For US readers - in my country in europe I'd say that 95% of people have only debit card, not credit card. it's very not common to have a credit card here. Card payments are extremely common, but everyone uses debit card.
That’s why you don’t see the same kinds of credit card deals in the EU compared to the US.
The EU limits for card fees prevent this in Europe, which is very good.
Do you mean a higher corporate tax paid by companies like VISA and Mastercard?
Either way, the solution is already on the horizon: Digital Euro.
Pix, UPI, and a few more
It tries to argue that higher reward rates are necessary to attrach customers that pay a lot (for credit card companies) and that lower income people are generally subsidized by taxes (obvious but unrelated), but at no point (until where I read) it seems to address the issue of merchants having to generally increase prices due to these cards.
Pretty flimsy argument to begin with. Because the rich then argue to lower their taxes and/or simply not pay them and the whole system falls apart. Not to mention that lower income people paying more to keep afloat debt than taxes (which at worst is a much better interest deal for an installment plan) is a much worse model for society.
What that article explains, is that the system of credit card fees and rewards that is used in USA is extraordinarily complicated, variable and obfuscated in comparison with other countries, so it is extremely difficult to discover who gains most and who loses most.
So the conclusion is more like "there is insufficient evidence because we cannot access all the required financial information" for the claims of the other article and the refutation itself presents no evidence that the claims of wealth redistribution are incorrect.
Similarly, the "whales" in a casino get lots of "free" benefits, but only because they're losing a lot of money gambling. They paid for them.
Contrast with frequent-flier miles where businesses pay for plane tickets but the points go to individuals. That's pretty clearly siphoning off business expenses.
one cash, one credit?
the credit payer is clearly paying less, with the difference paid by increased prices overall. That is the cash purchaser paying the credit one
Similarly, we do not say that October shoppers transfer wealth to Black Friday shoppers, even though the only tangible difference from your scenario is an irrelevant temporal one.
You are spending money, but you are spending far less money than the poor spend when paying for exactly the same products or services.
If I want to buy a few server CPUs or a few server computers or a few "datacenter" GPUs, I have to pay at least 2 or 3 times more than billionaires pay for them.
The same if I want to buy any other kinds of components that can be used to build things, e.g. power MOSFET transistors.
There is no "economy of scale" here, because those products are already fabricated in the high volumes that reduce their production costs.
For shipping, the costs are typically the same, regardless if the recipient is a big company or a small company or an individual, so they do not justify the price differences.
Even when the handling and shipping costs were bigger for small quantities, a small business or an individual could just pay the difference in handling and shipping prices, but that does not happen in reality, when the discounts given to the rich are many times higher than the shipping costs.
This policy of huge discounts is one of the main causes why all the markets end up in being dominated by monopolies or quasi-monopolies, because it is impossible for new entrants to compete with the incumbents, who pay much less than them for everything. Thus the biggest companies end up selling mostly between themselves, excluding any others.
Huge numbers reduce manufacturing costs, but only because they justify investments that are uneconomical at lower volumes. The business would still go bankrupt if they don't read breakeven.
Economies of scale are a real thing and not just because of monopolies wanting to deny new incumbents.
Are you saying it is intentional? Is it not more simply explained as simple greed by two companies colluding to keep competitors out of their market?
Personally I "like" or prefer V-pay because it made payment in the EU more easily for me without the need of a credit card even 8 years ago. Since the pandemic, I only pay for a (real) credit card (with daily billing) because some goods or services can only be paid with a "real" card, like more expensive cars at a car renting company or sometimes hotel rooms and the like.
In general I try to pay with cash so nobody needs to pay extra fees. But more and more smaller businesses prefer electronic payments. Then I use the banking card with V-pay and to state it again, the real visa card is only used when no other options are available.
Processing cash is by far >not free<! In fact, it costs a lot of money due to all the things involved (counting/collection/recycling etc). Anf it inwolves additional risks for the handling party.
Or is it more binary that you have to decide, you either handle any cash and have the cost associated with it, or you refuse to take cash at all? If the latter is the case, then avoiding cash altogether seems somewhat unrealistic where I am from. And if it doesn't scale then it makes a lot of sense cost-wise to try to do as many of your transactions with cash as possible.
Think about all the supermarket chains, handling millions of cash daily; in my region, those are relying heavily on outsourced cash recycling companies - why? Its more effort/cost if they would do this themself.
Yes, it sounds weird but it does
- Providing change is a pain and it's a "fixed time" cost
- Moving money around (also some banks charge for money deposits for commercial accounts)
- Dealing with "shrinkage" in various ways (even if you have insurance)
Yes handling cash is not free. But compared to some charges or fees it's often quiet cheap.
Sure you need to think a head like how much small change money you will need or how much cash for change in general. You also need kind of routine and flow for counting and handling but even if I had to count up to 10k EUR in small bills t does not needed more then half an hour incl putting it into the safe or on the way home putting it into the banking machine... At least in Germany it's not that big of a deal breaker.
I know of a large restaurant chain with some "bigger" branches: They often have to count two or three times with different people to be sure, that the amount is correct. Every evening.
Then you have transport companies which pick up the cach (or refill ATM) - you pay there for every time they stop, and you pay a tiny fraction per bill processed etc. (though, most restaurants do not use these services)
Then you finally have the very high risk of getting robbed.
I know: It is just hell! There is a gas station near my location, which closes the door from 23.45 to 24.00 for just doing this and handing over to the group.
After school I've worked at a gas station as well and we did not need to close because the shift swap was the same as over the day.
You exert your cashier(?) and the next one inserts the new. And you count in the office and take the time you need.
Half an hour incl. Some other minor takes was part of the shift. Simple as that.
In 2009 Sweden had 58 armored car robberies, in 2018 there were 1. This used to be a big concern in Sweden, now it's basically a nonissue.
There were 1154 store robberies in 2009, in 2018 there were 515. Muggings are also down considerably. 2022 was the first year with zero bank robberies. This is mostly thanks to the much lower use of cash.
https://www.riksbank.se/sv/betalningar--kontanter/sa-betalar...
https://bra.se/download/18.54e1fb8a19c479963d63601e/17731372...
2.5% for credit and 25c fixed for debit is the usual ballpark.
That being said, I do get that for US individuals it is completely rational to use cc's. I would do that too. If you are paying 3% Visa/MC tax anyway, then you might as well use their perks.
In the US, a charge on your bank card results in at least a hold on your bank account - money you can't spend on anything else until the hold is lifted. Worst-case, there can be significant fees associated with this (overdraft, declined payments, etc.).
For most of us, that's a much bigger problem than a debt we may or may not end up paying interest on.
From personal experience, getting a credit card company to quickly resolve fraud cases is also much easier than getting a bank to do the same, even when it's ultimately the same institution.
Now, if you DO manage to that threshold... you still want to delay finances. Because installments now become ways to give your money more time to make money and offset whatever you are paying for. The models and incentives are completely at odds.
That said as a French person with a ssn living in Asia, I don't have a french credit card because it's so expensive and foreign conversion fees are very high, whereas I use a us card because the currency conversion rate is very close to the market rate and it costs a lot less to maintain the account.
For safety reasons I never use a debit card for anything but an ATM.
In the countries I've been to in the EU (Belgium, France, Spain, Luxembourg), when they give you cards they give you typically both a debit and a credit card. It's extremely common to have both. I've got debit cards, a pre-paid debit card (which I top up when I plan to spend) and credit cards.
And getting up to 2% cashback in the EU (even if the fees vendors can add in the EU are maximum 0.3) is not that hard.
It's very common to pay for mostly everything with a debit card and then use a credit card to, say, book a plane or vacations or to open a tab when you check-in at some hotel.
Heck, I don't even know if you can book a plane with a debit card!? (and anyway then you probably don't get the cancellation insurance etc. that you typically automatically get with a credit card).
I’s bet the proportion is way higher than 5% even if the overwhelming majority use their credit cards the same was as debit.
Other than that, I've rented cars, rented other things with a "X will be charged to your card if you return it late", unattended gas stations... all the usual places you'd think need a credit card. It's fine.
We do have a "negative limit" that banks often give you, which means you can go into the red and pay it back later, but that has nothing to do with the card, it works even for normal bank transactions.
I too have a real credit card to be able to rent for instance "bigger" cars like even an Audi A6.
Most often hotels also block 500 Eur, or they state upfront that you need a proper/real credit card and not just a debit card.
That's for me the only reason I have VISA and use it like 3 or 4 times a year...
Usually, there is a deposit pre-authorized on the card. The additional insurance plans would lower the deposit (to a few hundred for fuel basically). I usually take the insurance plans anyway because I've had bad experiences that made me happy I had it.
Now, I was in a place where rental companies required credit cards except for the lower end models. It took me a few attempts for one to realize that I would take the additional insurance anyway.