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23 Jan. 2007

Yesterday

Harpage

There is evil afoot in this world. Is it not our job, our mission, our calling, to extirpate it? Of course it is, and we, every last person-jack or -jackie, must put our wallet to the grindstone until we have accomplished our mission. I have been good, albeit not in the sense of anti-"evil" about not harping on my subject, that of the credit-card tax. Other than this one previous blogitem, which by definition doesn't constitute harpage, I have remained quiescent and led no meetings or revivals. Today I revisit the subject in the light of my discovery of the Great Signature War. With luck, I will be able to revisit it by summary; I discovered the issue in a lengthy Wall Street Journal article that I don't want to inflict on myself again, or on you even once.

As things were, at least in my alleged mind
Action	Consequence
You buy something in a store and pay for it with cash.	The merchant seller gets your money, you and the credit card company get nothing.
You buy something in a store and pay for it with a credit card.	The merchant sends a percentage of the amount of money you pay to the credit card company. They keep some, and give you a "reward" of some sort - perhaps a cash rebate, perhaps "miles." The merchant loses his percentage.
So what's the problem with this? As the buyer, you are paying extra since the merchant marks up his prices so as to not lose money when he sells to the credit card user. Everybody has to pay extra, whether or not he uses a credit card or gets a "reward."
But that's too simple, of course
As things actually are, when you use a credit card, you can either "sign for it" or use a PIN which allows automation.
You buy something in a store and pay for it with cash.	The merchant seller gets your money, you and the credit card company get nothing.
You buy something in a store and pay for it with a credit card and sign the receipt.	The merchant sends a percentage of the amount of money you pay to the credit card company. They keep some, and give you a "reward" of some sort - perhaps a cash rebate, perhaps "miles." The merchant loses his percentage.
You buy something in a store and pay for it with a credit card and use your PIN instead of signing.	The merchant sends a smaller percentage of the amount of money you pay to the credit card company. They keep some, and give you a "reward" of some sort - perhaps a cash rebate, perhaps "miles." The merchant loses his percentage. But because the merchant is sending less money to the credit card company, the CC company gives you a smaller "reward."
So what's the problem with this? Now you're at war with the merchant! He wants you to use a PIN, and you want to sign. The merchant makes it difficult to sign unless you complain and demand to.

To summarize the summary: You want to get stuff cheaply, but the merchant has to charge more, because you also want your "rewards." Everyone pays more, and the credit card companies form an extra-governmental taxing body. And, to add nuisance to taxation, as a good consumer you have to be aware of the PIN issue and either you or the merchant leaves money on the table with each transaction.

The solution, as I pointed out in my previous blogitem, is to make it illegal for the credit card companies to demand that the merchant not offer a discount for cash. Making that demand is a monopolistic practice, since they are meddling in transactions with which they are not involved, and the merchant has neither negotiating power nor options, since he must accept credit cards to remain in business.*

How do the credit card companies get away with this? Clearly our evil-extirpation skills need improvement.

*All except Mrs. Nagle, who runs Nagle's Candy Barn. They accept cash only, and I don't blame them! Alas, Mr. Nagle, who makes the multilevular rectangular truffles by hand can't keep up with demand.

NP: "I'll Set You Free" - The Bangles

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Harpage

As things were, at least in my alleged mind

But that's too simple, of course