Why Do the Retailers Accept Credit Cards?

Have you ever wondered why the shopkeepers are willing to accept credit cards? Why do they accept cards even though the credit card slip that you sing must be encashed and it involves some kind of expenses?

In the past not all retailers gave their customers an opportunity to pay with their credit cards. Later the market became more and more competitive. But the competition is not the main reason for shopkeepers to accept cards.

There is no doubt that it is not profitable for retailers to pay banks without valid reasons. I found out why the retailers are happy to accept credit cards last summer. I was working at the restaurant as a waitress. I asked the owner why he accepted credit cards at his restaurant and if it was profitable for him.

He smiled back and let me know the "secret answer". The customers, who pay with best credit cards, shop for the larger amounts than the customers who pay in cash. So bank commissions can not be compared to the profit the retailer gets from credit card owners. The profit from additional sales is simply huge! So by accepting credit cards the retailers don't loose any money, they only earn!

I thought that I needed a proof for his words, so I decided to make a small experiment. I worked for three days and was trying to notice who spent more - the customers who used the credit cards to pay the bill or those who paid using cash. Not only did I notice that the people who paid with credit card spent more, they also left much larger tips!

Then I remembered myself: whenever I pay with my gas credit card, I always feel myself much more generous as well. For some reason, the fact that I don't count cash in wallet makes me feel this way. Signing the credit card charge slip doesn't really give me the feeling that I am actually spending money!

So because of that, at the end of the month I send big credit card bills to my bank. I found a nice solution to this problem: now when I go out to eat, I pay my bills with a credit card, but leave tips in cash.

But does it mean that shopping with credit cards can be dangerous for you and will necessary lead to financial crisis? Of course not. For example, my friend Steve pays with his card wherever he goes. He owes a cash back credit card and claims that if you make your payments on time and in full every month, the card is really beneficial. He gets a nice amount of money back every month and is very satisfied.

As long as you are aware of the fact that credit cards can make you spend more, you are safe and will think twice before purchasing something that you really don't need to have with your card! Then the next time you use your credit cards to pay for something, it will not be profitable for banks, credit card companies and retailers, but for you too!