Harriet Torry
speaker
611 appearances
11 recordings
1 series
first heard Sep 2017
last heard Dec 2024
Harriet Torry’s voice in public audio — every appearance, attributed to the second.
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Appearances
WSJ Your Money Briefing · Credit Card Use Deepens Divide Between Consumer Groups · 22 Jun 2020
podcast
And these fees can really add up.
So for instance, in our story, we spoke to the owner of a coffee shop in Maryland who roasts his own coffee beans, green beans.
And the paradox is that last year, he spent less on beans, he spent around $12,000 on beans than he did on these interchange fees, these credit card swipe fees, which cost him around $18,000.
So that just gives you an example of the scale of this and the scale of the costs that businesses face.
But because retailers' profit margins are slim, the way that it works is they usually pass on some of those fees to customers through higher prices.
And you end up paying that higher price no matter how you pay.
So, for instance, whether you use a credit card or a debit card or cash.
And what economists say is that the result of this whole complex transaction is that there's an implicit transfer from the poor to the rich.
Essentially, like if you're using a reward card that gives you 3% cash back, you're paying the same price as somebody who's buying something using cash or using a prepaid credit card.
But so you're essentially getting a 3% discount.
And that really adds up over time.
And usually the types of people who are given these who can access these rewards cards with very generous cash back and air miles and so on, are people with higher credit scores who tend to be higher income households.
So if you think about it, you know, if you're a customer who's making $200,000 a year, you're getting this 3% discount.
It really adds up over time.
And it's almost like it's what one economist calls a giant reverse Robin Hood effect that moves billions of dollars a year around the economy.
For instance, if you buy something with a debit card, debit card fees are capped by the Federal Reserve at 21 cents per transaction.
So, you know, let's say you go to a coffee shop, you buy a cup of coffee, you swipe your card, that's a fee of 21 cents.
And then if you're paying in cash, you know, the merchant doesn't pay any fee at all.
Of course, the downside for that is then the merchant has to sort of secure the cash and
put it in the bank and things like that.
Showing 321–340 of 611 · page 17 of 31
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