yeah this seems pretty obvious to me: if the business was allowed to charge customers for the credit transaction you could have an efficient system where the business charges what something costs and the credit company charges what it costs them.

It's weird that I had to scroll this far down to see someone mention utility. The important thing is that utility is a nonlinear function of your savings: it should be pretty obvious that one person with two units of cash and one with zero units of cash doesn't equal two people with one unit of cash each—the overall utility is far lower in the former case. There's nothing "intangible" about it.

I agree that it depends a lot on the provider, but based on the assumption of a 3% charge on credit transactions, and a 30 cent charge on debit transactions (none on credit), the threshold where debit becomes cheaper is 10 dollars, right?

@littleadv I've been having a hard time finding hard numbers on this one. From what I understand there can be a baseline fee for both credit and debit transactions, and credit always charges a flat fraction of the transaction.

I worry that the Merchants will probably prefer credit... bit is a guess at best, and likely wrong: credit companies often charge merchants up to 3% of every transaction, I image real money for them would trump the conveniences you list.