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BitCoin Card To Launch In 2 Months, Says BitInstant
hypnosec writes "Charlie Shrem, co-founder of BitInstant LLC, has confirmed that a BitCoin-funded international debit/credit card should be available very soon. Giving a time frame of 6-8 weeks, Shrem said over an IRC chat session that the card will function like any other credit or debit card, and that it can be used at places where MasterCard is being accepted. Shrem has also said that the initial 1000-odd cards will be given for free and subsequent cards will carry a charge of around $10. Any transaction that is carried out through the card [will incur a] 1% BitCoin transfer fee on top of the $1.50 ATM withdrawal fee."
So pardon me if I don't trust BitCoin cash, credit or debit cards.
When BTC becomes ubiquitous and I'm paying .00000343 BTC for a soda.
A subsequent RaspberryPi story shouldnt take long now, so strap yourselves in guy's!
rm -rf --no-preserve-root /
I needed a good laugh today.
Finally you can trade your services to each other directly in meatspace with the simple swipe of a card.
If you were blocking sigs, you wouldn't have to read this.
I'd take this with a grain of salt. This might be nothing but an idea and a photoshopped image.
this should give some transparency to this digital current
Why yes, I'd just love to carry a card which can process transactions for BitCoin, what with it's legendary track record of security and accountability! I can't think of anything better, in fact!
...and then we all woke up and had a good laugh.
From their FAQ:
If your transaction system is sufficiently insecure that your only solution to fraud and money laundering is to block transactions over a certain size, you fail. We're all dying to move away from that ridiculous idea that visa/mc/banks are currently using, because it is fundamentally broken. Who are you to tell people not to buy cars, home repairs, startup business equipment, etc...
1^2=1; (-1)^2=1; 1^2=(-1)^2; 1=-1; 1=0.
My anonomous currency has been too anonymous lately, so why not inject it into a system where the anonomty disapears and high financial fees for spending it occur!
I absolutely want to trust my financial transactions to a payment system announced via an IRC chat.
It's almost as if the whole system was invented by someone who said to themselves "man, I've got this botnet, and I want to turn it into money directly, rather than renting it out for DDoS attacks or spam or whatever, but how?"
Law enforcement rejoice! Finally every dumb criminal that heard about the untraceability of BitCoin has his name on his BitCoin wallet at this as of jet unknown major bank.
BitCoin's supposed to be this anonymous fiat currency system. Yet they're going through a decidedly non-anonymous regular payment card network (MasterCard).
I understand it makes the handling much easier for regular transactions, but doesn't this really sorta make it non-anonymous?
Though, I suppose since it's really just a currency enchange between bitcoin and whatever you use, though given it's volatility (and speculators don't help), it seems dangerous - one wrong swipe of the card and what was supposed to be a 1BTC/$15 USD exchange turns into a 1BTC/$4USD exchange because some hacker decided to cash out 40,000 BTC or something at that time. Remember the currency exchange on a credit card happens at the time of the transaction...
(And whoever is cheering the day BTC becomes the popular currency - remember there is no protection against the ills of the financial industry. Speculation, HFT (including arbitrarge amongst exchanges), etc.).
1% + $1.50 fee... so why would I want to use this? My current debit transaction fees are... zero. AND I don't have to worry about the value of the money in my account fluctuating wildly.
There sure are a lot of dollar signs in that summary.
It probably involved email and HTTP too. Do you trust them?
I think in the next 6-12 months we'll see botnets largely stop mining on Bitcoin because the rollout of ASIC mining hardware will make virus-infected PCs hopelessly un-competitive, even though the electricity is free. They're already worthless for doing CPU mining even if you have thousands of them and soon even if you have a lot of infected gaming machines the return will probably not be worth the time.
First off, I'm excited to see a Bitcoin based card that can be used just as easily as other credit/debit cards. However, it's disappointing to see that the interchange fees will be comparable to Mastercard and Visa (1-3% p15 http://www.gao.gov/assets/300/298664.pdf). Maybe there will be a reduction in the fees as more options come forward?
No trees were killed to send this message, but a great number of electrons were terribly inconvenienced.
http://en.wikipedia.org/wiki/Flooz.com
So a virus used your computer to generate bitcoins, and now you don't trust the currency? Thank god it didn't steal your bank account info, you you'd have to stop using the US dollar as well!
Wasn't the whole point of Bitcoin for it to be anonymous, like cash? Wouldn't having a card, with your name on it, to transfer Bitcoins to/from defeat that purpose, or at the very least flag you as a suspicious-individual-dealing-with-shady-untrackable-currency-used-by-hackers in the yes of the feds?
Bow before me, for I am root.
Let's combine the credit card system's amenity to theft (you can't buy anything without giving away your number) with the Bitcoin system's irreversability (no such thing as a chargeback). I can't wait to start having my money stolen with no possibility of getting recompensated!
I DO NOT WANT
To pay a RENT on BitCoins.
Fuck 'em. This is the same kind of transaction rent that makes "real money" truly evil.
"Flyin' in just a sweet place,
Never been known to fail..."
I don't trust Wallmart, the sledge the burgler used to break in here came from them...
Well guess what champ? You want to interoperate with the real world you pay the price. And Mastercard charges fees.
You aren't paying 'rent' you are paying a pretty cheap transaction (by credit card standards) fee to move in and out of the mainstream economy.
Not that it matters, just like egold before it, BitCoin is already flailing with the problem of keeping the money launderers, drug dealers and various other underworld forces from overwhelming it to the point no legit person will want to be associated with it.
Democrat delenda est
Bitcoin rolling out sales tax lol!
Support my political activism on Patreon.
Surely printed on daily basis $ is much better alternative.
It's the only currency that will remain, mark my anonymous words, i rarely mistake with such predictions.(if it won't fail technically, like there will be some hole that will allow to have more of bitcoin than there should be, or if it can be easilly stolen)
I don't trust computers. I watched a Highlander II DVD on mine, and since then I've a very expensive portable locked in the cupboard doing nothing.
-- Using the preview button since 2005
No, he would only have to stop trusting the US dollar.
In this case this is your fault - everyone knows there can be only one.
You aren't paying 'rent' you are paying a pretty cheap transaction (by credit card standards) fee to move in and out of the mainstream economy.
You call a $1.50 ATM fee per transaction pretty cheap?
You aren't paying 'rent' you are paying a pretty cheap transaction (by credit card standards) fee to move in and out of the mainstream economy.
You call a $1.50 ATM fee per transaction pretty cheap?
For drawing cash out of an atm in a foreign country yes.
wtf do you think you'd use it for? paying at mcdonalds? no, the primary purpose is for you to be able to sell bitcoins and draw the cash as cash out of the wall.
world was created 5 seconds before this post as it is.
You would be surprised at the number of people who use a credit card or debit card at McDonalds, other fast food places, 7-11s, or Wawas. They could have just hit the ATM for $20 and saved a few dollars by paying cash. Those ATM fees add up.
Is bringing a new currency to the mix a good idea? IS there an exchange rate for bitcoins? I always thought this was a way for the creator to scam people out of money. After all is does cost something to run those bitcoin machines. Plus the cost of the hardware itself. Have you ever looked at some people's bitcoins rigs? They spend $1000+ on them. If it was their hobby fine. Do people think they will get rich by doing this?
There's already BitCard, from "Global Standard Bank" They're not a real bank. They used to have pictures of their supposed building and offices in Montreal, which turned out to be a Photoshopped picture of a building on the US west cost, with a fake sign added, and a picture of a bank interior in Florida. They're not registered with Canadian banking authorities.
Here's the discussion on Bitcoin forums about them.
As for the new operation, I have a hard time taking seriously a financial institution that announces its products on IRC.
They need to find a new bank.
-- Let us endeavor so to live that when we pass even the undertaker shall be sorry. -- M. Twain
Many posters here are missing the point of this credit card, claiming that it will have all the downsides of both systems it is merging.
--Bitcoin is not required to be anonymous to be useful, and it's a benefit you can still have if you forego the credit card
--The point of the credit card is to make it possible to leverage your Bitcoins for every day purposes. If you reload the card using Bitcoins, but then you can use the card anywhere people use Mastercard -- now your Bitcoin savings can be used just like USD.
This bridges a huge gap for Bitcoin. Currently, those who own Bitcoins, have a tough time using them to get what they want. They're waiting for more widespread support, because the use-cases aren't diverse enough yet. With this, you can actually use them to buy stuff on Amazon (which you were going to do non-anonymously with your CC, anyway), but you can still maintain the benefits of Bitcoins for your own savings and services that support them natively.
This means that Bitcoins can join the party without being required to be supported everywhere. As merchants realize that they can save a couple percent and not deal with chargebacks, they can start supporting Bitcoin knowing that some part of their customer base already uses it. This normally requires a critical mass of users to be worth it for the merchant to take the leap -- this softens that curve quite a bit. For both users and merchants.
Also, if you are hostile to Bitcoin, please read this: http://slashdot.org/comments.pl?sid=2810657&cid=39797419
Umm, you don't pay a debit card fee on a normal cash transaction at a business.
Using a credit card allow you to make fewer trips to the ATM and avoid the fees. Not only that, most cards would have a 1% (or more) pay back either in "points" or "cash" for the purchase except for cash/money order withdraw and the usual additional warranties and other benefits.
That is your problem right there. There was no Highlander II movie. (Just like there was only 1 Matrix movie) The movie people thought it would be funny to skip II and go right to III. To keep the people guessing.
Why they named a space alien invading Earth movie Highlander is beyond me...
Sweet. At last we've found a way to combine the inconvenience of finding a merchant that sells something you want and accepts Bitcoins with the inconvenience of finding a merchant that sells something you want and accepts non Visa/MC/Discover/Amex cards!
0 1 - just my two bits
That's really how it works where you live? In Argentina it's forbidden to charge extra for debit/credit cards, and debit cards will give you a 4.7% refund on all purchases at the end of the month.
In short, I save 4.7% of everything I pay in debit card, while extracting money from the ATM is annoying, and they usually don't even have change.
And my last virus cleanup involved credit card processing, now I only use cash!
Financial transactions via HTTP? Totally secure! Man in the Browser ... you got me there.
An unregulated virtual cash system is certainly a great idea, but BitCoin? Bitcoinica announced that they are upgrading their exchange "to a professional level of security" just this year. Trustworthy, what was I thinking?
It probably involved email and HTTP too. Do you trust them?
Not for anything secure unless they're used with added trust and encryption.
You would be surprised at the number of people who use a credit card or debit card at McDonalds, other fast food places, 7-11s, or Wawas. They could have just hit the ATM for $20 and saved a few dollars by paying cash.
Excuse me? I don't pay anything to use my card at any of those places. In fact, I get cash back every time I use my card. Paying cash would actually cost me more.
My US Dollar trust ended August 15, 1971. These days the dollar runs on Hope and that seems to be running out too.
Please don't bundle the hookers with the rest of those, for they are service workers who involve nobody but themselves and their willing customers in their transactions. Also, please don't bundle the drug dealers, who are mere black market resellers, with extortionists and assassins.
Hookers are completely legit service providers, whether they happen to offend your personal morality or not. Drug dealers may or may not be legit, depending on their business practices. The Mafia, Russian or otherwise, is just a bunch of parasites which often preys on the first two groups. There's no other connection here.
Forget magic. Any technology distinguishable from divine power is insufficiently advanced.
Not that it matters, just like egold before it, BitCoin is already flailing with the problem of keeping the money launderers, drug dealers and various other underworld forces from overwhelming it to the point no legit person will want to be associated with it.
How did the dollar overcome this stigma? It's the #1 currency for laundering money bar none, yet nobody seems the least bit bothered being associated with it.
I have reserved a spot for this card; right between my Flooz and Beenz credit cards.
Don't blame me, I voted for Cthulhu.
I pay $3 every time I withdraw... so yeah, it's dirt cheap. Perhaps not if you live in your mother's garage though, consider getting a job.
wtf do you think you'd use it for? paying at mcdonalds? no, the primary purpose is for you to be able to sell bitcoins and draw the cash as cash out of the wall.
Why the hell would anyone want to do that, when you can already convert BTC to cash through a number of online mechanisms (as one of the simplest, gox->dwolla costs $0.25 per transfer)?
I love the idea, and fully support (yes, even use, when possible) BitCoins, but sorry, this sounds DOA - And not for reasons having anything to do with the "BitCoin" aspect of it.
I could be sorely mistaken but I do believe that each and every business you're using your card at has to pay for the privilege of being able to accept your card. Which, in turn, means that business is passing that overhead to you, the customer, cash, debit and credit. So, all y'all have zero points. Or are businesses magical realms that separates a mystical "them" from "us"? They all have fees so whether you see them in the first person or in the third makes not one bit of difference as to whether you're paying for it or not. You are. We all are. Your cash back is a pittance in comparison to what the card providers are making. Otherwise you'd be getting nothing back, ever.
\r
Low solvency and still low trust following the corralito. Why do they need to try so hard, even to the point of enforcing legal advantage? Beware the free lunch.
I've seen those discounts, even the >10% supermarket ones and I still prefer effectivo, bolivian veg stalls & vege shops. If only they accepted a less massively inflating currency too...
A blog I run for the wealth
Well, if I use a ATM not in my (bank's) system, I get nicked for $2.00 from the ATM, and $2.00 from my bank. So, pulling out $40 would be a 10% service charge, when I could just use my debit/credit card to pay for the transaction and make the vendor eat the credit card fee on their end (this is why you see a credit card minimum at many places). I assume the $1.50 fee that BitInstant would charge would also stack with the owner of the ATM's fee, so I would call it just about average (or 50 cents cheaper).
You were critically hit for no damage. The bruise will look nice, and maybe the scars will make good party talk.
So, can I pay that $10 charge using ....bitcoins?
I use a credit card at those places. I get about 2.61% back at restaurants (3x points for restaurants, but it's 115 pts/$1 for credits), and 2% back at gas stations and grocery stores. Gas costs more (technically it's a cash discount) at the time of purchase, but counting the cash back, I'm paying the same or less compared to other nearby gas stations.
I pay off in full every month, so it's more convenient and cheaper for me to use credit cards. (Yes, there is the credit card fee bundled into the price, but as I say every time, at each individual purchase, the price I pay is the same (gas station exception explained above), so it's advantageous for me to use credit cards.)
As for the main topic -- wasn't the whole point of this BitCoin thing to be anonymous? If you're using a credit card/debit card, even if it's backed by BitCoin, it's not going to be anonymous, right?
Yes. That's exactly what it costs for me to use any ATM that is not owned by my bank. Just because a lot of bank accounts have come with "free anywhere atm service" doesn't mean they all have, and even in those cases, it's a matter of the bank reimbursing the fee, rather than the fee never being charged.
Please send me you untrusted dollars. I'll watch over them for you.
This is just the first step of integration between the Bitcoin network and the Europay-Mastercard-Visa (EMV) network. The EMV network is what sits behind your Chip n Pin cards in Europe.
There is also the incredibly interesting OpenPay project (https://bitcointalk.org/index.php?topic=92055.0) which takes the level of integration a stage further. With OpenPay you can self issue your own cards and they will work in Chip n Pin terminals in any store. The backend payment processing is code you run yourself (perhaps on your mobile phone or PC at home). You pay in the store in local currency (£, euro, whatever) and then the payment is converted to bitcoin on the fly via an exchange lookup at one of the Bitcoin exchanges. You cryptographically sign the transaction with a private key that is stored on your smartcard. The card has a PIN.
For the US market, that typically does not have Chip n Pin yet there is AnyCard, where you can reprogram a magstripe card. This takes more work as, obviously, there is no chip to do the cryptographic signing in a magnetic stripe card.
There is a revolution occurring in payment processing right now. It's all open source.
I think his implication is that bitcoin is sleazy because it's used primarily by sleazy people, black market transaction, and people who will write viruses just to get more of them. Bitcoin hypothetically has legitimate uses whereas normal currency has been shown to have actual legitimate uses in practice.
Indeed (however, it's a payment processor, not BitCoin itself, that is taxing things). But it works, I think, in the long run: merchants will wise up, and learn that in-network transfers cost them a lot less (less expensive that Mastercard / Visa, and the money is theirs).
I am John Hurt.
You need to be fully verified in both mtgox and dwolla (ie send them a copy of your id and a recent utility bill to both web sites). Also, to witdraw from mtgox, you have to wait 6 - 8 business days for the mtgox -> dwolla transfer and 2 -3 more days for the dwolla to your bank transfer. In addition to the 25 cents charge, there is a 0.55% fee that mtgox charges for each bitcoin transaction to both the sender and the receiver, so total cost would be 1.1% + 25 cents.
So given all that, these seems like kind of a better deal.
You may want to look into the costs of handling cash and cheques. There's a reason the card people can charge what they do.
There are several bitcoin exchanges. Current value of 1btc is about $10
http://bitcoincharts.com/charts/mtgoxUSD#rg90ztgSzbgBza1gSMAzm1g10zm2g25zi1gMomentumzi2gRSIzi3gSStochzv
My last Bitcoin purchase was some books and toys from Amazon.com, by buying a giftcard from an affiliate that accepted BTC.
The affiliate was very upfront that they were getting paid comission by Amazon, and there was no charge to me for the service.
Since I got my stuff, I'd say that bitcoins have legit uses in practice
You're a hooker.
But you pay the same amount for products even if you use cash, so his point stands.
Sounds like you're the one living in mommy's garage and wasting money on frivolous purchases. We adults have bills to pay and families to support. $3 here and there adds up.
And bankers are the most wonderful people in the world right?
Lets get this over with... Fuck Off
Indeed; my friend manages a 7-11, and according to him they get charged a percentage of the transaction total (up to 4%, IIRC, depending on the card company). They don't charge the customer any debit/credit fees, so one of their mitigation attempts is limiting cash back to $10. 4% of $10 = $0.40, and when the purchase is a $0.35 pack of gum...
Get a better bank. Mine has no ATM fees, and refunds $x (25?) of other bank's ATM charges per month.
I'm afraid this is truly useless.
In a regular transaction, you exchange USD for Services. Credit card is a little more complicated, in that USD is given for services, but there is another transaction involved, where you exchange your credit for USD, and then later pay USD to reduce your debt. Sounds like this credit card service adds two more transactions to that same flow, without removing any transactions. The Retailer gets USD from the credit card company and you get Services or goods, The credit card company holds a debt for you (probably in USD because BC changes so much), and then you pay an exchange BitCoins for USD, and that exchange gives those BitCoins to the credit card company (Who in the long run, will just need to turn it back in to USD in order to pay off the vendors).
Cash Transaction = 0% overhead
Credit Card Transaction = Credit Fee + Retailer Credit Card Fee
BitCoin Credit card transaction = Credit Fee + Retail Credit Card Fee + Exchange rate fee (x2? Depends on whether or not they trust BC enough to leave it lying around)
The only way BitCoin's "Dream" can be realized is when retailers start accepting bit coins. At which point there needs to be a credit card where retailers can accept your bitcoins as payment (and not US Dollars), to avoid any extra exchanges, and ideally this would be somewhat ubiquitous.
- Holy crap, I've got MOD points! Who thought that was a good idea.
You get 2.6% cash back and everything is 4% more expensive than it would otherwise be because merchants are paying fees. I mean its one of those prisoners dilemma problems, but I really wish people would realize what is going on.
Hmm, via Square pretty much any Joe off the street with a smartphone can take credit cards and pay a 2.75% transaction fee. So I could theoretically set up a restaurant in my kitchen. order dinner from myself, pay via my Visa card which offers 5% back on restaurants and make a small profit.
BitCoin's fees seem unreasonable, not to mention I still see no reason to trust the "interesting, yet misguided currency which just won't die."
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I don't know about others but I bought three bitcoin rigs on credit and ran them for three months. During that time I made enough mining (after factoring power, ac, etc) to pay for the hardware. Rich? No, but I got three fairly sweet system upgrades with ridiculous graphics power. Ventures don't have to make you rich individually, they need to make you reasonable returns on investment. A friend mined for 6 months and made $15,000. That won't make anyone rich but when you consider that the rigs run 24/7 without any effort beyond a few hours setup on the part of the miner that isn't a bad income supplement.
The more people who mine, the harder it becomes to unlock blocks but the more the bitcoin becomes worth. Although bitcoin is on speculator markets and the price does bubble with interest... like Slashdot stories.
And yes, there is an exchange rate. Just like real currency there are a number of exchanges with bid and ask price where you can buy and sell Bitcoin with other currency. There are also people that trade gold for Bitcoin and vice versa. I actually considered opening a savings and loan at one point.
The real question is whether or not this Mastercard is going to be locked down to personal identity tracking details. The authorities have made cash very inconvenient to use. I assume this is why most of us don't use it on a daily basis anymore. This has to the potential to bring the convenience of credit/debit along combined with the kind of personal privacy that used to come with cash.
For example, I am about to purchase about $1000 worth of chemicals, glassware, lab supplies, and the like. This is a perfectly legitimate acquisition for the purpose of pursuing a legitimate personal chemistry study and lab work. Purchased through normal channels with my credit card in the most straightforward manner this might instigate not only a conversation with the DEA but might even trigger a hit for enough items on their meth tools list that they could raid and possibly even prosecute me. New laws actually let them send you to jail just by showing you purchased enough items that COULD be used to make meth and they don't publish the list of items. At the very least if they raid they will steal your gear and never return it.
This forces someone like me to skulk and spread purchases between multiple vendors and use cash at all of them. I will have to provide false personal details where possible. None of that is illegal but making large purchases with cash can raise suspicions not just from the staff at supply houses but from my wife. ;) A Bitcoin powered Mastercard might be just the trick. It even adds thousands of online suppliers to my acquisition source possibilities.
Banks charge businesses additional fees for handling too much cash. Additionally there is extra IRS oversight. It is debatable whether anyone is charging more as a result of debit fees.
That said, you are selling your soul by making all your purchases traceable and more so by making that the norm rather than the exception.
Being that the system is completely peer to peer I'm not sure why you wouldn't trust bitcoin? Unless you just mean trusting price stability thought that is better lately. I wouldn't store value in bitcoin but it works great as a cash transfer medium. Note that none of the fees mentioned here are automatic with bitcoin, they are just what one place is charging. If you are willing to wait a little longer to execute the exchange the fees are actually quite low and a very good bargain for privacy.
Why would you withdraw cash and spend it at McDonalds if you have a completely anonymous Mastercard that you can use directly? Cash uses are very limited these days and look odd if they are more than $40 or so, you can use a credit card everywhere in any amount from $0.10 to $5,000 and nobody blinks. This works especially well if you have a legitimate income stream that can be used to explain how you pay your household expenses. Using your bit funded card frees all your income up for funding on the book transactions and house expenses like rent, utilities, and gas so you look good in an audit. You pay all your incidentals with your card, cash, or bitcoin.
If you have serious bank coming in through bitcoin or no legit source of income you are better off with it coming from bitcoin than cash. You can make web-based ventures be the source of the income. You can generate anonymous bitcoin addresses to be the source of income all day long. There are no co-conspirators to refute you and no way to trace transactions to verify if anyone actually uses your service for real. Just computer generate bogus transaction records that add up to the right figures. There are no fees to transfer bitcoin in and out of Mt. Gox, only to trade it for other currency. You can do that transfer, call the fees a business expense, pay your taxes like a good citizen, and walk away with perfectly clean and laundered income. Your business with be profitable and paying its taxes and is unlikely to ever trigger an audit and would pass it if it did. You can even pay an accountant to do the books and they would never know.
Sounds like cause to not trust an exchange. The integrity of some exchange != integrity of the bitcoin. Bitcoin itself is a peer to peer system, every cycle spent mining actually makes the encryption even more ridiculously secure. The botnet running on your system was actually more reason to trust bitcoin than the other way around.
One thing to remember is that handling physical cash isn't free, either. Those security guys transferring money from salespoint to bank (or your employees doing it, running the risk of robbery, insurances against such risks, etc) doesn't magically happen just because security firms or insurance companies feel generous.
Where do you think those costs are bundled into?
Cash can loose it's value just as fast as money in a bank, regrettably, I see this day to day. On the other hand, but not using cash, I don't need to have my pocket filled with bits of metal, and pieces all day long, just one plastic card, and save around 10% of my monthly income using debit card.
Pretty similar to "extra 10% salary" in other words really. And if ARS get suddenly devaluated, I'm as much screwed as the guy next to me using cash.
He'd have to have a lot of trust to do that, and you have to have a lot of hope. :)
Wait, who's paying atm fees every time they use their Mastercard at a merchant?
They need to find a new bank.
Sadly, it is the merchant who is paying the fees most of the time.
There ain't no free lunch, and if merchants were allowed to charge the debit/credit card fee that they are charged by the card company for each transaction, it is very possible that most people would be using cash instead.
Frankly, a $1.50 per transaction is pretty reasonable all things considered.
Yes, it is possible for some merchants to essentially be paying banks for the right to give you a free lunch if you are buying something for a relatively low amount of money. Not only are they not really making a profit because of the cost to prepare the meal, overhead, and other things, it is possible that they are having to pay more in transaction fees than the amount they are taking in from the transaction in the first place.
Yeah, it sometimes sucks to be a merchant. Fees for debit cards tend to be lower (to merchants) than credit cards, but not by a whole lot. God forbid a merchant who has to deal with a real prick of a customer who decides to protest the charge that he has already lost money on and incur a charge-back fee as well due to a "canceled transaction", and other games that banks play with merchants.
This is also one of the reasons why Wal-Mart wanted to set up a bank of their own, so all of this money they were losing in transaction fees could be recovered at least partially (there is still the network fees banks pay, but those are a fair bit less). Also Wal-Mart, as "the bank", could protest charge-backs easier. That generally isn't possible for a small merchant though unless they join a credit union with other merchants.
Have you ever asked one of the merchants where you are making a purchase how much they are paying to the banks for the use of your debit card?
It isn't free. In fact it can be a very significant business expense depending on the kind of business they are running. You may not be charged that money due to some silly laws, but a typical merchant is much more appreciative of cash transactions, where you should see paying in cash for something as even a sort of a tip to that merchant in spite of the fact that you end up paying the same amount in theory that other customers are paying for the same items.
I know South American banks are run a whole lot more efficiently than North American banks (which tend to really pile up fees on their customers and treat their customers like scum), but the fees are still something that even a South American merchant needs to deal with.
Checks do cost more than a debit card, and some banks are now being real pricks and charging merchants some pretty nasty fees for processing checks as well, not to mention fees for counting coins. or processing cash.
The other problem with cash is the need to have somebody securely carry the cash to a bank at sometimes predictable times or to hire security guards to perform that act at random times throughout the week. So yeah, I can see similar costs applying to cash transactions as well.
That doesn't diminish the costs that businesses are charged for processing debit and credit cards though.
Not really. There is the issue of the fact that a merchant needs to cover these fees somehow, so you end up paying more for products you buy from that merchant in the long run. A typical merchant treats this as "the cost of doing business" and just makes it a part of how much they charge customers.
If a merchant is losing money in various transactions, they eventually go out of business... which really helps you out how?
You couldn't "pay yourself" in a restaurant you own in your own kitchen because you don't have a clue how much restaurants are paying for the "privilege" of accepting the card.
Yes, there is the transaction fee.... that you as the customer are paying, but then the restaurant pays an extra fee on top of that to the bank merely to get the money. Where do you think that "5% cash back" comes from? Visa doesn't give that to you out of the generosity of their heart, they are a business. Instead, it comes from the merchant along with some extra skin from that merchant on top of the 5%. That doesn't even get into taxes you would have to pay for running a restaurant out of your own kitchen, which would turn that "profit" you think you might get into a huge loss and an amazing revenue stream for local governments.
Just don't let your local municipal council know they are missing these potential revenue streams as they may force you to pay restaurant fees in your own kitchen and turn your crazy idea into law that you are required to do.
Upon first reading the headline I assumed "BitCoin Card" meant a processor card for generating BitCoins.
I could be sorely mistaken but I do believe that each and every business you're using your card at has to pay for the privilege of being able to accept your card. Which, in turn, means that business is passing that overhead to you, the customer, cash, debit and credit.
First, as others pointed out, there are business costs/risks to dealing with cash and checks. But that said, even assuming they were zero:
In theory, if everyone paid cash and merchants had to pay no fees, then yes, it would be cheaper to pay in cash. However, in reality this is like a HUGE case of the prisoners dilemma. If every customer (prisoner) were to act collectively in the group interest and pay in cash (keep quiet), then the result would be that everyone would get away with the best outcome pay less (get less prison time). However, in reality there are far too many customers (prisoners) to expect that a large portion of them won't choose the worst collective option. So in reality, if I choose to pay cash, my personal effect on the price is going to be negligible. Effectively, my choice is down to paying cash and getting nothing back, or paying with credit and getting 1) cash back, 2) extended warranties and purchase protection, 3) reduced exposure to being robbed. Since I can't control what everyone else does, it's in my own best interest to pay with credit and get what I can out of it.
indeed. you've found the dry spot underneath the bridge we've built. not much in the way of protection from wind and hail though. or piss.