Forget Google, time to end the Visa-MasterCard duopoly

Post by kalleboo » Tue, Jun 30, 2020, 3:15 AM UTC

jpkoning wrote: post #173

ajb wrote: post #28

Coincidentally I just read a post from a business that's finding ordinary bank transfers getting more traction from customers than they expected: https://www.revk.uk/2020/06/beyond-credit-cards-is-this-way-...

This is good news on the competition front. The traditional problem with bank-to-bank transfers in a retail, or point-of-sale, setting has been speed. Cheque was about the fastest that could be mustered. But with developments like UK Faster Payments (which is mentioned in your link) bank-to-bank transfers are getting faster, in some cases instant. And so usability at the point-of-sale is now on par with cards. In Hol…

Post by arcticbull » Tue, Jun 30, 2020, 3:19 AM UTC

gruez wrote: post #157

ComputerGuru wrote: post #37

Earlier quoted context omitted.

Interchange fee pricing is set based on how much MasterCard charges the bank That’s not true though, or at least is a massive oversimplification. In the US, interchange fees are extremely inflated to allow banks to recuperate the rewards they give out to distinguish their card offerings from one another. The 2% cashback has to come from somewhere.

>In the US, interchange fees are extremely inflated to allow banks to recuperate the rewards they give out to distinguish their card offerings from one another. The 2% cashback has to come from somewhere. And that's a bad thing, because it's essentially the poor subsidizing the rich. People who aren't able to get credit cards (or the "good" cash back credit cards) tend to be worse off financially than people who do.

Post by arcticbull » Tue, Jun 30, 2020, 3:20 AM UTC

jariel wrote: post #44

ComputerGuru wrote: post #37

Earlier quoted context omitted.

Interchange fee pricing is set based on how much MasterCard charges the bank That’s not true though, or at least is a massive oversimplification. In the US, interchange fees are extremely inflated to allow banks to recuperate the rewards they give out to distinguish their card offerings from one another. The 2% cashback has to come from somewhere.

"The 2% cashback has to come from somewhere." Yes, but in reality, the program comes from an upside down approach to overcoming the obviously anti-competitive practices that VISA/MC use to forbid retailers from offering discounts for not using VISA etc.. You can't say "Get 2% if you use cash instead of VISA". (Notice that nobody ever advertises that?) Because VISA doesn't allow it. You also can't say "$1.99 + 20 cent…

Post by briandear » Tue, Jun 30, 2020, 3:21 AM UTC

matthewdgreen wrote: post #154

akira2501 wrote: post #148

Earlier quoted context omitted.

> I’m paying for those 2-5% rewards Well.. you're paying a 2-5% higher price, but the merchant gets to keep all of that; it's not as if they have to also pay that fraction into their transaction processor. > I suppose a well-functioning competitive market You ever see retailers that offer a discount card? Like, spend $50 here get $10 off in the future? Typically they'll only offer those for cash transactions. This is…

In a properly competitive market the merchant doesn’t really get to keep it. Presumably they set their prices to a value that is X% higher than where they would normally set their prices without the need to pay transaction fees. If exactly half their business is paid in cash/debit and half in credit, then X might be set to something like half of the excess CC transaction fee. Then the credit card customers get to spl…

Post by ceejayoz » Tue, Jun 30, 2020, 3:23 AM UTC

matthewdgreen wrote: post #151

DevKoala wrote: post #105

Earlier quoted context omitted.

I had poor credit at a point in time. I "bought" a credit card to build my credit by putting a deposit. After 1 year of on-time payments I was able to graduate to a credit card with cash back. The system didn't feel punitive to me, and honestly, I had poor credit in the first place because I was irresponsible while in college.

You just described a scenario in which you were systematically bilked for at least a year —- paying full retail prices, which presumably paid for full transaction fees, which in turn did not pay you any rewards —- so you could graduate to the privilege of being allowed to purchase a consumer line of credit that reduced the level of punishment to something merely appropriate. There are relatively few businesses in the…