Dharma (Sanskrit) or Dhamma (Pali) is a term that means righteous duty or virtuous path. Most of us on our conscious spiritual journey learn about these terms or at least begin to contemplate how to live our lives in a "right" way. That is, in a way that is compassionate, considerate, and non-harmful.
However, we also understand that we live in the physical and material world as well as in spirit. In this current world, we pursue many things and, yes, many material things. We go shopping and, when we find something we need or want, we purchase items and services.
But, do we think much about how we pay for those things? I'm not talking about where the money comes from, but rather the method we use to make payments. Today, we are quite accustomed to getting out that little 3 3/8" by 2 1/8" piece of plastic (aka credit or debit card) and giving it to the clerk or typing its numbers into a web site shopping cart.
Credit and debit cards have made our lives easier, for the most part. The danger of fraud and theft is really quite minimal. It is more like a plane crash - we hear about it because when it happens it is quite devastating. Fraud doesn't happen often and, by the way, it most frequently occurs when you give your credit card to a waiter or waitress. In those few moments anyone can write down the numbers and use your card.
One of the important issues I want to address in this blog is regarding who pays for the convenience of a credit/debit card. Yes, credit card companies do make money on the balance you keep on your card. You pay interest on that balance. But, this is only a small part of the profit that credit card companies make.
Much of their profit comes from the fees that they charge merchants for processing credit and debit card transactions. This fee is generally about 2% of the transaction plus 25-cents per transaction. It may not seem like much, but there are millions of transactions every day.
A credit or debit card transaction of $100 costs the merchant about $2.25. If a merchant handles charges totaling $10,000 per month, that merchant is paying $225 in fees. By the way, this is why credit card companies advertise to promote the use of credit AND debit cards. You can see now that it is not "priceless".
Here's where it get's more costly. The "cash back" and "rewards" that you receive on your credit card are also paid by the merchant. When you use a Miles card, cash back, or other type of rewards card, an additional .5% to 1.0% is tacked onto the fee charged to the merchant.
Now, it's easy to think this is such a small thing and that you really like your rewards. However, you should not think that this is a perk with no costs. When the merchants see the fees that have been charged by their credit card processor, they know their bottom line is being cut. What can they do about this? Typically merchants start raising their prices. In this way, everyone pays more for those reward and cashback cards.
How can you help merchants? Well, here are a few pointers.
- Pay with cash or check - merchants are not charged any fees for cash transactions
- Pay with a debit card - merchants pay the lowest transaction fees on these cards
- Pay with a non-rewards card - merchants pay about the same transaction fee on these cards as they do on debit cards
Which cards are the most costly?
- Rewards cards generally increase the fee to merchants by about .5% to 1%
- Discover Card and American Express fees jump up to about 3.4% (that's outrageous)
- PayPal and other online payment services also charge high fees of generally 3.4%
So, the next time you are getting ready to pay a merchant, give this some thought. If you are not buying from a large company such as Amazon.com, Wal-mart, Target and so on, you are buying from a small business. They typically have fewer than 50 employees and they don't have the support of hundreds or thousands of other stores to help them make ends meet during difficult economic times. You would really be acting Dharmically to choose a payment method that will help them be profitable, keep costs down, keep prices low, and put food on the table.
Thank you for reading,
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