Originally Posted by
percysmith
I think garyschmitt is making a wrong assumption here. Going back to Economics 101 (okay maybe 102) he's assuming the demand for restaurants food is perfectly elastic
http://en.wikipedia.org/wiki/Price_elasticity_of_demand - any supplier raising prices will immediately price themselves out of the market, or out of the credit card-accepting restaurant market at least.
My assumption about elasticity was deliberate. It simplifies the discussion. Changing that assumption adds complexity, but it does not obviate my thesis. The premise to my points does not require elasticity to be one way or the other. Either way, the merchant still has pressure to reduce cost.
Originally Posted by
percysmith
Increase in credit card fraud is the same as imported inflation - an upward shift in the supply curve. Prices will increase.
Not if you believe Kebosabi. That is, if you believe it's possible to eliminate fraud for free, by using using a different payment system, then prices
will not increase, because merchants will be motivated to take the competitive advantage and eliminate fraud while their competitors struggle with it.
My claims are supported either way. If fraud is completely unavoidable, then everyones hands are tied and nothing can be done anyway. If the fraud is cheaply avoidable (that is the cost of security is less than the cost of the fraud that it offsets), then restaurant owners have the competitive pressure to implement the security feature. If the security feature costs more than it saves, then it makes no sense to implement it, because doing so would increase net cost.
The silly proposal at issue here is to bring in a portable terminal that is
less secure, and also introduces a cost of its own. You're losing in every respect. To pay more for a system that is less secure means more equipment costs, higher fraud costs, and no savings. Makes no sense from a business standpoint or a security standpoint.