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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%

#111

Post by nailer »

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.

I suspect it’s fast cryptocurrency networks. There’s L1s where you can pay on your phone and the transaction goes through in a second and a whole bunch of payment startups.

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

#112

Post by kalleboo »

mdasen wrote: post #31
e63f67dd-065b wrote: post #12

Earlier quoted context omitted.

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…

> I'm weary of government intervention in capping prices, but I'm not sure what's the alternative here Instead of capping prices, you could simply require any fees to be paid by the cardholder. Combine that with a standard for payment processing so that lots of companies could compete for payment processing and fees would drop really fast. If someone is using a POS terminal like Toast or Square, it should be trivial…

Where I'm from in the EU, many shops are happy to go card-only because the card fees (with the aforementioned EU regulation) are lower than the costs and crime risk of dealing with cash (which for supermarkets etc that handle a lot of it might mean paying a security company to show up with an armored truck, having to prepare change, staff pocketing some of it, etc)

So if we're making customers pay the fees for their preferred payment method, is it also OK to charge cash customers a surcharge?

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

#113

Post by withinboredom »

arcticbull wrote: post #109
withinboredom wrote: post #106

Earlier quoted context omitted.

Legal, yes, you're not going to go to jail for it. However, in accordance with the contract they signed to get access to the card network… they probably are not allowed to do this. Each card issuer has a dedicated form to report this activity.

Parent provided you a link explaining how this changed 10 years ago. You are unequivocally allowed in the United States to pass along credit card surcharges in all but two states. It's permitted by law, and it's permitted by merchant agreements! If you don't believe parent, and you don't believe me, I hope you believe Visa's own FAQ. > Q. Can I add a surcharge to card transactions? > As a result of a legal settlement…

Hmm, I think we are talking past each other. It isn't allowed without notice to MC/Visa, the cap is ~4% of the total, IIRC (which is usually far less than what I remember seeing when I last reported it a few years ago), and they require advance notice to the customer (before consumption) along with a line-item on the receipt.

Just because it is legal, doesn't mean they are doing it right -- and in my limited experience, they usually aren't.

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

#114

Post by Symbiote »

ivan_gammel wrote: post #43
mdasen wrote: post #31

Earlier quoted context omitted.

> I'm weary of government intervention in capping prices, but I'm not sure what's the alternative here Instead of capping prices, you could simply require any fees to be paid by the cardholder. Combine that with a standard for payment processing so that lots of companies could compete for payment processing and fees would drop really fast. If someone is using a POS terminal like Toast or Square, it should be trivial…

You won’t sell this idea in Europe. Here the price tag for anything is the full amount you pay - including all commissions and taxes. People use debit cards, the paid amount is immediately deducted from bank account. If customers are forced to calculate how much they actually will spend on each transaction, they will instantly switch back to cash.

In Denmark, the additional fees charged for foreign (non-EU I think) or corporate cards are passed on to the customer.

The price says 100DKK, but they pay 101.50DKK or whatever it is.

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

#115

Post by pgeorgi »

missingcolours wrote: post #81
snovv_crash wrote: post #67

Earlier quoted context omitted.

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.

In the past (decades ago), before the EU capped processing fees, I had pretty good success just asking for a discount when paying cash, even in supermarkets.

And yes, "it can only become cheaper" has a much lower cognitive load than US style payments where the advertised price is just a lower bound.

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

#116

Post by arcticbull »

crooked-v wrote: post #99
jiggywiggy wrote: post #97

Earlier quoted context omitted.

Still don't understand why US is so obsessed with credit cards. Debit is much more easy and straight forward, it's the standard in EU. Most of us only have cc to purchase stuff from US sites. Why such a complicated solution? Looks like a bank product.

You can't use a US debit card online, because functionality for that just doesn't exist in the US banking system. Edit, for clarity: You can't use it as a debit transaction . You can plug it into credit card systems, where it's run as a credit card transaction and interchange fees apply.

[edit] Edit, for clarity: You can't use it as a debit transaction. You can plug it into credit card systems, where it's run as a credit card transaction and interchange fees apply.

That's not actually true. Card-not-present debit is a separate transaction category than card-not-present credit. Durbin requires that debit routing be available for all debit transactions, not just PIN debit. Further, as of October 2022 the Fed amended the Regulation II rule to extend Durbin debit least-cost routing to card-not-present transactions. [2]

[1] https://www.cardrates.com/advice/atm-card-vs-debit-card-vs-c...

[2] https://cmspi.com/nam/en/resources/content/card-not-present-...

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

#117

Post by throwaway426079 »

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…

I'm in the UK and I have had (still have) rewards on MC, Visa and Amex. This was the case when we were still in the EU as well.

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

#118

Post by nailer »

AmericanChopper wrote: post #37
anonymouskimmer wrote: post #28

Earlier quoted context omitted.

I think you misread the point GP was making. The poor-poor don't have credit cards. They have cash and debit cards. They pay the same as we do at most[1] merchants, despite credit card transactions nominally costing the merchant more money than cash or debit transactions. Most merchants budget the cost of credit card fees into their regular prices that all people pay regardless of method of payment. [1] - https://www…

> The existence of credit cards is basically an automatic 2-3% inflation on prices. If you want to draw this conclusion you’d have to calculate the cost of the alternative. What would the impact on prices be if there were no electronic payments? What would the impact on prices be if every bank had to implement its own electronic payment system with every merchant? The credit card system integrates a huge portion of t…

It’s a flat fee of 0.000025 and takes about a second for payments to go through on current gen blockchain L1s, many of which have retail Point of Sale systems.

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

#119

Post by Symbiote »

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.

The UK was part of the EU until recently, and still maintains the card transaction fee cap regulation.

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

#120

Post by CapstanRoller »

crooked-v wrote: post #99
jiggywiggy wrote: post #97

Earlier quoted context omitted.

Still don't understand why US is so obsessed with credit cards. Debit is much more easy and straight forward, it's the standard in EU. Most of us only have cc to purchase stuff from US sites. Why such a complicated solution? Looks like a bank product.

You can't use a US debit card online, because functionality for that just doesn't exist in the US banking system. Edit, for clarity: You can't use it as a debit transaction . You can plug it into credit card systems, where it's run as a credit card transaction and interchange fees apply.

You absolutely can use USAmerican debit cards for online purchases. You just expose yourself to massive risk by doing so (e.g. getting your checking account drained).
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