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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%

#171

Post by uf00lme »

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…

Amex is a different model, their customers are card holders and not businesses. In their view of the world businesses must pay to access their customers.

It will be interesting to see Google or Apple's long term play in this market, I would love it if they started providing banking services. Just so it interrupts the currently market where the middle men provide little to no real value to the general public.

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

#172

Post by meghan_rain »

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…

> Net revenue was $29B. Opex was $9.3B. Net income was $16B.

This, people, is what a duopoly looks like.

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

#173

Post by acherion »

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…

> Instead of capping prices, you could simply require any fees to be paid by the cardholder.

This already happens in Australia. The price is the price, until you go to pay and if the shopkeeper sees you pull out a credit card, would adjust the total to include a 1.5% surcharge (Visa or Mastercard, and you'll likely be turned away if you pull out a different card like Amex).

The problem with this is that especially since Covid, a massive percentage of in person sales are done via contactless credit card payment, sometimes even with the screen of the terminal not even in view of the cardholder. Some sellers have caught on to this and are charging _much_ more than the 1.5% -- three sushi handrolls at the store around the corner of my workplace would cost about 9 AUD to buy (already includes GST), but the shopkeeper then added a whole 1 AUD on top for surcharge. I protested and have not shopped there since, but there's still plenty of customers at that store.

More and more stores are adding 50c or 1 AUD on top to cover surcharge for items well under 10 AUD, I'm guessing because calculating 1.5% is not trivial for a lot of people, and are ripping off their customers. Calculating 2.08% in your head to make sure the shopkeeper is not pulling a sly one on you unfortunately is not something a lot of people are going to do.

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

#174

Post by hocuspocus »

uf00lme wrote: post #170

The market is still ripe for disruption, this is a defensive move based on fear and the eventually that the era of free money for these players is coming to an end. These middle man are going to be cut out sooner than even they expected, since every smart phone is a PoS device e.g., the move with iPhones in Australia https://www.smartcompany.com.au/industries/retail/apple-ipho...

It's already started, unsurprisingly in countries like China, India or Brazil, that didn't have widespread card acceptance and could push mobile payments faster.

The EU has more or less given up on creating a new competing card payment scheme (EPI) and wants to support mobile payments instead. The EMPSA has already started federating a few domestic networks, and should also eventually be interoperable with AliPay, WeChat, UPI and so on.

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

#175

Post by londons_explore »

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…

I think there is a strong case for credit card fees to be zero for all involved, and the government paying some fixed amount for the running of basic payment processing systems.

Just like the government pays to produce bank notes and coins today.

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

#177

Post by robertlagrant »

nicoburns wrote: post #166
robertlagrant wrote: post #157

Earlier quoted context omitted.

> 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.

Do we all use credit cards? I know people who use credit cards specifically for large purchases. I know very few people who use one regularly for groceries, etc.

Seems crazy not to, just because of the risk of tapping a debit card that gets cloned. I only use a debit card to (occasionally) draw cash.

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

#178

Post by netheril96 »

55555 wrote: post #57
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,…

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.

In China most payments cannot be reversed. By contrast, the security of payment methods are much more stringent in China.

I was surprised when I first learnt that you could spend money online with a VISA card by only card number, expiration date and a 3(!) digit CVV. Those are hardly secure and printed out on the card that anyone can see. Then the US merchants have so many rules about fraud detection but all of them are just heuristics with many false positives and false negatives.

When Internet companies constantly invents new methods to both increase security and usability (two step authentication, pass keys, FIDO-U2F), the payment industry in the US is just stuck in the past.

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

#179

Post by kalleboo »

AmericanChopper wrote: post #168
kalleboo wrote: post #122

Earlier quoted context omitted.

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.

That’s a promo rate, and only available to certain merchants. Wait until it becomes profitable in “3 to 4 years”. The only real opportunity these systems have to increase efficiency is to not offer consumer fraud protections, which is obviously of questionable value to the consumers.

EU interchange rates are regulated to 0.2% for debit and 0.3% for credit and they offer fraud protection just fine
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