The people who subsidize rewards are customers paying cash/debit.
The prices are higher to cover the Visa Infinite or whatever premium card merchant fees.
Those benefits are usually your own money + the money of those who fail to make payments since merchants have to increase their prices to compensate for credit card fees.
They indirectly steal from you, launder the funds and present it back to you as a “benefit”, but only if you’ve been a good boy.
This is a similar principle as modern loyalty programs. In exchange for your personal information and your eyes (advertising), you get to pay slightly above the regular price and accumulate ✨points✨ while other schmos get a jacked up price that pays for your points (or the value of your points is built into the price of the items you purchase).
EvacuateSoul@lemmy.world 5 days ago
isVeryLoud@lemmy.ca 5 days ago
Absolutely, they get shafted the most.
bobs_monkey@lemm.ee 5 days ago
Not exactly. Card benefits come directly from fees charged to merchants, which is why processing fees vary wildly from card to card and the merchant has no clue what their fees are going to be per transaction (though this is starting to change with services like Stripe charging a flat percentage+ transaction fee). Interest and the like are pure profit for CC companies. You as the cardholder receive the benefits even if you carry a balance.
isVeryLoud@lemmy.ca 5 days ago
Yes precisely, and merchants increase their prices to account for those unknown processing fees since it varies wildly from card to card.
jordanlund@lemmy.world 4 days ago
I think a lot of people don’t realize what a big piece merchant fees are. This is why so many places just don’t take AmEx.
bankrate.com/…/why-american-express-isnt-universa…
“Visa and Mastercard tend to charge credit card processing fees between 1.15 percent + $0.05 and 2.5 percent + $0.10 per transaction. American Express charges 1.43 percent + $0.10 to 3.30 percent + $0.10 per transaction. That means if a business sells $10,000 in credit card transactions per week, they could pay around $115 to $250 in Visa and Mastercard fees versus around $143 to $330 in Amex fees.”
Now that CapOne is trying to buy Discover, I have no idea what that will mean…
kiplinger.com/…/capital-one-and-discovers-merger-…
pupbiru@aussie.zone 4 days ago
and since you’re paying through the cost of groceries etc whether you get the benefits or not, you may as well get the benefits