How do Card Companies make money..

Now a days, credit card has become a fashion or you can say, for some people it has become a “Mazboori”. God bless me, I have applied for this little piece approx six times and I didn’t get it. So finally I thank to god for not giving me an opportunity to use this master card. 
When I came across this term “Credit card”, suddenly one question came into my mind—how these credit card companies make money. After doing a bit google and consulting with my friends I got some points which I would like to share. I hope these points may give you a little bit answer if you already have this question in your mind. 


1.Let’s start with a real time experience which I had when I went to shop with my    friend. Here is the conversation which I had with cashier of the shop.
Me— do you accept credit card?
Cashier—yes we accept.
Me—any discount for TATA employees.
Cashier--- yes we have, if you pay by credit card then 7.5% discount and if you pay by cash then we’ll give you 10% discount. 
So here you can see the difference in discount percentage (2.5%) which is basically due to the mode of payment. If you pay by credit card then the shopkeeper has to pay some amount to the bank who issues the card. This happens with all the purchase done by credit card and the percentage varies from 1% to 4%.  Now you may ask why the shopkeepers accept card at all. Well now a days nobody carries cash with him. So ultimately there is no option left with the shopkeeper but to accept the card to improve his sell.


2. This is an example which happened with one of my friend. He has HDFC credit card and the limit is up-to 25k. Previous month somehow he crossed the 25K limit and the best part is the card was not denied at the time of transaction even though it crossed the limit.  When he got the bill, additional Rs 500 was charged to him due to over limit. Immediately he called to bank and asked “how the credit card was accepted if it crossed the limit”, finally he got to know that he was a very old card holder that’s why bank has allowed him to cross the limit. 
So I hope you understand the moral of the story. Over limit and late payment is one of the innocent ways to make money even if it is the mistake done by bank.


3. You might have seen the advertisement on the credit card bill if you have one. You’ll find lot of offers which give you some discounts if you use this card for some service. For example—if you book a flight ticket through this card you will get 15% discount etc. this may be one of the way to make money. It’s all depends upon the deal made between the bank and other service providers.


4. Service charge, higher interest rates, cancellation fee, charging more for use overseas, charging fee for card protection etc. are the ways to make money.


So ultimately there are several ways you can be charged either by mistake or intentionally, or as a normal process.