Credit/debit cards are used so much since they work. I get protected against scams or bad goods, get free miles so I can fly my family on holidays and it's so simple to pay in person or by phone/internet. Cash is nice to use occasionally (it feels more real) but only when necessary for small purchases and I certainly wouldn't do big expenditures in cash, plus you cannot use over certain limits anyway (try buying a car with banknotes!).
As for the fact that someone else pays for this service, this is the same as any business, where there elements of cross-subsidy. Every year I pay my car insurance and don't crash I'm subsidising someone who did. Everytime I go to an 'all-you-can eat' buffet I try to make sure someone is subsidising me by eating more than average.
I'm a consumer not a Bitcoin evangelist. I'll pay for something with my Bitcoins when it offers me an advantage to do so, either in speed, cost or security. Right now, for me personally, I've never come across that situation.
Exactly.
Merchants charge more to make up for the transaction fee the expect due to people using credit cards; prices would almost definitely be lower if credit cards weren't accepted anywhere. You may as well use your credit card and reclaim some of that premium in the form of miles and other rewards.
http://en.wikipedia.org/wiki/Tragedy_of_the_commons^ Prices would be lower if no one used credit cards but people use credit cards because there's a self-interest in obtaining the miles, rewards, etc..
You're basically paying for a service whether you use it or not. The higher prices everywhere credit cards are accepted is in exchange for convenience, buyer protection, and rewards. Using cash is like paying to enter a buffet and not eating anything.
The convenience of using credit cards is huge- I use my credit card whenever I can, even for the smallest of purchases.
It's a pain to have to pull out cash and put the change back in. So much easier to slide a card and be done with it. The fact that the CC company sees what I buy serves to my advantage as well since I can also log in and review my purchases. I'll use cash if I need a private transaction but I don't care about privacy for the vast majority of my purchases.
As for buyer protection/fraud prevention; it's unfortunate but true, but the majority of people will put as little effort as possible into securing their finances and will gladly pay a premium for someone else to do it for them. The fact that people fall for Nigerian/409 scams should be enough proof that some sort of buyer protection is needed for the general public.
The fact that you're borrowing someone else's money is also to your advantage. You're not responsible if your account is compromised and will be credited for unauthorized purchases before you ever lose a cent from your bank account. A few months ago I went to Subway and bought a $6 sandwich. I was charged ~$60 and didn't notice until I was looking at my credit card statement online. I called Subway but they never did anything. Called my credit card company and they took care of it and refunded me the difference with no additional effort on my part.
Cash (whether paper or digital) should always be an option from a security standpoint but I don't think there's any reason for most people to use it for day-to-day transactions. I fully support Bitcoin but a solution for quick transactions and buyer protection/security is absolutely needed before it sees any major point-of-sale adoption.
Never underestimate what people will pay for convenience and protection. (and miles
)
(The downside of credit cards is the ability for people to mismanage their money by carrying a balance for extended periods of time, which is where the CC companies really profit)
