When a customer swipes a credit card the company they are paying incurs a fee for the use of that card which is a percentage of the sale. It becomes a part of the cost of doing business. That percentage ranges around 3% decreasing somewhat as the volume of sales increases. Hence gas stations pool billings to lessen the impact. A cutrate company such as Wal-Mart is feeling the pinch as the margin between pricing and costs for them is tight leaving them with few options:
- Raise their prices to cover those costs which penalizes cash sales.
- Institute a fee for credit card use--a movement that is catching on.
- Refuse to accept VISA cards--an option at least one grocery chain has already embraced.
It has been announced that Wal-Mart stores are moving toward the latter option beginning in Thunderbay, ON. Will the banks blink? Will the move hurt both the credit card industry and Wal-Mart? Certainly customers will be inconvenienced.
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