Does taking plastic get people to spend more money? The card networks certainly think so and have often touted increased sales as one of the reasons why merchants should accept plastic and be happy to pay for it. My skeptical economist colleagues question this. They argue that the main effect of accepting cards is to shift sales from merchants that don't accept cards. But once all the merchants in an industry — say all supermarkets or all liquor stores — take cards, that benefit goes away. And why, they argue, should plastic make people want to spend more money? What miraculous powers could plastic have to make people want to consumer more?
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