How do companies that use high volume low prices operate? The IT industry deals with purchases that are several thousands of dollars with margins of 5%. Get hit with a 1.6% credit charge processing fee and now they are at 3.4% GP. Maybe it sounds small but consider a $100,000.00 deal. The company receives $3400.00 for the work they put into the sale and the credit card company receives $1600.00 for processing a transaction that costs them a $100.00 at the max. The credit card company made 1600% markup on that transaction. The business made 3.4%.
OK say the company had the best rates in the world and visa only charged them .25% (thats right 1/4 of a percent). The company still owes the credit card company $250.00. So the retailer walks away with $4750.00 and the credit card company gets $250.00. How much work did the credit cards company do to make $250.00. How many transactions like this one are made per day?
Simple math shows who is making money and who is not. If we accept the payments from credit cards we are at fault. If we unite and decide to make the rules they will fold to our requests.
What happened to supply and demand? Tell a customer they have to pay an additional charge of $1600.00 to process their order without hiding the fees and you customer would be irate to say the least. So how do cc companies get away with it? Simple, It is never disclosed to the consumer.
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