When is a cost of doing business not ccst of doing business? When it's a transaction fee whose original raison d'etre has long since passed and exists now to support an unsustainable business model that punishes hardworking shopowners who know all too well how they're getting screwed and consumers who have no idea.
The credit card people aren't like you and me. I've posted a chart that shows how, after the jump.
As I've explained in previous diaries, the interchange fee is a "transaction cost" -- which the credit card industry defends as a cost of doing business -- that is nominally between issuing (customer's) and acquiring (merchant's) banks, but is actually paid by merchants, and so indirectly, by consumers in the form of higher prices.
This chart from American Banker magazine, which I'm posting under fair use, that shows what is expected to happen with the interchange fee over the coming years:
Remember, these are transaction costs, which are fundamentally a matter of communication technologies. The interchange fee is from the bad old days when everyone had to use those clunky machines to make a card impression on carbon paper, and payment didn't come for weeks. In the Internet age, these transactions take seconds.
And yet the fee goes up and up? Yep. Without them, Visa and MasterCard might be successful businesses, rather than the kind of profit-churning powerhouses that would make the oil industry envious. Those credit card people, they're not like you and me.
