Visa and Mastercard agree to lower average credit card interchange fee below 1% • Hacker News Board

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

#151

Post by rjmunro » Fri, May 19, 2023, 8:38 AM UTC

eru wrote: post #140

rjmunro wrote: post #131

Earlier quoted context omitted.

This is a bank to bank fee. The merchant's bank will charge the merchant a higher fee than this. The banks take no risk here because normally they any fraud get's paid by the merchant through charge back. The only risk is that the merchant goes away completely, but banks have to deal with that possibility all the time.

The payout to the merchant is delayed, isn't it? So if they go away, they don't get paid anyway?

That's one of the ways merchant's banks mitigate the risk, yes. But you have 120 days to make a chargeback, and I think most banks don't delay the payment that long.

I believe bigger merchants with better credit ratings can normally negotiate faster repayments.

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

#152

Post by alwayslikethis » Fri, May 19, 2023, 8:38 AM UTC

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.

Can't this by circumvented by giving cash customers with a discount? It's like how things are sometimes offered interest-free, but a discount is given if you pay for it outright.

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

#153

Post by badcppdev » Fri, May 19, 2023, 8:42 AM UTC

xhendrick_neues wrote: post #126

e63f67dd-065b wrote: post #49

Earlier quoted context omitted.

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%+

There's a great map of the US on Wikipedia showing the Sales Tax by County ( https://en.wikipedia.org/wiki/Sales_taxes_in_the_United_Stat... )

Sales Tax ranges from 0% through to 12%

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

#154

Post by ivan_gammel » Fri, May 19, 2023, 8:43 AM UTC

Osiris wrote: post #141

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.

That’s not the case on the US (tax is added after the fact) and there hasn’t been a massive switch to cash. Convenience is a powerful thing.

Consumer behavior in different countries is different and depends on many factors - culture, mindset, local customs and habits, structure of taxes and regulations etc. American system will not be convenient for Germans, for example (I personally do not understand how it can be convenient).

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

#155

Post by dr_dshiv » Fri, May 19, 2023, 8:43 AM UTC

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…

Part of the cost of a tax is cognitive. That’s why VAT is a great tax. Build it into the systems.

Instead, private credit cards are built into the system. That makes no sense to me. The US system of credit cards does very little for economic stability or growth. It has clear harms to the vulnerable and it hardly benefits the economically stable. Instead, there should be a system of frictionless debit payment. Governments shouldn’t pick winners and losers, but they should build infrastructure for healthy markets.

Signing credit card slips? What is that? Clearly irrational. Visa and Mastercard are not just normal market players. American capitalism would function better without the excessive role of credit cards in commerce.

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

#156

Post by arcticbull » Fri, May 19, 2023, 8:46 AM UTC

rjmunro wrote: post #147

Symbiote wrote: post #119

Earlier quoted context omitted.

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

No it doesn't. It was one of the first "Brexit freedoms" the government took advantage of. That's why Amazon had a spat with Visa: https://ca.news.yahoo.com/visa-mastercard-agree-lower-averag... The article is wrong here.

Interchange in the UK remains capped at the same 0.2% for debit and 0.3% for credit rate that applied in the EEA prior to Brexit. What changed was that this cap only applies when the issuer, acquirer and merchant are within the UK. Therefore, UK-EEA transactions are no longer covered. [1]

[1] https://www.barclaycard.co.uk/content/dam/barclaycard/docume...

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

#157

Post by robertlagrant » Fri, May 19, 2023, 8:49 AM UTC

dr_dshiv wrote: post #155

e63f67dd-065b wrote: post #49

Earlier quoted context omitted.

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…

Part of the cost of a tax is cognitive. That’s why VAT is a great tax. Build it into the systems. Instead, private credit cards are built into the system. That makes no sense to me. The US system of credit cards does very little for economic stability or growth. It has clear harms to the vulnerable and it hardly benefits the economically stable. Instead, there should be a system of frictionless debit payment. Governm…

> Instead, there should be a system of frictionless debit payment

Here in the UK we have frictionless debit payments and we all use credit cards. Credit cards have a safety net in case of fraud. Much better.

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

#158

Post by erincandescent » Fri, May 19, 2023, 8:49 AM UTC

rjmunro wrote: post #145

throwaway426079 wrote: post #117

Earlier quoted context omitted.

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.

Amex doesn't count - they run their own system end to end and charge retailers stupidly high fees. That's why most retailers don't take them. As for rewards on MC and Visa, which card are you on? In my experience, either the rewards are very small, or they are for specific retailers only, where the Bank has done a deal directly with the merchant. Occasionally they are a loss leader for the bank, working on the princi…

The UK didn't scrap the Interchange Fees Regulation; but as a matter of law there became two separate IFRs, one covering the EEA-cards-in-EEA and one covering UK-cards-in-UK

(To put it bluntly, a big amendment was automatically applied to most UK laws on exit day replacing EU & EEA with UK; and of course in the EU the definition of both of those words changed)

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

#159

Post by erincandescent » Fri, May 19, 2023, 8:50 AM UTC

rjmunro wrote: post #147

Symbiote wrote: post #119

Earlier quoted context omitted.

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

No it doesn't. It was one of the first "Brexit freedoms" the government took advantage of. That's why Amazon had a spat with Visa: https://ca.news.yahoo.com/visa-mastercard-agree-lower-averag... The article is wrong here.

The UK didn't scrap the Interchange Fees Regulation; but as a matter of law there became two separate IFRs, one covering the EEA-cards-in-EEA and one covering UK-cards-in-UK

(To put it bluntly, a big amendment was automatically applied to most UK laws on exit day replacing EU & EEA with UK; and of course in the EU the definition of both of those words changed)

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

#160

Post by dzikimarian » Fri, May 19, 2023, 8:54 AM UTC

knallfrosch wrote: post #105

> Companies agree on product pricing. Shouldn't a free market handle that with competition?

It happens in smaller countries, where local payment schemes manage to get traction.

On global level it's A LOT harder. Main challenge is that fees are invisible for end users, so they will default to most widely accepted payment method. Today that's Visa/MC by a landslide.

To really threaten them you would have to be accepted at virtually 100% of merchants that accept them today. Even a few percent behind and most of the people will not use your solution. That means connecting billions of banks, merchants and intermediaries both from technology and business perspective.