Credit card fees get baked into the general price and are averaged between all the accepted cards. Hence cash transactions and lower-fee cards (debit, credit with less benefits) end up paying more of the share of the higher-fee cards.
When you get a credit card machine you sign an agreement saying something like transactions under X amount we, the credit card network company, will charge you 50c or any transactions over X amount we will charge your 1.5%.
Now as a business owner you raise prices 1.5% to cover this fee. If someone pays in cash, the extra 1.5% goes to you, if the customer pays with a card, the 1.5% goes to the card network .
The same price must be charged for products purchased with credit card or cash. Otherwise the card provider will withdraw their service from the retailer. So the credit card margin is added to every price.
Dubious, as I regularly see gas stations with separate cash vs card prices. I’ve seen small businesses offer discounts for cash, too. And it’s not like visa is going to stop processing cards because walmart started offering cash prices. It’s just scare tactics. And for big companies, people who pay in cash offer bigger profit margins, so it’s not like they are incentivized to help the situation.
How does the tax get added if you don’t use a credit card?
Credit card fees get baked into the general price and are averaged between all the accepted cards. Hence cash transactions and lower-fee cards (debit, credit with less benefits) end up paying more of the share of the higher-fee cards.
It’s well explained in the following video: https://youtu.be/OceYCEexDqQ
Because enough people use credit cards that businesses have felt compelled to raise prices across the board to compensate.
When you get a credit card machine you sign an agreement saying something like transactions under X amount we, the credit card network company, will charge you 50c or any transactions over X amount we will charge your 1.5%.
Now as a business owner you raise prices 1.5% to cover this fee. If someone pays in cash, the extra 1.5% goes to you, if the customer pays with a card, the 1.5% goes to the card network .
The same price must be charged for products purchased with credit card or cash. Otherwise the card provider will withdraw their service from the retailer. So the credit card margin is added to every price.
Dubious, as I regularly see gas stations with separate cash vs card prices. I’ve seen small businesses offer discounts for cash, too. And it’s not like visa is going to stop processing cards because walmart started offering cash prices. It’s just scare tactics. And for big companies, people who pay in cash offer bigger profit margins, so it’s not like they are incentivized to help the situation.