[lug] Credit - was: [Letting folks pay from the web.]

[Landon Cox]

On Feb 2, 2010, at 3:35 PM, Nate Duehr wrote:

> On 2/2/2010 3:01 PM, Bear Giles wrote:
>>
>>
>>
>> On Tue, Feb 2, 2010 at 2:38 PM, Nate Duehr <nate at natetech.com> wrote:
>>
>> I've noticed businesses seem to have gotten lax about checking  
>> signature
>> on the back, via a photo ID again lately anyway.  I think my card has
>> been checked about 1 time out of 10 for the last 20 times I've used  
>> it.
>>
>> Economics, same reason why it's now common to be have the signature  
>> waived entirely on small purchases of $25-50.  It's cheaper to eat  
>> the occasional loss on "card present" purchases than it is to  
>> verify or even require a signature.  You don't see that much in a  
>> gas station but something like Target might need an extra cashier  
>> to keep the lines from getting too long.
>
> Oh I agree, it's all about econmics.  (Virtually everything is.)

Before getting too riled up about the state of credit, feeling good  
about using cards for their rewards, and the general cost of credit  
for business owners, you should read this NYT article:

http://www.nytimes.com/2010/01/09/your-money/credit-and-debit-cards/09money.html?nl=your-money&emc=your-moneyema2

It does a pretty good job, I think, of showing how hard it can be to  
do something as seemingly straightforward as boycotting credit cards  
and also does a pretty good job of raising the question of the  
possible harm that card rewards has on the general state of business  
and by extension, consumer.

One other point that I think is rather gray is that card companies are  
very well limiting certain aspects of the economic recovery.  In my  
own case, I had a company credit card (for use with my own company)  
and whose balance I paid off every month if I had anything on it at  
all.  I got a note in the mail that they had cancelled the card.  It  
had a $20K credit limit, $20K available credit - ironically it  
actually had a positive balance - they owed me a few bucks from me  
having overpaid one month.   Apparently as a software developer, I  
represented too large a risk for them despite the fact I rarely used  
the card and always paid it off.  There went 20K of potential working  
capital if I were so inclined to use it to buy some tool - say an  
expensive license of SolidWorks, or a 3D printer to design my own  
parts, or a pick and place machine to manufacture circuit boards.    
These are all in the realm of small business investments within that  
small capital range.  Just making the point that there are lots of  
things card companies are doing that don't make sense for the  
consumer, business or economic recovery all in the name of protecting  
themselves and us.

I've had resellers of my product want to pay me by Amex just so they  
could get *more* rewards than they would get with a Visa and knowing  
full well an Amex purchase costs me, as a business owner, more also -  
in other words, they knowingly wanted me to pay for their reward.  I  
might as well have just given them a lower price for cash or I might  
as well have raised my price to cover an Amex gouging discount  
rate...something explicitly covered in merchant card service  
agreements as something that will cause revocation of your merchant  
services.

Food for thought,

Landon

-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://lists.lug.boulder.co.us/pipermail/lug/attachments/20100202/82692ace/attachment.html>