Comments on: How Does The Credit Card Machine Work? Regarding the monetary system. Who gets the money and at what rate %? http://smallbusinessmerchantaccounts.org/how-does-the-credit-card-machine-work-regarding-the-monetary-system-who-gets-the-money-and-at-what-rate.htm Sat, 19 May 2012 13:35:27 +0000 http://wordpress.org/?v=2.7.1 hourly 1 By: Dan B http://smallbusinessmerchantaccounts.org/how-does-the-credit-card-machine-work-regarding-the-monetary-system-who-gets-the-money-and-at-what-rate.htm/comment-page-1#comment-1522 Dan B Wed, 18 Nov 2009 19:12:48 +0000 http://smallbusinessmerchantaccounts.org/how-does-the-credit-card-machine-work-regarding-the-monetary-system-who-gets-the-money-and-at-what-rate.htm#comment-1522 The company that owns the machine gets about 2.5% of the transaction - called an interchange fee. The bank gets a cut of that 2.5% also. And you, the customer pay that fee in higher prices. It's exactly like a 2.5% hidden sales tax on every credit card or debit card purchase on top of the interest you pay on your credit card balance on top of the 8% sales tax you pay to the state. The banks are claiming that they are losing money on credit cards. Yes, but they are making BILLIONS on these transaction fees. They treat them separately so they can garner sympathy from the regulators. Businesses like cash because they get to keep that 2.5% fee. The company that owns the machine gets about 2.5% of the transaction - called an interchange fee. The bank gets a cut of that 2.5% also. And you, the customer pay that fee in higher prices. It’s exactly like a 2.5% hidden sales tax on every credit card or debit card purchase on top of the interest you pay on your credit card balance on top of the 8% sales tax you pay to the state. The banks are claiming that they are losing money on credit cards. Yes, but they are making BILLIONS on these transaction fees. They treat them separately so they can garner sympathy from the regulators.

Businesses like cash because they get to keep that 2.5% fee.

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