The Case: Suppose you go to the market and purchase some goods using your credit card issued by your bank. Definitely the bank is providing you this facility in return for some profit. Keeping in view the core principles of money and banking, please explain, who is paying the extra money to the bank for providing this facility: you, merchant or both, and why? Support your answer with logical reasons.
Solution:When you do an offline transaction and simply sign a charge slip, the retailer (merchant) has to pay a small percentage of your total purchase – perhaps 2%. This fee goes to the bank that issued your debit (or credit) card as an interchange fee.
Reference : http://banking.about.com/od/checkingacco...credit.htm
