So I should be excited right? Well, not really. The 2% cash back barely makes up for the 2% that MC/Visa take out of the middle in the first place! So the goods I buy cost more than they should and I get a "kickback" on the backend.
And if you're someone without access to great cards, then you still pay the same price in stores but you get no cash back, high APR, low credit limits, and crazy late fees.
It's regressive taxation.
> On average, each cash-using household pays $149 to card-using households and each card-using household receives $1,133 from cash users every year. Because credit card spending and rewards are positively correlated with household income, the payment instrument transfer also induces a regressive transfer from low-income to high-income households in general.
I'd be surprised if the cost adds up to 2% of the cost of all goods, but it's still there.
> And if you're someone without access to great cards, then you still pay the same price in stores but you get no cash back, high APR, low credit limits, and crazy late fees.
That's an entirely different discussion, and completely misses out on debit cards (no APR, typically includes some form of rewards), when the bad cards should be used to build a good credit history, not as a daily driver.
Fraud. While you may have an individual pay for $10-$500 in goods with counterfeit currency(rare), you'll definitely encounter $10-$5000 purchases with stolen card numbers. This means you not only lose the sale income, but you get charged a fee because there was a filing against you (charge-back).
Depending on your line of business, this can be as high as %0.66.
Not that much. Which is why all-cash businesses invariantly offer stuff cheaper.
I do think there's a right to privacy, and I do hope it's difficult to gather political will for taking away rights.
I mean, it's much easier for a tax inspector to simply go to the store, when it's busy, and wait for the slip up (when the clerk accepts money but does not use the register).
But in my opinion this was rare even before. And in really small operations, they don't have a register anyway. (Or take the gamble and don't use it.)
There's no reason why it shouldn't.
> I mean, it's much easier for a tax inspector to simply go to the store, when it's busy, and wait for the slip up (when the clerk accepts money but does not use the register).
Why would a lowly clerk break the law for his multi-millionaire employer? And why would a customer do business with a company that didn't provide receipts?
That's not how it works. The fraud happens further up the food chain. However, if the taxman knows exactly how much money came in from customers by monitoring the cash register, he knows how much to expect in taxes from that business.
> But in my opinion this was rare even before.
Perhaps in your country. A few years ago whistleblower protections and a reward system were enacted here. So anyone who dobs in a company that's been evading taxes gets a percentage (IIRC 10%) of the unpaid taxes subsequently recovered. Since then there's been a string of highly-publicised cases of the taxman coming down on tax evaders. They recover taxes and squeeze more out of them in penalties and fines, and the whistleblower (probably some low-paid bean counter in the company) get's a huge lump of cash for his troubles.
Anyway, as a result of these events, now the taxman monitors the tax registers of large companies that accept cash. Certain categories of commerce and small businesses are exempt.
On the topic of criminal behavior, it's also worth noting that doing business cash-only makes you a more tempting target for robbery; if you did almost all of your transactions via credit or debit cards, you'd have very little in the till for someone to steal.
Since old habits die hard, these small businesses used to under report income despite the trail of evidence left by credit card processors. So, IRS came in and imposed a rule on these processors: send us a copy of payments paid to Mr Small Business X--and that copy is called 1099-K. This is like W2, 1099-MISC, 1099-INT.
Basically, the tax man wants records from the third parties, since self-reported ones are mostly under reported.
Some processors charge merchants for this reporting services to the IRS which further drives up Merchant Services cost.
I know people who work in hospitality. Employee theft is endemic. Via both cash and card.
Back in the 90's, my parents were making a purchase with a card, and the cashier told them that the machine was down, so he had to take a copy of the card to run it later. A quick swipe of their card throughv something that impressed it on carbon paper and off they went.
Not long after, police showed up at their door informing them that said cashier's apartment had been raided and a whole stack of copies of cards had been found; for every one he made for the store he kept one for himself.
Mind you, this was before ubiquitous cell phones, internet access, and way before chips in cards for encryption. Whether a similar tactic could work now I have no idea.
Customer A has an open tab, customer B pays with cash, put B's drink on A's tab and pocket the cash.
Only if you don't fall behind on payments and start paying the card their exorbitant interest, as most people end up doing.
(I always have money in other accounts for emergencies, but this keeps day-to-day spending in check.)
These fees are more in line with costs in Canada (~$.03 a transaction).
These numbers align with my experience when working for a processor in the US.
The debit cards have different regulations which as far as I understand, don't exist (ie, it's like the old credit card contracts where they didn't allow you to charge a separate price for cash transactions). This is only my assumption.
There was no discussion on what regulations we had to follow for our merchants when it came to bank network transactions(the deals are brokered on a per bank basis, you can see which networks your card supports by looking at the back of the card for instance). Because of the segregated nature of the debit networks, they have less clout than visa or mastercard.
The consumer-friendly thing to do is to charge proper rates for things with higher processing fees, like credit cards, and not subsidize them by punishing everyone else.
I'm not sure I'm following. The reason you'd do it is because you want to pay for a small purchase with your debit card. Like if you run into a gas station and buy a soda and a bag of chips but don't have cash on you.
>That regulation is in place purely because of political bribery by the credit card industry.
It's in place because it was determined that people shouldn't be subjected to a minimum purchase amount for paying with their own money through their debit card. (As opposed to paying with borrowed money through a credit card.)
>The consumer-friendly thing to do is to charge proper rates for things with higher processing fees, like credit cards, and not subsidize them by punishing everyone else.
Again, I'm not following. We're talking about minimum purchase amounts. What's punishing someone else?
I've seen it done at gas stations (of all things), but never anywhere else.
And you don’t want to. Adding another set of prices and complication isn’t worth it to the business owner.
Interchange fees to the issuing banks start around 1.5% while Visa's volume assessment is only 0.13%.
But they get a tiny slice on an ungodly amount of transactions, so it adds up.
And to boot, you pay a yearly fee for those non-interest-bearing funds to sit around!
$0.25 and 2% is much less than the fees for Bitcoin, even cheaper than the ethereum gas.
If you only want to compare to cash, the cost of one bad employee greatly exceeds 2%, then employees needing to transfer money to and from a safe, and the guards and trucks required to transport that money.
At best it's a 3 party system between the Gateway (Auth), Acquirer (person actually paying the merchant), and the card brand. I don't think it's uncommon for their to be middle-men between the acquirer and merchant.
So something is only taxation if the money is wasted in your view?
Sometimes I wonder if half the problems we have in this century stem from our eagerness to slap labels onto things instead of just letting them be themselves.
>Researchers at the University of Bologna in Italy created two simple reinforcement-learning-based pricing algorithms and set them loose in a controlled environment. They discovered that the two completely autonomous algorithms learned to respond to one another’s behavior and quickly pulled the price of goods above where it would have been had either operated alone.
>“What is most worrying is that the algorithms leave no trace of concerted action,” the researchers wrote. “They learn to collude purely by trial and error, with no prior knowledge of the environment in which they operate, without communicating with one another, and without being specifically designed or instructed to collude.” This risks driving up the price of goods and ultimately harming consumers.
I don't think it's out of the realm of possibility that two companies could arrive at such a move without conscious collusion. I also don't think it should be treated differently.
Long term, I think Visa an MC could shoot themselves in the foot. Merchants are now allowed to charge fees for using CCs IIRC in at least some areas.
You could easily end up with a situation like Europe where people mostly use debit cards for in person purchases since the processing fees are lower.
Consumers lose the protection of a buffer from their bank account, issuers lose out on revenue. Not a good outcome IMHO.
That is there is more than you win/I lose or I win/you lose but there is win/win.
It’s definately conceivable two algorithms or two ai would be capable of concluding the same. In fact it may be even easier because what’s the actual dilemma/self interest of such a system without the selfishness of human nature?
In India, banks have transferred the liability of debit card frauds directly to the card holder.
As far as they are concerned, the cards have EMV chips, and you have to provide a PIN to use the card on every transaction (merchant or ATM). Further, everytime a transaction occurs, the user gets an email and SMS message on their mobile informing them of the same. So ultimately it is presumed to be your fault if your debit card is "misused" in any manner.
If you lose your card or suspect fraud, you can always block it through your online net banking account or by calling the bank.
In fact, there was recently an interesting and controversial indian court case and ruling on debit card usage -
A spouse used his wife's card at an ATM to try and withdraw money to pay her medical bills (she had just given birth). The transaction failed (i.e. he didn't get the money) but the amount was debited from the account. They informed the bank and the bank told them that there might be an issue with the ATM and in such cases the amount would be credited back to the account in 24-48 hours. When that didn't happen, they filed further complaints with the bank and the ATM's CCTV footage confirmed that the ATM had not disbursed the money. But since the footage also showed the spouse using the card, and not the card holder, they closed the case stating that since debit card PIN has been shared, the bank is not liable as debit cards are non-transferable. After appealing in various forums, and finally in court, even the court sided with the bank. They further added that if the account holder wanted her husband to withdraw money, she should have given him a self-cheque for the amount, and not her debit card.
In India, banks have transferred the liability of debit card frauds directly to the card holder. As far as they are concerned, the cards have EMV chips, and you have to provide a PIN to use the card on every transaction (merchant or ATM). Further, everytime a transaction occurs, the user gets an email and SMS message on their mobile informing them of the same. So ultimately it is presumed to be your fault if your debit card is "misused" in any manner.
A spouse used his wife's card at an ATM to try and withdraw money to pay her medical bills (she had just given birth). The transaction failed (i.e. he didn't get the money) but the amount was debited from the account. They informed the bank and the bank told them that there might be an issue with the ATM and in such cases the amount would be credited back to the account in 24-48 hours. When that didn't they filed a complaint, and the ATM's CCTV footage confirmed that the ATM had not disbursed the money. But since the footage also showed the spouse using the card, and not the card holder, they closed the case stating that since debit card PIN has been shared, the bank is not liable as debit cards are non-transferable. After appealing in various forums, and finally in court, even the court sided with the bank. They further added that if the account holder wanted her husband to withdraw money, she should have given him a self-cheque for the amount, and not her debit card.
And the CC "protection policies" aren't that useful here, in my experience it's near impossible to do a successful chargeback and there are few cards with high cashback.
- the typical open and transparent "price signaling" where competitors can "see" others' price changes. Similar to one airline immediately changing (matching) a ticket price in response to another airline lowering or raising its price. Same mechanism as Amazon bots constantly web scraping Best Buy and Walmart and Best Buy in turn scrapes Amazon. Everybody is constantly monitoring everybody's prices.
- Visa and MC have overlap of owners. 4 out of the top 5 owners are the same for both: Vanguard, Blackrock, FMR, State Street
- Visa and MC have overlap of member banks that also have minority ownership
Yes, you were being sarcastic about the coincidence but it seems like the natural economic equilibrium is for both to have near identical network fees.
 Visa top 5 institutional stockholders: https://www.nasdaq.com/symbol/v/ownership-summary
 MC top 5 institutional stockholders: https://www.nasdaq.com/symbol/ma/ownership-summary
Economists have found evidence that as ownership concentration increases, firms act more like a monopoly.
See this paper for one example in the airline industry: https://onlinelibrary.wiley.com/doi/full/10.1111/jofi.12698
There's been a trend towards more activism with passive indexes. One example with Blackrock's passive fund:
it’s at least not totally implausible.
Company A 'mulls' something, company B and C follows, X gets done.
If company A mulled something and no one else piped up, they could still of course go it alone, or they could decide that they want to help save their customers even more money, and not raise prices.
Technically it depends, but it's still Delta branded with Delta setting the policies. Endeavor Air is, for instance, wholly owned by Delta.
to be fair, one needs to experience the current credit card rigamarole to realize that straight lower prices are less complicated and preferable. i get tired of having to remember to cash in my points in a convoluted system involving yet another third party (the rewards provider).
Get Citi Double Cash and you'll get 2% on everything without point conversion hassles.
Also, some cards automatically apply rewards points. My Schwab Amex card deposits my 2% cash back each month directly into my brokerage account. My Amazon Prime card just gives you a checkbox when buying on Amazon where you can apply cash back to your purchase during checkout.
Visa and Mastercard change prices much less often than that, so this take is a little too apples-and-oranges for me.
All data shows the same: competition is being trumped by consolidation and its eventual end, cartelization
That's not to say that capitalism is thus refuted as an economic model. All it means is that someone hasn't been doing an adequate enough job (probably regulators or lawmakers, in this case).
Capitalism's success is always a function of adequate rule of law, economic regulation, social trust, and personal generosity. Where those are present, it absolutely trounces other models.
Capitalism isn't just a hand, it is mostly a mind that runs as an overlay over all the participants willing or not, and it isn't very bright, but it is very powerful. We are all but rabbits under its strong hands.
these services should not operate as for-profits. though efficient oversight is also hard :(
Cooperation is the way to maximize profits for both companies.
Why are they not competitors?
I might be way out there, but if two companies provide the same service (even if they vary slightly), they are competitors.
It's the same reason why airlines don't compete with each other.
Source: am in the industry.
Along with lowering costs, Optblue let processors add a markup to Amex transactions. (Previously they couldn't. That meant no incentive for processors to suggest or push Amex acceptance, as they didn't make money on Amex transactions.)
Now they can, and those markups tend to be higher than for Visa/MC. In egregious cases, the processor simply continues charging the business the old Amex rate (~3.5%) and pockets the entire difference between 3.5% and the new lower rates.
Well merchants and consumers aren’t the competitors of visa/MC. Maybe they should cooperate by lowering the fees. If cooperation is the way to maximize profits...or does that only work when two companies collude to price fix?
Okay and seriously: I actually just want US Mint backed card. I think it's absolute lunacy that these private companies are essentially levying their own tax on consumer transactions. Cash is outdated, and the government should react appropriately. (And only in my most feverish of fever dreams: it's a cryptocurrency, and only at >104F temperatures, it's on the ethereum network. Oh boy a man can dream!)
In this world: Amex, Visa, and MC can go back to being credit cards.
At the beginning the transactions went through your credit card, but they added (optional) direct bank account access not long ago. They also quickly removed transaction fees for amounts < ~$500, above it's 1%.
They've also added ability to have company accounts, so that you can pay in kiosks, kebab shops or whatever with Vipps. And since they're backed by the banks you can get and pay your bills directly in the Vipps app. They're currently in integration talks with Paypal to make Paypal<->Vipps transactions more smooth.
So yeah, raising transaction fees isn't the first thing I'd do if I were Visa or MasterCard in Norway.
I remember being shocked when my local pizza place put a sign on the register saying there was now a 3% fee on card usage (which became legal to do as of ~September 2017). Absolutely wild that Visa/Mastercard would raise prices further. It's already hard enough to find a place that accepts my Discover card, let alone an independent joint that will accept Amex (accept for all the places in and around Chinatown who only accept Amex, never will understand how _that_ happened).
Otherwise there is no incentive to lower them.
Whether it's actually working that way in practice, of course, is a valid question.
Combine this with contract terms in many places preventing merchants from passing on fees and it gets even worse, because card networks can gain customers and increase their network size by offering rewards and then use the network effect to raise fees. If the merchant can't charge more to customers whose card network charges them higher fees, the cardholder has the incentive to use the card with the highest rewards (and thus the highest fees), so you get a ratchet of increasing processing fees despite an overall trend of falling underlying processing costs due to automation.
Slightly old info, but:
SEC filings for end of 2016 had Visa circulation at 335 million, MC at 200 million, Discover at 51.4 and Amex at 47.5.
Nilson report 2016 card usage by volume has Visa at $1.549 trillion, with Amex at $0.695 trillion, Mastercard at $0.693 trillion.
Forbes has some charts with market share info.
Moreover, that still wouldn't give you competition, because then what incentive does Visa have to give you a good rate if they're the only network you could plausibly attempt exclusivity with? It's like trying to solve a lack of competition by creating a monopoly.
>contract terms in many places preventing merchants from passing on fees a
This is not a thing anymore, the card brands allow surcharging. It's prohibited by state law in something like 7 states, but those are rapidly losing court battles about it.
Providing parking is also a cost of doing business. I don't see any arguments in favor of merchants charging car-driving customers more than walk-ins.
Customers regulating through voting with their wallet isn't going to work with how much power large financial firms wield. I contacted Elizabeth Warren's office (she's on the Senate Banking Committee); if this matters to you, I suggest you do too!
Unless you've also got a plan to get a Democratic majority in the Senate, your plan probably needs to extend beyond Warren if you are relying on her role in the Banking Committee (if you are expecting her to win the Presidency in 2020, that's perhaps another story.)
It does. No need to pollute this thread, email me if you want to chat about it.
Saying as a merchant ;)
I used to tell myself that it was superior customer service, but I once disputed a charge at an overseas hotel and was sure it would be a fast/easy process - I paid for the room through Expedia and the merchant charged me for the room after I checked out. I contacted the merchant and they agreed and said they'd refund the charge. They never did.
I sent all of the information to Amex including the Expedia booking and the email from the merchant saying they'd refund me. It took them 3 weeks to "investigate" the charge and then they came back and determined that the charge was legitimate and I was not due any refund.
I spend an hour on the phone with them and got escalated to a supervisor who said she would re-open the investigation and 20 days later, they decided that I was due a refund and a week later they refunded it.
That's when I realized that there's no reason to have an Amex, so I replaced my Amex Gold Card with a Chase Sapphire card - I had to dispute one charge on the Sapphire and I didn't even have to talk to anyone, just did an online dispute and had my money back in less than a week.
As you said, users should still carry a backup, but most places accept it. As for customer service etc., their platinum cards are where they shine.
They were prohibited by federal law until a few years ago. That was repealed, but now they're still prohibited by state law in a number of states. In addition, some merchant agreements still prohibit it, particularly if the merchant accepts American Express.
I don't have any love for Ryanair but recently booked with them because the ticket cost less than Easyjet's fixed fee.
square lists discover fee 1.56% – 2.3% and visa fee at 1.43% – 2.4%.
of course, fees are negotiable and much less for the physical retail. durbin amendment sets the limit on /debit/ fees at 0.05%+$0.21
From their perspective, the fact that companies like Stripe and Square have been able to obtain unicorn valuations for card processing services means that there's money left on the table. Card processing was a basic commodity business before these guys. Somehow, Stripe et al have been able to convince a large swath of customers to accept 2.9% + $0.30.
Did you know that interchange on most debit cards is just 0.05% + $0.22? That's massive margin.
Visa/MC is like, sorry Stripe, don't try to play our game on our platform. We invented it. (Somewhat cynically you could argue this is why Stripe spends a lot of time/resources on "big thinking" and kind of puffing themselves up into more than a "card processor". It's part of the sell.)
>Did you know that interchange on most debit cards is just 0.05% + $0.22? That's massive margin.
Except on certain transactions where it's a money loser. Square was charging Starbucks 2.75% and Starbucks' average $5 debit transaction was killing them. They lost millions.
Square’s cost to process a regulated debit card works out to 0.16% of the total sale price (the 0.05% regulated and the assessments from the card brands) plus a transaction fee of $0.2355. (Again, the regulated transaction fee plus assessments.)
So, Square’s cost to process a $5 transaction is $0.2435 (5 x 0.0016 + 0.2355). However, 2.75% of $5 is only $0.1375, which means Square losses $0.106 (0.2435 – 0.1375). It only charged its customer $0.1375 for a transaction that it paid $0.2435 to the bank and the card brand to process.
That's a somewhat separate issue. That's because Square doesn't charge an absolute component ("+ $0.xx"), not because their percent component markup wasn't huge. In any case, Stripe suffers no such problem.
Visa even owns a low volume processor called authorized.net that charges same fees as stripe. They also own cybersource which specializes in high volume processing which operates on an interchange plus model.
Are there published details on this? What is their markup?
Generally, Interchange plus fees(not stripes) range fixed of 0.05 with 10bips settlement fee all the way down to fractions of a penny if you're doing millions of transactions per month. Authorized.net used to do 0.10 and 25bips settlement but I think they only do blended rates now.
Stripe only partners with a merchant acquirer bank. To replace Visa/MC they'd also have to get into the card issuing side of things: get a bank or banks to issue "Stripe cards" and get merchants to start accepting them.
Yeah, that's not how it works. Banks that issue cards contract with intermediary card networks like Visa/MC, not POS system vendors.
> integrating bitcoin lightning network soon
Been hearing that for years. Basic problem is while merchants would love to have lower fees, consumers don't have a powerful incentive to switch off using cards. The usual argument is they would save ~2% on prices but there is actually evidence that this would't necessarily happen. When Australia regulated down processing fees, the savings were not passed onto consumers.
Certain retail industries are willing to pay a premium for simplicity and better UX. Merchant account processing is a cottage industry and it's easier to pass on hidden charges through a merchant than a what-you-see-is-what-you-pay flat rate. Especially one with Stripe-caliber UX.
Also, they have a more direct rival to Visa and MasterCard as well. RuPay, which has lower fees apparently.
Compared to that Visa, MasterCard and Rupay combined do around 150M transactions a month. Of course if we add ATM withdrawals (which is actually a cash transaction to think of) than that number is around 800M per month for all of them combined.
All numbers are for India only. in USA Mastercard alone does around 12B transactions a year and globally around 75B transactions a year. Large but India's UPI had a fair chance to even overtake than in next 5 years.
I like how in Europe and Australia interchange fees are capped. Even if it means they live without such bountiful premium cards.
>> In the United States, the fee averages approximately 2% of transaction value. In the EU, interchange fees are capped to 0.3% of the transaction for credit cards and to 0.2% for debit cards.
More like stagnant growth and very few levers to increase their (Visa/Mcard) bottom line - which, of course, shareholders demand. Issuing banks and acquirers deal with the points people get.
Source: was in the industry for a dozen years.
Would Stripe exist if PayPal hadn't been so hostile to their customers? Giant markets of money movers all explicitly saying "We hate having to use these guys, isn't there anything better?" tells David that it might be worth fighting Goliath.
IMO blockchain is like a green-party candidate that undermines more promising candidates by sapping votes in a system that doesn't allow runoff voting – it's a shiny, utopian distraction that prevents people from starting the companies I think are more appropriate and promising – card & payments startups that support or resemble existing infrastructure.
Privacy.com, Final (RIP), the venmo card – the first company to unseat the incumbents in the card space is going to be a big deal. Stripe is making excellent headway in eating the elephant, using their web payments platform to get big enough to compete in the more difficult card issuance space. Here's hoping they have ambitions of re-investing the clout they get from cards to attack the underlying processing layers, and disrupt global financial infrastructure from the outside in.
The Point Of Sale industry is making great headway here too. Revel, etc. The blockchain equivalents have flopped, but the card-based ones are now standard issue at even the tiny mom and pop stores. There's real hunger for modern tech in the payments space, it just needs to roll out in more accessible stages.
There could be a dark brilliance to such a move. Want to raise your margins? Get paid to sell your low margin product, let it die, and get paid again when you raise your margins in the new market.
Best thing is credit card rewards are not taxed because they are considered a rebate, which is quite amazing especially in a high tax state like CA!
Well, sort of. Enough bad publicity and public shaming has some impact on corporate bad behavior.
> it makes no sense to "protest" by using cash
I agree — I never suggested that.
I also churn. After an initial investment of learning the concepts, I spend very little time. I can go onto a major issuer's site and spot a good deal in minutes. I have a small text file where I note offers I see on Reddit that may be of future note.
I don't recall how long it took to "learn churning" but it was small chunks spread out over a long period.
I periodically take breaks when coding to rest my brain. I'm taking one right now in fact :)
So I'd argue the time cost was zero/near zero since I wasn't going to be "productive" during those breaks anyways.
Then again, I'm not an extremeist - I mostly keep an eye out for destinations I'd like to vacation to, what airlines service them, then sign up with a card that can get me points to pay for that flight.
In the end, I'd estimate I save 1-2k on airfare per year plus some spare change in cashback. (Credit card rewards are treated as discounts and thus not taxable income, so getting tax free airfare then putting the money into an IRA or 401K is +EV).
I don't let myself get wrapped up in getting an extra percent back on my tacos or something though - in fact through analysis I've found that keeping entertainment money as cash reduces spending to a point it's better to use cash than use a CC and get rewards for spending at bars, restaurants, and the like.
The reason is because on the legacy airlines, international business class seats usually cost 4+ times more than the economy class seat on the same flight but you can redeem just 2-3 times more miles for a business class seat rather than a economy class seat.
One of the issues with this hobby is that the reward redemption flights are typically not as good as the non-redemption flights (i.e. you might have a layover as opposed to a direct flight).
For instance, the United/Lufthansa/Swiss alliance has flights from NYC to Paris departing May 27 and returning June 5.
Economy seats are ~$650 or (60k United miles + $105). For economy, those miles would have a valuation of ~$0.0091/mile (($650 - $105) / 60k miles). Chase somewhat regularly offers signup bonuses on their United credit cards of 70k United miles if you spend $3k within 3 months (you are charged a $95 annual fee in this case). So the ROI is ~$450 ($650 - $105 - $95) in exchange for spending $3k on that new credit card.
Business seats are ~$2900 or (140k United miles + $161). For business, those miles would have a valuation of ~$0.0196/mile (($2900 - $161) / 140k miles). The same Chase offer as before applies. But you have to open the card, meet the spending requirement, get the bonus, close the account, and reopen the account and repeat once more. The ROI in this case would be ~$2549 ($2900 - $161 - $95 - $95) if you spend $6k on those two new credit cards.
In either case, it shouldn't take you more than a ~10 hours of active work to get those kinds of returns. You do need to occasionally check the banks' websites to see if they're offering any special deals, occasionally check the airlines to see if there's any favorable redemptions available, etc. In the case of economy, the ROI is ~$45/hr. For business it's ~$255/hr.
Edit: Also, I consider it a hobby. It's fun to try to beat the system. And the reward for "beating it" is incredible experiences (i.e. Singapore Suites) that would be far out of reach if I didn't play. Would you ask the same question of someone who cooks or plays video games what their ROI is?
(IME, CC bonuses are less time intensive than checking/saving bonuses. You just sign up for a new card off one of the blogs that tracks current offers as soon as your min-spend is met on the last one, and put your ordinary spending on the new card.)
If you spend $250,000 a year on credit card purchases and get 4% back on everything you've cashed in on $10,000 bonuses, but you had to spend $250,000 to get that.
It sounds like one of those conversations where it's like "yeah, just buy a car because you can write it off on your business account", so while you do get a discount on your taxes, you still had to pay for the car which is a net negative on how much $ you have in your pocket at the end vs not buying the car and paying more taxes.
Also I'm not sure about "higher prices", in my town there's two convenience stores across from each other, one with CC fee and one with no fee, same prices otherwise, so I just go to the no fee one. Maybe it gets worked in somewhere but it's not as fair/efficient as it could be.