Ever pay a bill with UPI, debit card or cash?

Ever pay a bill with UPI, debit card or cash? Thanks! Because you just helped me get a free trip to Dubai!

How? Let’s rewind to 2007-08 ⏪

The housing markets in the US had collapsed, and no one was able to pay their mortgages.

As a result, banks were struggling.

To make money & rebuild their business, banks turned to credit cards.

To get people hooked on this product, they started offering some crazy rewards:

↳ 1 point for each mile travelled in the air
↳ Free ticket upgrades across the year
↳ 10% cash back on all expenses
↳ Round trips to Europe!

Essentially, banks wanted you to spend more to get more points, for which you had to spend more 🔁

But banks didn’t have a change of heart after the recession. They funded these points with an interchange fee.

When you pay for something with your credit card in a store, the store is charged an interchange fee. Then, the bank collects this fee from the store and uses it to pay for your rewards.

Retailers (naturally) hate credit cards because they are sponsoring our rewards!

To combat this, retailers increase their prices.

These ‘increased prices’ are levied on all customers – with and without a credit card.

The only difference is that the guy with the credit card gets points for all their transactions, and it comes from the pocket of UPI, debit card & cash users!

So, yup, people without credit cards pay for credit card rewards!