[chinathrow]

The rewards system is the wrong incentive here in my eye.

It corrupts everyone and everything down to each penny, on every transaction. Everyone along the line where the money flows is incentivised to get you a) hooked on credit cards and b) on paying by credit cards. The issuer, the merchant, the card institute, the processors in between and even the buyer get's a cut from the exorbitant high fees.

[patio11]

Merchant here. We don't get a cut from "the exorbitant high fees"; we pay 2~3% for the (substantial utility of) being able to reliably take money from you in seconds.

[bigjimmyk3]

While reviewing statements from our processor ~8 years ago, I noted that some transactions had slightly higher fees than others. Research found that those were... rewards cards. So, the processor may pass some of the cost along to the merchant.

As for the "free money" argument, research [1] suggests that humans tend to spend more when using credit / debit cards than they do when using cash.

[1] https://www.psychologytoday.com/blog/ulterior-motives/201001...

[chinathrow]

I see I need to back that up: some merchants ask you if you would like to pay in your local curreny at POS when you are travelling abroad with a credit card. DCC, dynamic curreny conversion at Visa/Mastercard or similar.

The gains on higher fees are then split between the merchant and the processor.

Edit: Yes I think the fees are exorbitant - hence some lawsuits in the US and some EU countries with regulated, lower interchange fees.

https://en.m.wikipedia.org/wiki/Interchange_fee

[morgante]

> I see I need to back that up: some merchants ask you if you would like to pay in your local curreny at POS when you are travelling abroad with a credit card.

That's an annoying situation and (is entirely optional). But it's also a relative outlier and is definitely insufficient evidence to claim that the whole system is irreversibly corrupt.

[morgante]

> It corrupts everyone and everything down to each penny, on every transaction.

I'd love to know how I'm supposedly being "corrupted." I've never once carried a balance, but have flown thousands of miles for free.

[lotsofpulp]

There is no such thing as free...you simply flew thousands of miles paid for by paying an extra 1 or 2 percentage points for everything.

On the other hand, if you did not fly thousands of miles using miles and points, and you still paid the same price as the cardholders, then you helped pay for those who did fly around for free.

[morgante]

The value of the points to me exceeds the transaction costs.

For example, I willingly pay a 1.8% fee to pay my taxes via a credit card. I end up getting back 5-10% in bonuses.

[chinathrow]

> I'd love to know how I'm supposedly being "corrupted."

Yes, corruption might be a too strong word here. The way I see the whole rewards system is that the users actually got paid in order to use their payment method again and again. They pay you. They bribe you, the incentivse you and eventually, it corrupts the way you're spending.