Interesting NYT Video Article: Your Rewards Card Is Actually Bad for You, and for Everyone Else

[britechguy]

Your Rewards Card Is Actually Bad for You, and for Everyone Else​

Makes me glad to know that my general practice of using cash when shopping "with the small guys" is a good idea. Also makes me glad that I don't accept credit, unless someone pays me via PayPal (and I've started adding a fee to cover what PayPal eats if a credit card is being used).

I knew about percentage of sale fee, but when I was running a brick and mortar retail business we were not being charged swipe fees at the level they're set at now for credit cards. They were more in line with what's mentioned for debit cards, around 25 cents.

 

[Metanis]

I see more and more local small businesses tacking on a credit card surcharge fee. Which I have no problem with it.

 

[timeshifter]

The fact that everyone thinks it's free money is sad. It's so simple. The merchant has to pay about 3% on the sale. They're not going to accept 3% less profit. So you're going to pay for that.

Also, it's been demonstrated that people spend about 14% more on a shopping trip if they're paying with plastic vs cash.

The cc companies may break even on the rewards, but they're making a killing on the few who carry a balance.

 

[britechguy]

The fact that everyone thinks it's free money is sad.

And not only in regard to credit cards. I'm constantly amazed at the belief that services that come at no direct cost to the consumer (e.g., the Covid vaccine clinics that went on for 2 years) are actually free. No, they're not. They're funded by tax dollars.

There truly is no free lunch.

 

[Markverhyden]

Far too many believe that no cost to them means no cost to produce what ever it is they are consuming. I've stopped telling people that relatively old line - If you're not paying for it, you are the product. They either don't care or can't grasp the concept.

 

[callthatgirl]

and I've started adding a fee to cover what PayPal eats if a credit card is being used

wait what? you are charging a fee for the Paypal fee?

When I get paid $240 on paypal, the fee is $8.87.
So I'd add that to the $240? The real bill would be $248.87
and then the total fee is $8.95 for the $248.87
the math isn't mathing my guy
Not sure I get how you do it but I'm interested.

 

[Diggs]

I've started adding a fee to cover what PayPal eats if a credit card is being used).

I decided long ago that I wasn't going this route. If I quote $240, then that's what it is. Me netting $231.13 instead of $240 is little difference to me compared to nickel and diming a customer with extra fees. I just won't go that route. Leaves a bad taste......

 

[Blues]

I know most utility bills and such add fees when paying online and it is different for CC and "eCheck" because they billed you with intent to collect and receive exactly that much so if you pay in a means that "takes a cut" or charges a fee they are saying you pay the fee or find another way to pay. I actually had one utility at my previous address that charged for CC online but in person there was no charge so I continued to pay by card but just went to their office and paid monthly.

The math isn't too hard you have to add a fee greater than the original fee in a case like that @callthatgirl so that you continue to net the amount you intend to receive for your services.

 

[Blues]

I decided long ago that I wasn't going this route. If I quote $240, then that's what it is. Me netting $231.13 instead of $240 is little difference to me compared to nickel and diming a customer with extra fees. I just won't go that route. Leaves a bad taste......

I believe though for him he actually operates as a cash business and wants to discourage card payments so it is a matter of how it is all presented upfront as to how bad that practice is. Depending on who you use as a processor they can setup your system to pass the fee to the payee where it adds the fee and displays it in the check out so they must agree to it.

 

[britechguy]

Not sure I get how you do it but I'm interested.

The result can never be "perfect" for the very reason you mention.

But using your example, if you do that you eat 8 cents as opposed to $8.87. Using your example it appears that PayPal is eating about 4% based on the payment method being used, so tack on a 5% fee if that payment method is used. You still come out way ahead of imposing no fee.

I'm assuming, since it's only 4%, that this is a cash transfer by PayPal. I'd have to believe that a credit transaction would have more eaten up than 4%.

 

[britechguy]

I just won't go that route. Leaves a bad taste......

And that's a perfectly legitimate choice. We all need to do what we feel is best.

I do it to actively discourage PayPal payments. I'd far rather have cash or check when possible, preferably check. In all the years I've been in this business I've yet to have a single check bounce, even once and even due to an accidental lack of funds (I've bounced one of my own, once, decades ago, because I forgot to do a transfer I'd intended to do).

Pretty much the only time I take PayPal is if I'm doing remote work for people across the country and who are often blind clients who prefer not to write checks (for obvious reasons). And in those cases I actually don't impose the fee.

 

[callthatgirl]

@britechguy too much math, I eat the costs, write off lol. My accountant would probably choke me if I did that anyway.

 

[MDD1963]

The fact that everyone thinks it's free money is sad. It's so simple. The merchant has to pay about 3% on the sale. They're not going to accept 3% less profit. So you're going to pay for that.

Also, it's been demonstrated that people spend about 14% more on a shopping trip if they're paying with plastic vs cash.

The cc companies may break even on the rewards, but they're making a killing on the few who carry a balance.

A few places, such as restaurants, have wised up to the potentially negative appearances of having a '3-3.5% credit card surcharge' on purchases, and, alternatively, have simply raised all prices by 3-4%, and then offer a '3.5% cash discount' on purchases paid in cash.

Fools the minions, and, sounds better.

 

[Markverhyden]

At the end of the day those fees are usually a small percentage of the total. The only time I actually do something is for material purchases and for that I just use round multipliers. If I get whacked for 5% I'll markup 10% - 1.1 x fee. I'm far more concerned about posting my revenue and than a few $ in fees someone else charges me.