> The logical conclusion of people acting like you did is that credit card issuers increase interest rates to make up for their losses.
Actually no, they pay for it directly out of transaction fees levied on sellers (which are usually around 3-5%). Some of that they take for themselves, and some they use for consumer rewards. It's a great way to make a lot of money and keep consumers incentivized to use them.
Economically, it's sort of like crappy product/service things licensed to prisons (like video telephones) that charge hefty fees to the inmates and their families, and give a significant portion of those fees back to the prisons. They're taking advantage of the incentives they can provide to the decision makers (prison administrators, or consumers in the case of credit cards) to overcharge the other party (inmates, or vendors), and make a lot of money in the process.
Actually no, they pay for it directly out of transaction fees levied on sellers (which are usually around 3-5%). Some of that they take for themselves, and some they use for consumer rewards. It's a great way to make a lot of money and keep consumers incentivized to use them.
Economically, it's sort of like crappy product/service things licensed to prisons (like video telephones) that charge hefty fees to the inmates and their families, and give a significant portion of those fees back to the prisons. They're taking advantage of the incentives they can provide to the decision makers (prison administrators, or consumers in the case of credit cards) to overcharge the other party (inmates, or vendors), and make a lot of money in the process.