Cost per Transaction

Yesterday, I visited the local liquor boutique store, Madhuloka. I look forward to these visits as Madhuloka is a classy liquor store and I can buy A-to-Z of my drinking needs from this store. As I was running low on cash, I used my debit card at the payment counter. They charged me 3% for the debit card transaction. This was a very negligible amount considering the total vale of my transaction. So, I paid.

I always avoided the merchants charging me for using the credit card since the days in New Jersey where I got my first credit card. It was 1999. In order to build a good credit history, I was advised to use credit card for all transactions. The advisor also warned me about using the credit cards in Indian stores who charged an extra 2% on the total sale value. These stores only allow you to use the credit card if you have purchased goods worth of $20 or more. So I purchased groceries and phone cards from Oak Tree Road, NJ using cash. My friends, who were in college at that time in various parts of the US, have paltry sums using credit cards, without getting slapped with an additional cost.

Credit and Debit cards helps businesses more than the consumers. Debit cards are beneficial to the consumer in avoiding the credit trap. But, credit cards are benefitting the business because they are guaranteed to get the money from the bank and do not worry about theft or robbery while transporting the money to the bank.

Then, why do they charge me an extra 3% on a credit card or a debit card transaction?

Picture Courtesy: Burrp

Tags: Musings,Cost Per Transaction,Liquor,Madhuloka,Credit Card,Debit Card,New Jersey,1999,Oak Tree Road