Once upon a time, your choices of payment method were cash, check, or credit card. Written checks went out of vogue decades ago due to fraud; e-checks were a temporary substitute but I am not aware of businesses today accepting checks in any form. Debit cards were added as a digital alternative to credit cards. And so it remained unchanged for many years.
The pandemic pushed us further towards digital-only payments: besides the need to order everything online, cash was dirty and could transmit disease. The swing to digital payments is so severe that retailers may no longer accept cash even though technically it represents legal tender, which is (surprisingly) completely legal. I personally rarely carry cash in my wallet and many not see or touch bills for months at a stretch. It’s all digital, baby!
Businesses are charged by credit card processors for the privilege of accepting credit cards, typically 3% of the total amount, usually built into the business model: n% of payments are via credit cards, therefore prices are increased accordingly.
However, as cash payments continue to decline (from 35% in 2015 to 15% in 2024), many businesses – restaurants, utilities, hair stylists – have determined that eating the costs is not feasible and instead are charging you, the consumer, for the privilege of charging: a complete turnaround from the original premise.
I understand the growing impact on the businesses who accept credit cards – which is not exactly optional, but also seems like this may halt the progression to a truly digital economy. Perhaps the upsurge in surcharges prompted Congress to investigate the credit card business model. Selfishly, I prefer credit card payments for the benefits it provides; fortunately my wife and I always pay off our outstanding amount monthly to avoid interest charges.
One thing to remember: the surcharges may help businesses, but does result in even higher revenue to the credit card processors! There has to be a solution.
Image Credits
- “Foreign Currency and Coins” by bradipo is licensed under CC BY 2.0.
