<prompt> Human: There was a recent rpersonalfinance post talking about how credit cards can be beneficial if used correctly. I think that assertion is right. But credit cards have negative effects on local merchants and the shiney happy veneer from the previous post chaffs me. My previous mostly unread comment that was the basis for this post was late to the party. Now rpersonalfinance can downvote these comments on their own. Credit cards are convenient but they are evil in ways that discourage local business. Here is how: the merchants agreement with the credit card company gives the credit card company a cut of every transaction. the merchants agreement with the credit card company is negotiated based on scale of business. Your local merchants are paying a greater percentage than the big chains. It hurts them. the merchants agreement can allow the credit card company to arbitrarily hold up all payments if a single customer complains. This can be catastrophic to a small business. Amex is especially bad for this. the merchants agreement includes a non disclosure that does not allow them to tell you all this. the merchants agreement precludes giving a discount based on cash payment because they would all offer such a discount. And they did 25 years ago... before the natural monopolistic credit card companies all contractually prohibited this.My rule: I use my cards at any big chain. I try hard to pay cash at local businesses.  <response>: Small businesses can choose to not accept credit cards if they think they are bad for their business. Obviously, most dont because it benefits them to offer this service. Credit cards allow their customers to purchase on credit without the business having to take the risk of extending them credit terms themselves. They also dont have to risk nonpayment like they do with accepting checks.Small businesses usually get worse terms from the processors than big companies do, but this is true of almost all vendors they work with. Higher volume gets you lower prices. 