Cash payments encouraged in card fee spat

http://www.cbc.ca/consumer/story/2010/12/17/con-credit-card-spat.html

Summary:

This article is about how businesses in 2011 will encourage payments of either cash or debit over credit cards.  The reason for this is the fees that the big credit card companies, Visa and MasterCard, are charging the merchants for accepting their cards.  The Canadian Federation of Business is trying to help the merchants by giving them the choice of a sign they can put in their businesses that encourage customers to pay with debit or cash.  Canada’s competition commissioner Melanie Aitken is taking the big credit card companies to tribunal to settle how much money they can take and how it is calculated.  Another change they are fighting for is for there to be a prohibition on any sort of surcharge by retailers on credit card purchases.  This tribunal upsets both the credit card companies and retailers.  Retailers are opposed to the inability to surcharge to credit card payments because they cannot refuse to take credit cards that charge higher fees.

Connections:

For this article the connection to the chapter would be the credit cards that were in the chapter.  We learned in the book how merchants are charged by the credit card company when they accept them because they receive quick payment and they don’t have to worry about collecting money from the customers.  The article talks about how the companies are charging too much for this service.  Even though the merchants can write this off as an expense, this fee is still deducted out of the bank account.  The restriction of not being able to charge the customers this expense will affect how much money they make.

Reflection:

I’m afraid there is a fee for using this credit card.  Anyone would be kind of ticked off if they were told this.  Is it right to charge someone more money than you owe them just because they are using a credit card?  Even though this can be avoided by paying by cash, I believe that the retailer should still not charge the customer because they are paying for the convenience not having to go to the bank and depositing the money themselves.  Why would the customer have to pay for the convenience of the merchant?  Even though the article quickly blames the credit card companies for charging the merchants, I think the real ones who are greedy are the merchants.

Games Merchandise does Brisk Business

http://sify.com/sports/games-merchandise-does-brisk-business-news-others-kkhnEeggcaf.html

Summary:

This article is about how well the 2010 Commonwealth Games merchandise is selling in New Delhi, India. Merchandise such as vuvuzelas , t-shirts, Shera(the mascot) plush toys, and more are selling at a fast pase. Many of these merchandise are imported. One example of this is the vuvuzelas, which is imported from China. The merchandise can be bought at places such as the four official stores, four mobile vans, and sixty-three different venues in the eleven stadiums hosting the Games. Like all merchandising businesses, these people invested money into the products in hope of making a profit. Even though the merchandise sold well, it ended up being a loss of money for Premier Brands, the merchandising partner of the 2010 Commonwealth Games, because of delay in sales.

Connections:

There are connections in this article to the merchandising business in chapter 11. Merchandising businesses buy and sell products to make a profit. Premier Brands is an example of a merchandising business. They invest in(basically they buy them) their product, the 2010 Commonwealth Games merchandise, and sell them to retailers for a profit. They also have “official stores” in which they sell their products directly to the customers. The products that were sold to the retailers are then sold to the consumers(customers) for a price that will profit the retailer. Another way it is connected is the shipping of their products. Their merchandise is shipped to them from different places. That being said, there must be shipping costs(freight-in) which we also learned about in chapter 11. Thus, those are the two connections to the chapter.

Reflection:

Ultimately, the article shows that not only sales are important, but also the time in which you sell them. Every merchandising business takes a risk when they buy a product to sell. It could sell right away or not at all. Even when the ending gross profit is high, the expenses of running the business can greatly affect the ending net profit; bad cases end in a net loss. This is one case where it ended in a loss for the business. Still, I think this is the best of the worst outcomes possible for Premier Brands because at least the sales are up and they are getting back some of the money they lost.