Month: October 2011

The Development of an Economic Consciousness

Part 1 – Debit, Credit, or Cash? Small merchants (a cafe, and a small grocery store) on my street will not take debit or credit cards if you buy for less than $5. That’s because they’ll loose money on the transaction (i.e. what they have to pay the bank is well above their profit margin). This morning I asked the man at the cafe what the transaction cost was. He said it was $0.65 or thereabout, which surprised me because it was higher than I thought. It’s higher than, say, Paypal, because they have to set up the devices there at the register. So my recommendation here is: avoid using cards whenever you can, especially at small independent merchants. Help them survive. That is less the case for big chain stores that just want you to be hooked, and set their prices to afford a higher margin. They may even be more concerned about taking cash because they’re easily the target for robberies and petty thefts. In that way, airlines stopped taking cash just because …