|Picture is a generic sample only, and is not intended to represent the Credit Card company referred to below.|
All credit card companies charge the merchant a percentage fee on every transaction. The amount of this fee varies between card companies.
Getting to the bottom of various credit card plans is akin to comparing mobile phone plans. The more one looks into it, the more complex you realise it is. Mine Host has at times thrown his hands in the air in exasperation.
Not widely known, especially among those shoppers who object loudly and publicly to the credit card surcharge, is that the fee to the card company is only half the cost of accepting credit cards.
The other half is fees to the bank.
A certain Credit Card (perhaps pictured above) used to charge 6% and it would be one week before the money arrived. Thus many merchants flatly refused to accept it.
When this card company (perhaps pictured above) reduced their fees, promised swifter payment, and at the same time the law changed to allow collection of a credit card surcharge, more & more merchants began to accept this card.
Historically that credit card company has been very difficult to deal with. This has changed, as they were losing merchants (and cardholders) hand over fist.
However, their fee is still double that of any other card. This presents them with some commercial difficulties.
How does the credit card company handle this? Cluelessly.
This will be explained in tomorrow's post.