Opinion: How credit cards drive up costs for all consumers

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Larry Harris, who wrote the Aug. 4 Op-Ed about the hidden cost of credit cards, came across comments on his piece that try to disprove his argument. He offers this reply:

Several commentators note that cash customers also impose costs upon merchants. Merchants often lose to internal theft and to counterfeiters, and they often must pay for armed security to protect and transport their cash holdings. These considerations make credit cards attractive to merchants.

Cash handling costs are important, but they have not changed much over the last 20 years. In contrast, the costs to merchants of accepting credit cards have risen with the introduction of increasingly generous rebate programs. Merchants who do not offer cash discounts raise their prices to all consumers to cover these costs. My argument that the costs of the rebate programs are borne by all consumers whereas the benefits accrue only to credit card users remains valid.

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