Summary
The article I found is about consumer groups opposes additional charges on credit card fees. Consumers Association of Canada joined Visa and MasterCard in disagreement for the extra charge for using credit card as a payment. Based on a survey, 916 people with credit cards were asked about surcharges for credit cards and 75% of the people disagree with the surcharges on the credit card. Also, they were questioned about being charged an extra 3.5% and 80% were against it. Many merchants disapprove about the additional 3.5% charge on products since there’s possibilities of losing costumers. Visa and MasterCard are prohibiting retailers from charging surcharges on credit card payments.
Canadian Federation of Independent Business stated that they will release a campaign during next year suggesting consumers to make cash or debit card payments. They sent a letter to Visa and MasterCard asking if this campaign is disobeying contracts merchants must sign. CFIB vice president Dan Kelly quoted, “If they come back to us and say merchants are not allowed to even encourage customers to pay with a lower cost payment method, then they're demonstrating to the Competition Bureau and to us in the public that they do have these very restrictive rules that the Competition Bureau is criticizing.
Connection
Connection between chapter 14 section and this article is the surcharges on credit cards could affect the company’s attraction to the costumers. For example, if a consumer would be buying clothes on their credit card, but they noticed they have to pay an extra 3.5% for the payment, consumers may change their minds and not purchase the products due to this fee. This will definitely affect the cash flow for the company and they’ll lose costumers. Also credit card companies will lose profit since consumers may less likely use it, so it’ll affect different accounts like sales or credit card discount expense, etc. Another connection is that since merchants are encouraged to charge consumer credit card surcharges, it’ll affect their own bank. For example, if I were to give discount to those who use credit card to purchase an item, on my balance sheet, it’ll be debited on credit card discount expense and credited on bank. Another connection is that credit card is another form of payment. There are other forms like cash, debit cards and maybe a cheque. Though credit cards may be a simpler way to pay, it may not always be the safest.
Reflection
In my opinion, even though CFIB encourage people to use debit cards and cash because of the surcharges, people shouldn’t use credit cards because it’s difficult to pay back the amount. For example, if I was poor, and I use the credit card to buy something, I wouldn’t be able to pay it back if they keep putting interest on it. It’s risky for those people who use it. Even if credit card companies give discounts for using their credit card as payment, I wouldn’t want to use it. Like I mentioned earlier, credit card surcharges will affect the business cash flows. Consumers may not approve the fact that they charge credit card use an additional fee, so they might not end up purchasing the product. The encouragement of not using the credit card will mainly affect credit card companies because the lesser people use credit cards, the lesser credit card debts there will be. This means they may not earn as much from interest from the decrease in debt. The only consumers it would affect are those who love to use credit cards because they would always have to pay surcharges to use the credit card. I agree that people are encouraged to use debit cards and cash because I believe it’s safer than credit cards. Also that people in their teens are more likely to be careful on how they spend their money because there are limits for debit cards and cash.
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