Originally Posted by
drtor
That said, I do think the whole system with merchant fees leading to rewards is a bit screwed up. It would seem that in this day and age the merchant and I could make a deal where I got a few percent discount and he was paid directly out of my bank account (~debit card), thus cutting out the credit card middle man. For reasons I don't understand, however, it is illegal for merchants to charge more for customers using credit cards, even if they have to pay steep fees.
That being the case, it normally isn't possible to get a cash discount directly so we frugal optimizers have to use a credit card for the cashback and rewards, even though we have no need for credit.
It is probably due to 50% (give or take a few percentage point) of consumers who use CCs, carry the revolving debts - in other words, about 1/2 of the credit cardholders spend what they cannot afford to pay off each billing cycle, let alone using CASH (debit card) to pay for what they buy.
So the cash discount become a "discrimination" to about half of the consumers.
I agree with your last paragraph - this is the few ways we the financially responsible folks can actually get some rewards to our good behavior, in a society that seems to constant reward BAD behaviors. (think the bail out of the banks and the housing market as the prime examples).