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What do Visa and Mastercard do? An intro to card networks

tautology.town

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Re: What do Visa and Mastercard do? An intro to card networks

#231

Post by crossroadsguy »

shimman wrote: post #228
adrian_b wrote: post #199

Earlier quoted context omitted.

I think that there was a recent HN thread that linked to an article which argued that the credit card system of USA has the purpose of taking money from the poor and giving them to the rich, and the estimated amount of the money transferred in this way was huge. The EU limits for card fees prevent this in Europe, which is very good.

Do you have a link? Highly interested in that thread. Do you know if people discussed how state solutions faired? I'm assuming something like Pix from the Brazilian Central Bank does an even better job at prevention while providing a public service.

https://www.library.hbs.edu/working-knowledge/how-credit-car... probably this

Pix, UPI, and a few more

Re: What do Visa and Mastercard do? An intro to card networks

#232

Post by pyreko »

jimbob45 wrote: post #84
ianhawes wrote: post #58

Earlier quoted context omitted.

There is, it's called debit cards, but Stripe et al. "simplified" pricing by charging a percentage regardless of card type instead of the traditional interchange-plus pricing. Merchant banks "used to" make money by tacking on fixed fees, i.e. a set-up fee, terminal fee, monthly fee, etc, but then Stripe came along and provided (1) a better dev experience, (2) better onboarding, and (3) simplified pricing.

You have to wait for the investigation to complete to receive compensation if you’re hit by fraud on a debit card. Credit cards don’t share that issue. If you’re poor or living paycheck-to-paycheck, debit cards are potentially a risk to your livelihood.

Eh... I guess YMMV, at least for a low amount it took me literally an afternoon, I just froze my card, walked to the bank, explained the issue, and they refunded me on the spot (also switched out the card for a new one). They said technically it could be clawed back after investigation but they never did.

Re: What do Visa and Mastercard do? An intro to card networks

#233

Post by canjobear »

adrian_b wrote: post #199
avianlyric wrote: post #140

Earlier quoted context omitted.

The EU caps all card interchange fees at 0.3% for credit cards and 0.2% for debit, which is an order of magnitude lower than some of the fees in the US. That’s why you don’t see the same kinds of credit card deals in the EU compared to the US.

I think that there was a recent HN thread that linked to an article which argued that the credit card system of USA has the purpose of taking money from the poor and giving them to the rich, and the estimated amount of the money transferred in this way was huge. The EU limits for card fees prevent this in Europe, which is very good.

A refutation of that view: https://www.complexsystemspodcast.com/episodes/credit-card-r...

Re: What do Visa and Mastercard do? An intro to card networks

#234

Post by skybrian »

adrian_b wrote: post #199
avianlyric wrote: post #140

Earlier quoted context omitted.

The EU caps all card interchange fees at 0.3% for credit cards and 0.2% for debit, which is an order of magnitude lower than some of the fees in the US. That’s why you don’t see the same kinds of credit card deals in the EU compared to the US.

I think that there was a recent HN thread that linked to an article which argued that the credit card system of USA has the purpose of taking money from the poor and giving them to the rich, and the estimated amount of the money transferred in this way was huge. The EU limits for card fees prevent this in Europe, which is very good.

Assuming they pay their credit card bill themselves, it's effectively a volume discount for big spenders (though that "volume" goes to multiple vendors). The argument that the money "comes from" other customers is sort of like claiming that when you "save money" by buying things on sale, the money comes from other customers who paid full price. Actually you aren't "saving money" at all; you're spending money.

Similarly, the "whales" in a casino get lots of "free" benefits, but only because they're losing a lot of money gambling. They paid for them.

Contrast with frequent-flier miles where businesses pay for plane tickets but the points go to individuals. That's pretty clearly siphoning off business expenses.

Re: What do Visa and Mastercard do? An intro to card networks

#235

Post by projektfu »

lxgr wrote: post #197
cmurf wrote: post #178

Earlier quoted context omitted.

It’s 2% or actual cost for credit cards. Under subparagraph f)A seller or lessor shall not impose a surcharge if a customer elects to pay for goods or services by Check, cash, debit card, processing as a debit payment, or gift card. eCheck is considered a check. https://colorado.public.law/statutes/crs_5-2-212

What even is an “eCheck”? I keep hearing that word but haven’t found a sane definition. Is it just a weird term for an ACH debit transfer?

Sometimes it is a synonym for ACH, but it could be processed more literally as a check, with a check image and everything, and something like "Pre-Authorized Payment" written on the signature line. Usually they also let you specify the check number, if you wanted to have it follow your own sequence. Amazon Business was doing this with invoice payments up until January of this year.

Re: What do Visa and Mastercard do? An intro to card networks

#236

Post by JamesSwift »

quickthrowman wrote: post #147
losvedir wrote: post #44

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…

> but it's ridiculous that people have this sense that shopping should somehow fund your vacation. Some people are dumb and think tax refunds are free money when in reality they’re an interest-free loan to the IRS. Money is fungible and instantly redeeming rewards for a statement credit is almost always the optimal way to use credit card rewards. A person who wants to fund a vacation with rewards can simply redeem th…

> Money is fungible and instantly redeeming rewards for a statement credit is almost always the optimal way to use credit card rewards.

Uhh I have no credit cards where redeeming for credit is the optimal play. Every single one has 'offers' that give a further multiplier on the dollar amount of the points. Eg redeem $80 of points for a $100 home depot gift card.

Re: What do Visa and Mastercard do? An intro to card networks

#237

Post by tflinton »

citizenpaul wrote: post #188

Credit cards are the OG of rent seeking for the 21'st century. They recognized upfront that no one would pay their ridiculous middleman fees so they backdoor-ed the fee with the merchants and had them pass it on in price. Its on of the most insidious extraction engines ever made, Jesus would definitely flip their tables lol. Now they do all kinds of accounting tricks to pretend that they have thin profit margins beca…

Networks like visa and Mastercard don’t seem evil. If you’ve ever had to dispute a charge and got your money back easily or relied on the fact that even if their computers are down they’ll still take the risk and allow you to take money out of your account you’d find the fees they charge pretty minimal. Now the issuer bank… that’s where most of the fee and why most banks now have reward cards because the issuing bank can ask for whatever additional fees on top of what visa/mastercard does.

Re: What do Visa and Mastercard do? An intro to card networks

#239

Post by jamesfinlayson »

senbrow wrote: post #143
johannes1234321 wrote: post #104

Earlier quoted context omitted.

> I used to think "I should be nice to merchants" and pay everything in cash. That is only "nicer" as it allows to evade taxes. (Which some may consider nice) But cost for cash is comparable to card payment if looked at seriously * You need working time to count it * You need working time to bring to bank (or request pickup, which costs) * The bank will charge the deposit * The bank will charge for the change you nee…

I own a business that does about $10-$15k mo USD in cash and card transactions and most of what you've said here doesn't ring true to me. Unless you're handling huge amounts of cash, cards are WAY more expensive to deal with IME, especially because the fees scale as a percentage of revenue, so you can't just increase sales and lower your margins. I bought a cheap cash and coin counter for about $400 on Amazon, which…

> My bank does not charge for deposits or change; this would be insane and I've never encountered this in the US.

Some smaller banks in Australia do but the big ones all have cash and coin ATMs which are free for account holders.

Re: What do Visa and Mastercard do? An intro to card networks

#240

Post by derektank »

post-it wrote: post #229
derektank wrote: post #218

Earlier quoted context omitted.

Wouldn’t it be simpler for European countries to simply raise the VAT and redistribute the proceeds to poor people, rather than regulate the interchange fees if the concern is inequality

Your solution sounds significantly more complicated actually.

In what way? There are many sources of inequality. Trying to play whack a mole with each one seems much more laborious than simply deciding how much inequality you want in society, and then setting it with the tax code
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