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The Whiners and the Winners of the Credit Card Wars

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I believe that retailers need to stop bemoaning credit card swipe fees as a kind of necessary tax. Businesses aren’t forced to accept credit cards, and many smaller businesses do fine as cash-only businesses. Meanwhile, Visa and MasterCard provide companies with an invaluable service – keeping transactions digital and allowing retailers to avoid the hassle, expenses and danger of stockpiling large quantities of cash.

Accepting credit cards also generates higher sales volume from more shoppers who use plastic for their everyday needs. Credit card usage also encourages pricier purchases – spending $1,000 in cash sure feels a lot more costly than swiping and signing on the dotted line. Lastly, swipe fees are often used to enable reward cards, which can keep customers coming back to spend more.

In other words, retailers have plenty to thank Visa and MasterCard for. However, they continue to see swipe fees as taxes and an unnecessary expense. What’s more, retailers are unlikely to reduce product prices even if swipe fees were reduced. They would simply pass on that 2%-3% savings back onto themselves to slightly increase their own margins.

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