account making a minuscule, but not zero, amount of interest while the card gives "cash back on purchases". Making a completely wild guess this nets me around $50 a month in "free" money.

Don't get me wrong, this isn't some plan to "hack the system" just my debit card expired and I never got around to getting a replacement so the credit card is all I have. But, free money is free money...

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Yeah, as long as you pay reliably (ideally automatically) so you never get hit with any fees, it's fine.

But if everyone did that, these companies would go out of business. So they're clearly counting on a significant percentage of users failing to do that, and sticking themselves with the fees in the fine print. And those tend to be the folks who can less afford it and are less equipped to reliably handle such things, making the enterprise feel predatory.

Would they go out of business? They make a % of every transaction too.

What % of a credit card companies income is transaction fees vs account interest?

I would argue that a credit card company could probably operate on transaction fees alone. Sure they might need to downsize, but I think the transaction fee would be enough to pay for the minimum infrastructure to run such a company providing the service they provide.

> ...while the card gives "cash back on purchases".

Sure, but cash back is a kind of marketing trick which makes the card user more willing to spend and use their card. It's this little extra which pushes you over to buy something because, hey, I get my cash back.

There is no free lunch. Someone has to pay the cash back and we like to think it is the merchant, but in the end it is the consumer who pays for all these cash backs and card fees.

> Someone has to pay the cash back and we like to think it is the merchant, but in the end it is the consumer who pays for all these cash backs and card fees.

Well, specifically, it is the other consumers who frequent that merchant and pay in cash/debit. In the US anyway, at any business that does not charge CC fees, people who do not pay with a CC are subsidizing people who do.

Businesses generally are happy to pay the CC fees, because in the local minimum in which we exist, that is the price to pay to access a large segment of the population's purchasing power. Businesses are not required to accept CCs, and some do not, but those that do do so because the income brought in by the people with CCs who would not show up to a cash-only location outweighs the price of the CC fee.

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