Comment by gruez
2 years ago
>low-friction electronic payments are feeding back to the consumer, vs. having all the value derived from that technology captured by the banks and merchants.
Are you talking about the cash back? Isn't that just a shell game? If the consumer is getting 2% cashback, but the merchant is charging consumers 2% more to pay for it as well, how is it "feeding back to the consumer"?
> Are you talking about the cash back? Isn't that just a shell game? If the consumer is getting 2% cashback, but the merchant is charging consumers 2% more to pay for it as well, how is it "feeding back to the consumer"?
One of the issues is that the cash back rate is not evenly distributed across the buying population.
The benefit for the customer is getting 2% back when prices are only 1.5% higher than they would be “otherwise” because of cash and debit payments.
The disadvantage to the customer is increased spending because of how easy it is, which probably far outweighs the 2%.
The other disadvantage to the customer who gets that extra 0.5% is that they know they're profiting off the misery of those worse off than them, that they enjoy rewards while those with low credit scores, struggling to feed their family, face 1.5% higher prices.
I would hope the tarnish on your immortal soul and realization that you're profiting directly off other's misery would be a bigger downside.
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