121–130 of 305 posts
Don’t forget arbitrage, which is the withholding of transferred funds for 7 days while the capital remains in visa’s accounts for “investing” / speculation. It’s like if you gave your buddy $100 to give to his room mate, and he decides to wait a week and gamble it on Kalshi
You better don't look into how banks make money on your savings.
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Clankers found me one study [1] that suggests total handling costs may actually be this bad, but are highly business dependent e.g. restaurants are worse than grocery stores [1] https://www.ihlservices.com/product/the-cost-of-cash-handlin...
Clank deeper, please. You gave us content marketing from the electronic payment industry: "Does IHL Group have any connections to merchant providers?" > IHL Group sells market intelligence, vendor directories, and lead generation data to the electronic payment industry.
Cash handling costs is a real issue though. Not counting under-reporting income, credit cards cost the most at US intercharge levels of 1-3%. Then the all-in cost of cash handling. The lowest cost method is debit.
Well I don't really know what they do, but what I know is that Visa transactions costs are 0,22 € out of a payment of 1 €, Mastercard's is 0,23 €, and the French CB network is 0,17 €. All of them do the same : ensure I get the money from the customer. Of course it's a larger project to run this in the whole world, but shouldn't it scale to less along with the number of billions of customers instead of the other way r…
Are you sure of these values? Because that's different from what I was told, which was that CB was cheaper for transactions of more than 10 €, because their fees were fixed, not rates like Visa and Mastercard.
From what I've just read (not counting the possible extra tax by the bank of the seller):
CB: 0.20% + 0.00117 € ⇒ 0.00317 € for 1 €, 0.20117 for 100 €
Visa: 0.20% + (0.01% to 0.014%) ⇒ up to 0.00214 € for 1 €, 0.214 € for 100 €
Mastercard: 0.20% + (0.15 to 0.17%)
The 0.20% is for the "interchange" described in the article. So it applies only when the seller and the buyer do not have the same bank. The maximal rate is fixed by the UE, and AFAIK everyone use the max value.
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Jokes on you. Merchants prefer credit cards because there is less loss than cash. 2.5% is nothing compared to 5-10% loss at the register. Plus easier and more accurate accounting.
ACH is still the best https://gocardless.com/
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Clank deeper, please. You gave us content marketing from the electronic payment industry: "Does IHL Group have any connections to merchant providers?" > IHL Group sells market intelligence, vendor directories, and lead generation data to the electronic payment industry.
Definitely a conflict of interest. Cash handling costs is a real issue though. Not counting under-reporting income, credit cards cost the most at US intercharge levels of 1-3%. Then the all-in cost of cash handling. The lowest cost method is debit.
BTW, I used to handle around $7M/year in credit card transaction in the USA, and if you got actual hand-written partial numbers on a signed contract, then we could avoid nearly 100% of charge backs, as we always delivered on our end. I think in 14 years, we had around 10 charge back attempts, and our merchant provider loved us. The only time I ever magically lost a charge back was to a Visa executive for ~$10k, and our merchant provider just shrugged. Whatayagonnado?
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How are chargebacks resolved in this situation? This is an important question- most of the costs of a credit card providers come from dealing with fraud and chargebacks. That's partially because, under US law, credit card companies have to eat fraudulent charges if they can't get the person or company that did the fraud to do so. (Funnily enough, this is one of two places where protections for average people in the U…
You resolve it the same way you handle in-store cash purchases of products that turn out to be faulty. There is no reason why fraud and contract violation must be handled by unelected and unaccountable payment processor, when the government has already set up a consumer protection system for disputes related to cash payments. The payment processor is best left as a dumb pipe that does what parties and (in case of dis…
Making a purchase is (still) voluntary for the customer.
For everyday purchases at physical stores, cards are convenient. You just swipe and maybe put your PIN. But other digital payment methods or cash can be just as convenient. You're never going to chargeback a coffee, a sandwich, or your groceries.
But for distance purchases such as online shopping, hotel bookings, flight reservations and such, trust is the most important factor, not convenience. Cards have fraud protection. Other payment systems do not. These "unelected and unaccountable" people can actually help you if you've been the victim of wire fraud. Much faster and much less of a hassle than going through the courts. And if they don't help you, you haven't in any way, shape or form abstained from your right to justice through a court of law.
If customers can have that security and ease of mind, then they are much more likely to make a distance purchase. Which means that the vendor can sell their product. If the customer can't have that ease of mind, then the vendor will not make a sale.
So vendors who want to make sales will gladly accept cards. Anybody foolish enough to try to sell without making it easy for the customer to pay in their preferred way will go out of business.
Another point worth mentioning is that cards work instantly across pretty much all currencies in the world. You can go from anywhere to anywhere and pay with your card and currency exchange is done automatically. And in the past 10 years, cards have given very good exchange rates.
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Jokes on you. Merchants prefer credit cards because there is less loss than cash. 2.5% is nothing compared to 5-10% loss at the register. Plus easier and more accurate accounting.
If your employees are stealing you should probably nip that in the bud...
I play the credit card "game" because I hate feeling like I'm leaving money on the table, but I really wish I didn't have to. Some degrees of fees make sense, to run the network, and handle fraud, but it's ridiculous that people have this sense that shopping should somehow fund your vacation. Where I am it's increasingly common to see credit card fees when checking out. I get it, because merchants are being charged 3…
It boggles my mind that the government has privatized currency to these people. Crazy-person-but-actually-really practical-idea: Nationalize one if these networks. Maybe Discover. The US government should provide us digital currency. The simplest way is to force the current systems to do that. All that rent they collect in terms of transactions fees shouldn't be profit for a private business but fees of the governmen…
Some light self-promotion but also longer term thoughts: A large part of the promise of crypto and stablecoins was to displace Visa and Mastercard rent-seeking. This didn't seem to happen. Most modern neobanks, our own included ( https://peanut.me ), actually seem to EMBRACE Visa and Mastercard. Almost all offer an actual Fiat card within their app, instead of boldly saying "No, pay with crypto, the future of money!"…
Furthermore, a currency needs a government (or similar kind of body) to manage its stability, by printing (and buying) money. Otherwise, we'll see wide fluctuations in value like what happens with Bitcoin.
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> 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 someone owned all the highways, building an alternative would be difficult as well.