Are credit card machines are the modern day equivalent of medieval coin clipping, except these days it’s not the poor doing the coin clipping it’s the banks!
What is Coin Clipping?
Coin clipping was a practice in medieval times where people would cut a little bit of each coin that passed through their hands. The coins usually in those times had precious metals in them and those who handled the coins would take a little piece, a cutting or clip, of each coin and then melt a collection of shavings down to make extra cash.
A really good description can be found in this introduction to coin clipping.
So, how does this compare to the modern debit/credit card clipping?
With our modern card payment systems, each time you use a debit or credit card, a “transaction fee” is levied to every single purchase meaning each time a payment is made (a transaction), a small fee is levied to the merchant.
The merchant/business is charged this fee and is then minus the free from the amount displayed/charged in their online, store, shop or eatery.
A good example would be that if the store were to charge £10.00 and the transaction fee was 1.5% then the store would receive £9.85 and the processing agent, or payment gateway receive the remaining £0.15.
“With an estimated 678 billion global credit card transactions in 2022 (equivalent to an average of 1.86 billion per day)”
This fee is for enabling the transaction from the customer to the merchant.
Thus they have clipped a tiny bit of the merchants money. 0.15% of the transaction.
From figures I found on Google, Visa process about 660,000,000 transactions per day. That’s a lot of clipping!
Let’s say each transaction is only a small amount of £10, and the average transaction fee is 1% then the amount received by the credit card companies would be some £66,000,000. And this is happening every single day, so times that by 365 and you get £24,090,000,000! And this is only one card payment type.
All hypothetical numbers of course but I’m sure the real figures are out there somewhere!
So can credit card payments be compared to medical coin clipping?
Well, I certainly think so and the more transactions we do by card, on the way to a cashless society, then the more money the bank will clip from customers and merchants alike.
Picture this though, if cash is removed from society what is to stop the banks increasing these fees ad hoc?
Or indeed charging you the consumer to use your debit card?
Who knows??!?!?!?
Photo by tommao wang on Unsplash