What do Visa and Mastercard do? An intro to card networks
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Re: What do Visa and Mastercard do? An intro to card networks
#2They tax our entire economy at X rate, while maintaining their infrastructure only requires Y cost ... and X is significantly higher than Y.
From the actual article:
> The payment processor keeps 0.35% ($0.35), then pays 2% ($2.00) to the cardholder’s issuing bank and 0.15% ($0.15) to Visa. The 2% is the interchange fee, commonly known as interchange. The 0.15% is the network assessment fee. 8
In other words, they get 0.35% of every transaction ... and it does not require anything close to that to maintain their network.
Re: What do Visa and Mastercard do? An intro to card networks
#3They tax our entire economy at X rate, while maintaining their infrastructure only requires Y cost ... and X is significantly higher than Y. From the actual article: > The payment processor keeps 0.35% ($0.35), then pays 2% ($2.00) to the cardholder’s issuing bank and 0.15% ($0.15) to Visa. The 2% is the interchange fee, commonly known as interchange. The 0.15% is the network assessment fee. 8 In other words, they ge…
middlemanning is the most american of business ventures
Re: What do Visa and Mastercard do? An intro to card networks
#4They tax our entire economy at X rate, while maintaining their infrastructure only requires Y cost ... and X is significantly higher than Y. From the actual article: > The payment processor keeps 0.35% ($0.35), then pays 2% ($2.00) to the cardholder’s issuing bank and 0.15% ($0.15) to Visa. The 2% is the interchange fee, commonly known as interchange. The 0.15% is the network assessment fee. 8 In other words, they ge…
> and it does not require anything close to that to maintain their network.
If it's so easy to disrupt visa/mastercard payment network, they wouldn't be able to charge this much. Payment is a highly competitive business. We witnessed so many payment companies went under or were bought out, but these two stay for years and are still profitable.
The truth is their moat is considered very durable and hard to build. A global n banks to n banks payment network is not as simple as how people thought.
Re: What do Visa and Mastercard do? An intro to card networks
#5They tax our entire economy at X rate, while maintaining their infrastructure only requires Y cost ... and X is significantly higher than Y. From the actual article: > The payment processor keeps 0.35% ($0.35), then pays 2% ($2.00) to the cardholder’s issuing bank and 0.15% ($0.15) to Visa. The 2% is the interchange fee, commonly known as interchange. The 0.15% is the network assessment fee. 8 In other words, they ge…
Credit card companies are mostly parasitic middle men but I have a credit card that I use for most payments and pay off the balance every month and effectively get 2% cashback with no interest costs.
Re: What do Visa and Mastercard do? An intro to card networks
#6They tax our entire economy at X rate, while maintaining their infrastructure only requires Y cost ... and X is significantly higher than Y. From the actual article: > The payment processor keeps 0.35% ($0.35), then pays 2% ($2.00) to the cardholder’s issuing bank and 0.15% ($0.15) to Visa. The 2% is the interchange fee, commonly known as interchange. The 0.15% is the network assessment fee. 8 In other words, they ge…
Credit card companies are mostly parasitic middle men but I have a credit card that I use for most payments and pay off the balance every month and effectively get 2% cashback with no interest costs.
The actual rates charged to merchants are variable, and typically higher for rewards/cashback cards. Basically, other people are subsidizing cards with higher benefits/cash back (of course as people shift, the merchant raises prices to compensate for the higher average fee, or just charge an additional Z% higher than your cash back)
Re: What do Visa and Mastercard do? An intro to card networks
#7I remember reading a comment here a while back about merchants being offered a discount on the processing fee if they also transmitted detailed data about the purchase (essentially the data that would be on the receipt). That data could then be resold on to advertisers. Does anyone remember this or have links to more data? (Not having much luck with search, maybe I'm hallucinating the whole thing.)
Re: What do Visa and Mastercard do? An intro to card networks
#8[deleted]
Re: What do Visa and Mastercard do? An intro to card networks
#9They tax our entire economy at X rate, while maintaining their infrastructure only requires Y cost ... and X is significantly higher than Y. From the actual article: > The payment processor keeps 0.35% ($0.35), then pays 2% ($2.00) to the cardholder’s issuing bank and 0.15% ($0.15) to Visa. The 2% is the interchange fee, commonly known as interchange. The 0.15% is the network assessment fee. 8 In other words, they ge…
That 0.35% feels more reasonable in 1976 or even maybe 2001 than it does today because technology changed so much. But maybe I'm wrong about that
If you're an American that 2% is a much bigger problem for your society. That's a direct funnel from the poor to the wealthy, it's not as a obvious a problem as "Trump gave the ultra-rich a tax cut" but it might structurally be more significant.
Re: What do Visa and Mastercard do? An intro to card networks
#10They tax our entire economy at X rate, while maintaining their infrastructure only requires Y cost ... and X is significantly higher than Y. From the actual article: > The payment processor keeps 0.35% ($0.35), then pays 2% ($2.00) to the cardholder’s issuing bank and 0.15% ($0.15) to Visa. The 2% is the interchange fee, commonly known as interchange. The 0.15% is the network assessment fee. 8 In other words, they ge…
> and it does not require anything close to that to maintain their network. If it's so easy to disrupt visa/mastercard payment network, they wouldn't be able to charge this much. Payment is a highly competitive business. We witnessed so many payment companies went under or were bought out, but these two stay for years and are still profitable. The truth is their moat is considered very durable and hard to build. A gl…
> If it's so easy to disrupt visa/mastercard payment network, they wouldn't be able to charge this much
If they have the US government behind them its much easier
https://thepaypers.com/payments/expert-views/pix-hits-a-wall...