[geminitojanus]

> Credit card companies do not charge 4%. I worked in credit cards about a decade ago, so unless the marketplace is less competitive now than before, I assume this still holds true. Furthermore, the fees that do exist are not necessarily passed on the consumer, but taken out of profit.

This isn't entirely accurate. Most credit card companies now tack on a 30c + 2.9% surcharge for processors that do fewer transactions than some arbitrarily defined limit, well known to most small companies as the "PayPal tax" because they started doing it first and the credit card companies realized they could get away with it too.

And it's usually passed completely on to consumers, because eating it as a business owner with a low-margin business is pretty damned hard, and because the little guys are doing it, the big guys get away with doing it too.

Or haven't you heard about the recent record profits being made by Mastercard et al?

[srdev]

> This isn't entirely accurate. Most credit card companies now tack on a 30c + 2.9% surcharge for processors that do fewer transactions than some arbitrarily defined limit, well known to most small companies as the "PayPal tax" because they started doing it first and the credit card companies realized they could get away with it too.

Wasn't aware of that. We charged flat percentage rate, and added to the processor I think it was 1.5% or so. But like I said, a decade ago, so maybe I'm just wrong on that point and forgot.

> And it's usually passed completely on to consumers, because eating it as a business owner with a low-margin business is pretty damned hard, and because the little guys are doing it, the big guys get away with doing it too.

Is it actually proven that the costs are passed on (i.e. that the price would be lower in absence of credit cards)? Because, again, in theory that only works if the demand has enough inelasticity.

[geminitojanus]

> Is it actually proven that the costs are passed on (i.e. that the price would be lower in absence of credit cards)? Because, again, in theory that only works if the demand has enough inelasticity.

Go buy something at your local No Name Shoppe and compare it to what you were paying 3 years ago. Adjust for inflation. Be shocked by the random ~3-4% cost increase.

My best personal example is the place where I play Magic the Gathering increasing the price of packs to adjust for the processing fees (and struggling to do that for fear of sending the regulars back to buying packs online, which would shutter their business permanently).

[srdev]

>Go buy something at your local No Name Shoppe and compare it to what you were paying 3 years ago. Adjust for inflation. Be shocked by the random ~3-4% cost increase.

That wouldn't give actual data though, just anecdote. I'm interested if theres anything out there with a bit more rigor.

Furthermore, the claim is that prices were passed on across the board, not just at small businesses. Was there a 4-5% increase universally, or just at Ye Ole No Name Shoppe?

> My best personal example is the place where I play Magic the Gathering increasing the price of packs to adjust for the processing fees (and struggling to do that for fear of sending the regulars back to buying packs online, which would shutter their business permanently).

Doesn't that support what I said? They had difficulty raising the price, because people could just buy the cards elsewhere.

Anyway, I'm interested to further have this conversation, but getting back to the original argument, I think the only way Bitcoin could actually solve this problem is if the merchants dropped credit cards en-masse. Most credit card agreements stipulate that you cannot give discounts if they do not use a credit card. Then the question becomes if enough customers would be willing to forgo their cards for Bitcoins to make it a good value. Even at a theoretical 4%, I'm not sure I'd be willing, unless the Bitcoin ecosystem DRAMATICALLY improves.