How do credit card companies make profit by giving us credit for 40-50 days (India). I purchase something on my credit card and I pay it to the credit card company after some days. How are they going to make profit with this where I'm not paying any service charge to them?
I'm asking this for couple of reasons.
I heard that credit card companies charge the merchant with some percentage of the bill amount. Is this true? If that is true then why cant we get that percentage directly from the merchant by paying cash. We can get this percentage by getting discount in bill. isn't it?
If they get profit from late fees or interest charges if customer makes late payment or pays long after due date. If this is the way they get profit, is this big amount compared to what they offer in credit to the customer?
Please put some points from your side to make me aware of this system, so that I can get maximum from a credit card company.