The point is that everything you buy with the card is at least 2% more expensive, because the merchants are just passing on their credit card fees to the consumer. You are not saving money in any way, shape or form.

Once upon a time, it was beneficial for a merchant to accept credit cards, it lowered their costs for handling cash, which meant they saved money and the 2% cost for each transaction was reasonable.

In a world where everyone is using credit cards for every purchase, that 2% is essentially a tax instead.

Which is all fine and good but my options are pay 2+% more for everything and get nothing or pay 2+% more and get something.

Like there’s no point to trying to punch a river as a lowly software dev completely unrelated to finance and politics.

Yes, you absolutely should use a credit card in the US and get your cashback or rewards or whatever. You have to play the game, because everyone is playing the game.

But, you have to realize that it's not beneficial to you. You don't earn anything, you merely, barely, move the needle back up to break-even. You're not gaining. You're not winning. You're not sticking anything to any man. If the entire credit card industry got rid of rewards, and lowered their merchant fees, it would be a net benefit to you.

So feeling happy or grateful for cash-back means that they got you, they tricked you into feeling grateful for the privilege of giving away your money.

If you paid cash, in virtually every case you'd pay exactly the same price because most merchants don't provide cash discounts. If your merchant does provide a cash discount, I would suggest taking advantage of it. But if they don't provide a cash discount, you're still paying that 2% margin anyway without receiving any benefit from it.

Likewise, except for small businesses whose owners don't actually price in the cost of their own time and labor, it's not entirely obvious to me that the cost of accepting credit card payments actually is any more expensive than the cost of handling cash, which is probably why cash discounts are rare. The main exception to that seems to be gas stations (which usually have a lower price for debit cards and not straight cash), except even in that case, I get an even bigger discount by using Costco's gas station, which doesn't have any such discount. You do address this point...

> > Once upon a time, it was beneficial for a merchant to accept credit cards, it lowered their costs for handling cash, which meant they saved money and the 2% cost for each transaction was reasonable. In a world where everyone is using credit cards for every purchase, that 2% is essentially a tax instead.

That makes no sense. If the cost of receiving credit card transactions is 2%, that doesn't imply that the cost of receiving any other kind of transaction is 0%. If there's no cash discount, the difference in cost to the consumer is zero anyway. But the difference in cost to the merchant isn't 2% either, because if they accepted a different form of payment, the difference in cost would be 2% minus the cost of accepting that different form of payment. (And if they didn't accept any form of payment at all, the cost would effectively be 100% because there would be no sales). In a world where credit card sales are ubiquitous, if anything, credit cards become a better deal for merchants because there's less economy of scale for cash-handling services.

All in all, I would even suspect there are instances where credit card rewards end up providing a net positive to a sufficiently devoted cardholder simply because most people are not going to expend the time and effort necessary to maximize their credit card rewards. It's just like Vegas in that sense--while it's true that "the house always wins", casinos will also comp you rooms and drinks, and there are documented instances in which you would expect to be better off playing video poker or blackjack for long enough to get a free room (assuming perfect play, which means memorizing a small decision tree). Why is this possible? Because the vast majority of people don't play perfect blackjack or video poker. Businesses plan for average-case expected customer behavior and not best-case (or worst-case from their perspective).

The cost for a merchant to handle credit cards is whatever the credit card companies can get away with.

The actual cost of handling card payments is very, very low these days, but merchants are stuck paying the higher price, because there's effectively no competition in the space. To avoid having obscene profits, the cc companies give back a lot of the extra money to the consumers in the form of cashbacks and rewards, and then consumers stupidly feel grateful for being fleeced.

In an ideal world, merchants would pay only the actual cost for handling card payments, only pay for the tech itself, and the fraud risk. Naturally, such a pricing would be a fixed per-transaction-fee, because the actual cost is the same for each transaction.

In the same ideal world, the credit risk of credit cards have to be managed through the interest rate and credit worthiness management. It's completely outrageous that credit card processing fees should in any way, shape or form cover the risk side or the fraud side of the business. That's not the merchant's problem.

That would be fair. That wouldn't be gameable. Some countries did exactly this: https://en.wikipedia.org/wiki/Dankort

> The actual cost of handling card payments is very, very low these days, but merchants are stuck paying the higher price, because there's effectively no competition in the space.

In other words, the cost of processing credit cards is low enough that it successfully competes with every alternative form of payment. In which case I don't see what you're outraged about. Invent a more cost-effective payment mechanism if you think there's an opportunity for it.

It's also worth mentioning that cash isn't necessarily any less expensive for merchants to accept. It is if you're talking about a small local business or something, but if you're paying for the actual labor of counting cash, delivering and depositing it to the bank, as well as the increased security risks and costs of holding large sums of cash, it starts to add up.