Originally Posted by
phltraveler
If the issuer awards at the same rate - let's say 2% everyday spend for the sake of argument - then yeah, it's 2 cents rounding up, thus equal-ish for the merchant, but I'm taking a 1% hit on the chin to get net 1%. I'm making ~$1 instead of ~$2 in rewards. The issuer doesn't have incentive to increase rewards rates drastically because their net did not drastically change.
If transaction volumes stay the same, sure. I can see some people deciding that it's not worth it anymore if they only get 50% of the rewards they used to, though, which might cause issuers to incentivize people to keep using their cards. (OTOH, if people are going to come out ahead anyway, maybe not that many people will opt for using less expensive cards?)
Originally Posted by
greg_atlanta
True, cash isn't free. Banks charge to process it (not sure how much). Plus being cash only or cash heavy puts you at a higher risk of robbery during business hours (potential harm to employees, customers, and property).
I looked a while ago and Chase at least seemed to charge around 0.3% or so for cash deposits. Based on that, I can see how many merchants (especially smaller ones with few to no employees) rightly or wrongly would conclude that cash is cheaper for them, especially if e.g. you're running a lower-risk business otherwise.
Originally Posted by
greg_atlanta
Going debit only is probably a good path for some merchants if the swipe fees for debit are minimal. Are swipe fees for debit the same now with or without a PIN? (At one point they were higher for no PIN transactions).
For the large banks, the original Durbin Amendment capped interchange to 0.05% regardless of how the card's run. IIRC there's still a difference between PIN and not-PIN for the cards from smaller issuers (and I imagine it's a significant enough difference that the larger stores are incentivized to steer people towards the former).
As for going debit-only, unfortunately I suspect merchant processors make that incredibly difficult to do and you definitely can't if you want to use something like Square or Toast. Otherwise, I'd at least have seen it more outside of like Costco (if not using Visa), WinCo and Arco (before they started taking credit cards too).