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How credit card rewards became a $9.2B wealth transfer

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Re: How credit card rewards became a $9.2B wealth transfer

#351

Post by NooneAtAll3 »

CircuitSeuss wrote: post #318

This ignores the aspect of consumer data. Credit issuers generate profit through issuing rewards programs in part due to the sale of their customer’s behavioral spending data. Cash and debit users largely retain their data privacy here. It’s hard to put a real world number on what the cost to the consumer is for losing this data ownership, but it is not zero: these data are increasingly used for targeted pricing prac…

I think one factor missing in such discussions is that consumer data can be used for political means

And I don't mean "politicians can use it" - but instead, as corporations are more and more involved in the politics, you get targetted and directed based on their needs

Re: How credit card rewards became a $9.2B wealth transfer

#352

Post by ghaff »

tiffanyh wrote: post #19
SXX wrote: post #7

Important context: this is US thing. EU capped interchange fees at 0.2% for debit and 0.3% for credit cards. So in US card processing is x5-x10 more expensive.

To be more specific, this is a US credit card topic. Debit card fees are capped in the US, yet I’ve never received a discount from a merchant for paying with debit instead of credit. As such, I just pay with credit and have never understood this argument.

It's not unheard of. Gas sometimes. My car dealer for one. (Whether it's a credit surcharge or a debit discount is semantics.) Though with the cashback on my usual credit card I use for domestic credit card purchases, the difference is pretty much not worth worrying about.

Re: How credit card rewards became a $9.2B wealth transfer

#353

Post by semiquaver »

CircuitSeuss wrote: post #318

This ignores the aspect of consumer data. Credit issuers generate profit through issuing rewards programs in part due to the sale of their customer’s behavioral spending data. Cash and debit users largely retain their data privacy here. It’s hard to put a real world number on what the cost to the consumer is for losing this data ownership, but it is not zero: these data are increasingly used for targeted pricing prac…

Do you have evidence to support your claim of targeted pricing practices? In what areas?

Re: How credit card rewards became a $9.2B wealth transfer

#354

Post by hypeatei »

JKCalhoun wrote: post #268
SXX wrote: post #7

Important context: this is US thing. EU capped interchange fees at 0.2% for debit and 0.3% for credit cards. So in US card processing is x5-x10 more expensive.

In Germany I saw they charged extra for using my credit card. A U.S. retailer told me the credit card companies won't allow that in the U.S.?

They can't make it an explicit line item of "3% surcharge" or whatever. Instead, the business will raise prices across the board and offer a "cash discount" of 3%

Re: How credit card rewards became a $9.2B wealth transfer

#355

Post by rkuodys »

CircuitSeuss wrote: post #318

This ignores the aspect of consumer data. Credit issuers generate profit through issuing rewards programs in part due to the sale of their customer’s behavioral spending data. Cash and debit users largely retain their data privacy here. It’s hard to put a real world number on what the cost to the consumer is for losing this data ownership, but it is not zero: these data are increasingly used for targeted pricing prac…

Is't the fact that data is valuable for somebody, does not mean that it has a cost (price) for me? Spending data is definitely valuable for seller / corporation to know what to produce. I, on the other hand, cannot get money by saving information.

It's not zero sum game, that either I have it or seller have value out of it. Just like with garbage - for me old broken furniture might be a garbage, while for other it's a burning fuel.

Re: How credit card rewards became a $9.2B wealth transfer

#356

Post by ownagefool »

rkuodys wrote: post #355
CircuitSeuss wrote: post #318

This ignores the aspect of consumer data. Credit issuers generate profit through issuing rewards programs in part due to the sale of their customer’s behavioral spending data. Cash and debit users largely retain their data privacy here. It’s hard to put a real world number on what the cost to the consumer is for losing this data ownership, but it is not zero: these data are increasingly used for targeted pricing prac…

Is't the fact that data is valuable for somebody, does not mean that it has a cost (price) for me? Spending data is definitely valuable for seller / corporation to know what to produce. I, on the other hand, cannot get money by saving information. It's not zero sum game, that either I have it or seller have value out of it. Just like with garbage - for me old broken furniture might be a garbage, while for other it's…

I think the OP is right in that spending data is valuable as a mechanism to figure out how extract more profit, which in the end will have customers paying that price.

However, it doesn't need to be exclusively negative. The data will both show where you can price gouge but also simply where demand is.

Put your coffee shop near a metro stop and sell sourdough bread and people will buy that because they want it isn't exactly negative.

Re: How credit card rewards became a $9.2B wealth transfer

#357

Post by Jach »

sokoloff wrote: post #74
hvb2 wrote: post #11

Earlier quoted context omitted.

> Otherwise, you're giving up 1-3% discount. I would be curious what percentage of people actually qualifies for a card with over 2% cashback especially without a monthly fee. My guess is that that percentage is very low. High earner/spender, sure but that's not most people

If you have Amazon Prime, I recommend getting the no-fee Chase Amazon card. 5% on Amazon and Whole Foods; 6% on some Amazon “no rush” deliveries. No affiliation; just a happy user.

I treat the Amazon Prime membership as the "card fee". The cash back accumulation per year is always greater than the membership fee for me. (The original main benefit of savings on shipping is of course also nice, though if I'm honest with myself I'd say the majority of my purchases didn't actually need 2-day/1-day/same-day shipping. Very nice luxury however.)

Re: How credit card rewards became a $9.2B wealth transfer

#358

Post by foepys »

arpinum wrote: post #346
SXX wrote: post #7

Important context: this is US thing. EU capped interchange fees at 0.2% for debit and 0.3% for credit cards. So in US card processing is x5-x10 more expensive.

EU only capped fees for 4 party systems, and only for consumer credit cards. business credit cards and 3 party systems (American Express for example) are not part of the cap and you can get more rewards with these card types.

Quite a few places do not accept Amex and many that do probably don't know they do or they would disable it.

Re: How credit card rewards became a $9.2B wealth transfer

#359

Post by gorgolo »

Steve44 wrote: post #330
gorgmah wrote: post #109

Earlier quoted context omitted.

It's partly true: this only applies to consumer cards. That's why many EU banks still offer corporate credit cards with huge cashback etc. For example, revolut offers no cashback in France on their metal cards if you have a consumer account, but up to 1% cashback on the same card if you have a "freelance" account. https://www.revolut.com/fr-FR/metal/ Second thing: interchange fees are not the only fees that your typi…

> That's why many EU banks still offer corporate credit cards with huge cashback et We're a business in the UK and the charges for accepting Business credit cards is much higher. I don't have current charges to hand, but in 2023 Personal Credit Cards were 1.97% whilst for Business Credit Cards we were charged 3.43%. That's probably how they afford such high cashback/loyalty schemes. I think we're paying about half th…

Never heard about this before but it sounds crazy. Are you able to control this somehow, like reject business cards?

Re: How credit card rewards became a $9.2B wealth transfer

#360

Post by sokoloff »

strix_varius wrote: post #303
sokoloff wrote: post #17

Earlier quoted context omitted.

If the alternative was paying cash, cash has an even more demanding level of confidence of sufficient funds required and it applies earlier with no flexibility.

No it applies at whatever time you choose - it's the most flexible option for a person whose wealth fluctuates frequently around a low baseline.

I don’t think I understand.

If I pay cash for everything and my cash level fluctuates down to $0 temporarily, how do I buy something right then?

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