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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%

#121

Post by nailer »

throwaway426079 wrote: post #117
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.

As a counter point, I’ve been here for fifteen years and never have.

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

#122

Post by kalleboo »

AmericanChopper wrote: post #93
e63f67dd-065b wrote: post #62

Earlier quoted context omitted.

The world you described exists, and it’s called Alipay (in China), TNG (in Malaysia), Pix (Brazil), etc (that's why I listed them in my original comment). Alipay and Wechatpay is the standard in China, a country with a population triple that of the US, and only charges 55-60bps, a quarter that of the US. So yes, I do believe that we can gain efficiency by switching. Also note that interchange is capped in the EU at 3…

I use several such systems, including TNG, and they have all of the same fee structures as credit cards. The TNG cash back program: https://fintechnews.my/33848/e-wallets-malaysia/fave-offers-... The TNG loyalty program: https://www.touchngo.com.my/promotion/redeem-your-points/ The TNG cardholder fees: https://www.touchngo.com.my/policies/touch-n-go-card-fees-an... There’s also merchant fees (which are confidential).…

This is the relevant number here: https://merchantsupport.tngdigital.com.my/hc/en-us/articles/...

Merchants are charged 0.5%. Compared to 2-3% in the US credit card scheme.

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

#123

Post by alibarber »

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.

I'm confused - this commenter says the only reason some population of the EU have a credit card is to purchase stuff from US websites. Which to me implies that their EU debit card only works locally.

In my corner of the EU - I don't recognise this at all as every debit card you would get from a bank here (as an adult with no bad credit judgements) is Visa branded and works just fine anywhere worldwide that would be set up to handle Visa (electronically at least).

People who make a habit of purchasing stuff abroad might well seek out a bank with a low/no currency exchange fee - and it could be that a credit card is more effective here, but it's nothing to do with the fundamental debit vs credit, and once again, simply isn't something that's generalise-able across the entire EU.

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

#124

Post by kelnos »

f6v wrote: post #104
ivan_gammel wrote: post #43

Earlier quoted context omitted.

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.

You can show the full price and the breakdown at the same time. That’s how it works eg in the Airbnb app: I see the price host charges and the fee I pay to Airbnb. The taxi apps show their fee as well.

That doesn't work in a brick and mortar store where they wouldn't know your card's fee until you go to pay.

Also doesn't work online if you're not signed in, or if it's the first time you've visited that store and you haven't given them a card number yet.

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

#125

Post by arcticbull »

CapstanRoller wrote: post #120
crooked-v wrote: post #99

Earlier quoted context omitted.

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).

Your liability is strictly limited in this case - similarly to credit cards, but not identically. Unfortunately you're out the funds until a resolution is reached which can be challenging to say the least.

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

#126

Post by xhendrick_neues »

e63f67dd-065b wrote: post #49
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…

As a sidenote I hate that sales tax is not shown on the price tags here in the US. I strongly believe that you should be able to walk out of the store paying the price shown on the price tag -- not a cent more. This obviously clashes with the obvious solution of making credit card surcharges a thing and letting consumers deal with it. I genuinely don't know what's the best solution here -- I think the EU did a good j…

The sales tax surcharge does seem awkward

On the other hand, that's probably why sales tax is around 5%? whereas VAT is 20%+

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

#127

Post by Reason077 »

e63f67dd-065b wrote: post #49
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…

As a sidenote I hate that sales tax is not shown on the price tags here in the US. I strongly believe that you should be able to walk out of the store paying the price shown on the price tag -- not a cent more. This obviously clashes with the obvious solution of making credit card surcharges a thing and letting consumers deal with it. I genuinely don't know what's the best solution here -- I think the EU did a good j…

Competition drives prices down in a fair market, but the credit card business is an oligopoly - with huge regulatory and structural barriers to entry. That is, despite Visa and MasterCard’s enormous profits, there is little chance of new players entering the market and increasing competition.

Regulation is warranted in monopoly/oligopoly situations. Either by changing the rules to favour/promote increased competition, or, as the EU has done here, by capping the fees which they can charge.

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

#128

Post by vineyardmike »

KevinBenSmith wrote: post #90
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…

The programs don’t take money from the merchants - they raise their prices to cover the fees.

The reality is that they exist largely because the people earning the points aren’t paying the bills. Most CC Rewards programs target the professional class of travelers - people who travel for work where the employer pays the bill. It’s essentially taking from consulting companies’ clients to give to the employees.

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

#129

Post by carlosjobim »

Symbiote wrote: post #114
ivan_gammel wrote: post #43

Earlier quoted context omitted.

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.

That's probably not the card fees, but the currency exchange.

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

#130

Post by kalleboo »

alibarber wrote: post #123
crooked-v wrote: post #99

Earlier quoted context omitted.

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.

I'm confused - this commenter says the only reason some population of the EU have a credit card is to purchase stuff from US websites. Which to me implies that their EU debit card only works locally. In my corner of the EU - I don't recognise this at all as every debit card you would get from a bank here (as an adult with no bad credit judgements) is Visa branded and works just fine anywhere worldwide that would be s…

I believe they're being phased out everywhere now but historically debit cards were something like Maestro, "Visa Electron", EC Card, Girocard, etc. Maybe the GP is still somewhere where those are still in use. I believe Germany is one of the big laggards in this space.
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