Chapter 14 Blog: Who pays what to whom?

http://www.cbc.ca/consumer/story/2009/04/16/f-cardfees.html

Summary

                        So it is clear, the web of fees that's woven around every transaction involving our debit and credit cards? There is the annual fee, the interest you're charged if you don't pay your credit card bill in full every month. That goes to the bank. There's a lot more, it’s what has retailers complaining bitterly. There's the merchant discount rate and the interchange fee, which consumers don't see at all. There's the fee that merchants have to pay to the company through the process of your payment when one use their debit card a non-profit organization that oversees the system that allows for direct payment. Which result in a small fee the retailer usually adds towards the use of your debit card. On the other hand, retailer who accepts cash, will spent time on doing daily transaction, it consumes a lot time. Merchants pay two to four per cent of the sale price in various transaction fees whenever they accept a credit card for payment. It's the interchange fee involved in credit card transactions that's making retailers angry. The Retail Council of Canada claims Canadians paid $4.5 billion in "hidden" credit card fees alone last year. The study also found that merchants preferred debit cards (53 per cent), followed by cash (39 per cent) and then credit cards (five per cent).

Connections

                        This article is connected to chapter 14.2, the bank credit card unit. In this unit it talks about the bank credit card transactions and how it occurs when the customer makes a purchase, in a store accept customer’s credit card. The fact that there is an extra fee to the cost of our credit cards and or debit cards is just too much. The retailers are charge with an extra interchange fee, which result in many stores in charging the consumer and extra fee. Store clerk will write up a voucher, run a sale slip, ensure the customer sign the slip, given one to the customer and two back to the stores, place the slip into an envelope and record the gross amount on a summary slip to the bank.

Reflections

                        I personally find the fact that retailer are charging consumer more just so they are able to pay the extra interchange fee is just too much. At the same time, the major credit cards businesses are also taking up to two to four percent of the sales of the various transactions fees. Many merchants are accepting money in such a way because of their extra cost of transaction fees. Sure enough, a retailer who accepts cash will also have to spent time preparing the cash deposits. That takes time. If you've been in the business a long time, they may view it as just the cost of doing daily business. But it’s sort of unfair for Canadians last year to make a payment of $4.5 billion in the “hidden” credit card fees.