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Visa and Mastercard agree to lower average credit card interchange fee below 1%

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Re: Visa and Mastercard agree to lower average credit card interchange fee below 1%

#81

Post by missingcolours »

snovv_crash wrote: post #67
ulfw wrote: post #55

Earlier quoted context omitted.

Australia is the only country I've ever been at that heavily discourages using a credit card because almost every single shop charges you 1-2% MORE for using a credit card, including international hotel chains, restaurants etc. THAT is something that should be outlawed.

Pricing transparency is a good thing. It makes sure incentives for everyone are correctly aligned.

Even as a fan of the rewards points system I'm fine with this. My only beef is that I wish the credit card price was the list price and cash had a 2% discount. A fee that affects nearly everyone isn't a fee (see resort fees), a cash discount reduces surprise and cognitive load.

Re: Visa and Mastercard agree to lower average credit card interchange fee below 1%

#82

Post by cashmonster »

Pxtl wrote: post #72
ulfw wrote: post #55

Earlier quoted context omitted.

Australia is the only country I've ever been at that heavily discourages using a credit card because almost every single shop charges you 1-2% MORE for using a credit card, including international hotel chains, restaurants etc. THAT is something that should be outlawed.

Why? If the merchant is paying an extra 1-2% for your purchase in cc transaction fees, why should they be expected to eat the cost? Why should your service be subsidized by people whose transactions don't have that overhead?

They are paying even more to manage cash but don’t have a separate fee for it. Why should credit card users subsidize that?

(Personally I think it’s fine to charge any which way you want as long as your terms are clear. But I think this answer makes clear it’s not so obvious as you suggest?)

Re: Visa and Mastercard agree to lower average credit card interchange fee below 1%

#83

Post by hyperbovine »

withinboredom wrote: post #71
bombcar wrote: post #64

Earlier quoted context omitted.

> Instead of capping prices, you could simply require any fees to be paid by the cardholder. This has begun. Many restaurants near me have a credit card fee, as does at least one car repair place. No fee of paying with cash/debit.

That is usually against the card-processing agreement. If you want to have fun, you can report them to Visa/MC and watch that go away within a few days.

Nope, this is completely (laws vary by state) legal as of ten years ago.

https://www.lawpay.com/about/blog/credit-card-surcharge-rule...

Re: Visa and Mastercard agree to lower average credit card interchange fee below 1%

#84

Post by adrr »

e63f67dd-065b wrote: post #76
adrr wrote: post #35

Earlier quoted context omitted.

Cash is more expensive to take as a payment method than interchange unless you’re cheating on taxes.

I'm not objecting to credit cards and promoting cash instead -- I'll happily support a total cash ban (quite an unpopular opinion around these circles, I believe, but that's a story for another time). I'm objecting to the cost of 2-300bps on credit cards, when it is trivially shown that they can be 30-50bps (Alipay, EU caps, etc) and everything will work just fine, just without 2% cashback.

Significant number of people below the povery level are unbanked and live off cash which is why some jursidictoons ban retailers from not accepting cash.

What's your opinion on Buy now Pay Later for online retailers? fee is close to 5% but allows customers to pay for items with interest free installments over 90 days.

Re: Visa and Mastercard agree to lower average credit card interchange fee below 1%

#85

Post by Havoc »

danpalmer wrote: post #80
Waterluvian wrote: post #4

> That means on a $100 purchase, if a customer pays with a credit card, the retailer will get at least $99, where they previously would have kept as little as $97 in some cases. I absolutely love the heavy lifting “as little as” is doing here. > Businesses with annual Visa sales volume below $300,000 will qualify for the lower fee, as will those who do less than $175,000 from MasterCard. That’s revenue, not profit. S…

> where they previously would have kept as little as $97 in some cases Or lower. A number of years ago I worked in an Apple reseller, and there were Apple products that wouldn't break even when the customer paid with AMEX, and that's only based on margin/card fees, not counting all other business costs. IIRC AMEX could reach as high as 5% and Apple's wholesale discount could be as low as 5%. Possibly the worst two co…

Yeah as much as I like my amex I fully understand when retailers tell me no amex accepted

Re: Visa and Mastercard agree to lower average credit card interchange fee below 1%

#86

Post by arcticbull »

bombcar wrote: post #65
55555 wrote: post #57

Earlier quoted context omitted.

FedNow is launching soon. It won't support chargebacks or reversals, which merchants would love, so they may offer it as a payment method (if this is possible). Consumers will then be able to save a few % at the expense losing their ability to contest the transaction. Unless credit card agreements mandate the price be the same regardless of payment method, or something.

I suspect fednow is why visa and MC are moving now to reduce fees. I can’t wait.

It almost certainly isn't. Nobody's taking FedNow at point of sale.

Re: Visa and Mastercard agree to lower average credit card interchange fee below 1%

#87

Post by Scoundreller »

thegrizzlyking wrote: post #60
ramraj07 wrote: post #41

Earlier quoted context omitted.

Nationalize a universal payment interface like india did. India, a very corrupt, bureaucratic place with billions of people did it. There’s no excuse but lobbying. Credit card rewards are evil. They incentivize crafty behavior to secure miles or whatever and shaft normal people who just want to live life and get what’s equitable without playing shenanigans. I’d rather live in a world where when you pay for a coffee,…

Miles just allow airlines to transfer portion of business expense for personal use.

And tax free too

Re: Visa and Mastercard agree to lower average credit card interchange fee below 1%

#88

Post by arcticbull »

KRAKRISMOTT wrote: post #25
arcticbull wrote: post #17

Earlier quoted context omitted.

Fintechs seem to do just fine in Europe, so I would suggest this is a pretty myopic take. Have you seen Adyen (Dutch, $ADYEY)? PayPal? Like it or not those companies provide value to their merchants so they're able to charge for their services. That isn't going to change with lower interchange.

They are low level infra companies that exist because of regulatory capture. I am referring to companies like X1 and to some extent Ramp. The high level fintechs driving consumer innovation like electronic wallets, interesting rebate card models, better banking UXes all require interchange fees. This is also why most consumer fintechs start in the US and UK first before expanding elsewhere.

I guess I would flip that around and say that the fintechs are providing services that are worth paying the mark-up for - not the other way around.

Re: Visa and Mastercard agree to lower average credit card interchange fee below 1%

#89

Post by polotics »

e63f67dd-065b wrote: post #12
arcticbull wrote: post #6

Visa and Mastercard don't keep much of interchange at all and never have. The vast majority is paid to issuing banks to pay for loan origination, fraud and, most significantly, to return in the form of cash back or points. These networks charge 0.2% for debit and 0.3% for credit in Europe as per regulation, you just don't get rewards there. Kinda sounds like they're just going to squeeze issuing banks. Cash back and…

These numbers are not public, but the grapevine is that visa/mastercard keeps about a third of all interchange. Credit card rewards are a regressive tax on the poor -- literally, only those like us here on HN with good credit can get 2% cashback on everything, the rest who pay with debit/cash effectively subsidise our 2% discount. I enjoy my 2% cashback, but really would rather see a world where, like the EU, interch…

You are talking about fractions of a percent, for transactions where banks in aggregate take some risk, while Google and Apple keep their 30.000/100.000 ransom on all transactions...

Re: Visa and Mastercard agree to lower average credit card interchange fee below 1%

#90

Post by KevinBenSmith »

arcticbull wrote: post #6

Visa and Mastercard don't keep much of interchange at all and never have. The vast majority is paid to issuing banks to pay for loan origination, fraud and, most significantly, to return in the form of cash back or points. These networks charge 0.2% for debit and 0.3% for credit in Europe as per regulation, you just don't get rewards there. Kinda sounds like they're just going to squeeze issuing banks. Cash back and…

Why should there even be something like cash back or points programs? These programs are taking money from the merchant and giving it to the end-consumer, while the middle-men keep a cut.

I believe a world without these programs (or as you said “watered-down” versions) is more fair for the merchant and others shoppers not using such cards. Especially if the merchant is not allowed to charge the end-consumer with this added fee.

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