Durban, South Africa — For the past four years, a group of South African economists has been working on an idea that’s been bubbling for some time.
The idea is that, given a certain amount of time and enough transactions, it makes sense to charge a fee for every transaction.
The fee should be based on the total amount of money in circulation — say $1,000 in today’s dollars — and should be set based on a fair and equitable distribution of the profits to all parties involved.
For example, if you make $50,000 a year in sales and $10,000 from your business, you should pay the same rate as the next person making the same amount.
The problem with this approach is that it ignores the fact that businesses are not simply making money from the sale of goods and services.
The vast majority of the revenue generated by a business is paid in rent or other costs, such as payroll, insurance and taxes.
It is this income that the average customer is expected to reinvest in the business — and it’s not the cash coming in that makes the business profitable.
“It is a mistake to think that the money coming into the business is always going to be reinvested,” says Michael Fekete, one of the economists.
“If you are going to reinvest, it has to be in the form of profit, which means you have to have a profit margin.”
If businesses have a high margin, they’re likely to keep increasing their turnover — that is, they’ll make more money.
But when a business has a low margin, and that means that the business can’t make any money, then the profit margin has to go up.
That means businesses that have low profit margins will either have to find a way to raise their rent to make up the difference or they’ll have to invest more money to try to increase the value of their assets.
“This is the kind of business model that drives people crazy,” Fekete says.
“You need to be able to take your margin and grow it, because otherwise, you’re not going to have enough money to invest in the next business.”
But when it comes to charging fees for transactions, the economists say it’s hard to argue with the fact they’re not just trying to raise revenue but to get it.
“The problem is that fees are going up because the demand for them is increasing,” says Fekeete.
“When you have more people doing transactions, you need to raise fees.”
It’s an argument that makes sense when you consider that there are many businesses that charge a “fee” for services that don’t have a direct relationship to the goods and/or services they’re selling.
This is called “service charge” and is generally the price paid by merchants for providing services to the customer.
According to the Economist, in 2019, for example, some businesses charged $2.70 to $2,90 for a transaction between a customer and a bank, while some charge $4.50 for a purchase from a vending machine.
“That’s what you call a service charge,” Finkete explains.
“In other words, if the transaction has no direct relationship with the goods or services that you’re selling, it’s really not going for profit.
And that’s a big reason why we think that fees should be banned.”
If you’re a business owner and you want to charge businesses a fee to make their business more profitable, you may want to think about it this way: Why should your customers pay to use your service if they’ll get a better product or service at a lower price?
Fekekete says businesses may decide to charge you for services they don’t provide, and he points to the example of a pharmacy that charges customers $5.00 for their prescriptions, rather than $4 for the same medicine they could get at a pharmacy in Durban.
“These businesses are charging you to provide the services, which are just a different way of saying they’re providing services and not actually providing the drugs,” he says.
This may not sound like a huge difference to the average business owner, but it can have a big impact on how much customers pay.
“What is a service, really?
Is it the fact you provide something to a customer?
Is that service a good thing?
Or is it just another way to make a profit?
In other words,” he adds, “the difference between a service and a service is not whether or not the service is good, but how much profit you make.”
But the Economist says that while this may be the case, it is also possible that it’s “not a service that you’ll actually use.”
That’s because some businesses have become so big that they’ve become the dominant force in certain markets.
“People are used to seeing services as something that is for the convenience of the customer,” Fiskete said.
“But this is not