When customers ask about credit cards and get told prices would have to rise, they usually say they'd rather pay with cash. Why do you think business owners and cash buyers should pay for your airline miles and cash back?
Why should a credit card user pay for your armored car pickup/delivery service, or the extra time spent handling and counting cash? Or any of the other overhead that goes into operating a business, but which I don't directly benefit? It's just more difficult to narrow down a dollar figure for a discount if I say "I didn't walk in the Sporting Goods section, so I don't want to have to pay for the floor cleaning services that take place in that department."
A credit card fee happens to be easily quantified, so it's easier to try to filter out.
Two: Those "expenses" are probably bringing along some additional sales revenue. I've seen various studies which say that people with rewards cards spend a disproportionately higher amount than those without. (A person who might otherwise spend $70 will spend $100 even if they're only getting 2% cash back.) Credit card companies
probably wouldn't be pushing rewards cards if they were going to lose money on the deal. In the process, a retailer will also get to soak up a piece of that additional spending. And of course, some people are simply prone to spend more when they have a credit card than they would if they had cash.
But that pushes into "difficult to quantify" territory. "Excuse me! Did you spend at least 5% more than you otherwise would have spent if you were carrying cash? What about if you had a rewards card? By what amount did that affect your spending habits?"
Here we go.
"A Dun and Bradstreet study several years ago showed people spent 12-18 percent more when they paid with credit cards instead of cash."
Saving money on the card fee can come at the expense of reduced sales. Oops.
It's certainly a complex interaction.
It'd just be quite interesting to find out that offering a "cash discount" and shunning those spending-habit-altering cards actually results in a long-term
reduction in sales.
(I wish we had a way of applying some electrical engineering principles to this. This situation is a feedback circuit, that's all. It just takes a longer time to stabilize than an electrical circuit, and people are always meddling with the inputs too quickly to get a clean output signal.)