How much do interchange fees increase prices in the US?
What do Visa and Mastercard do? An intro to card networks
241–250 of 334 posts
Re: What do Visa and Mastercard do? An intro to card networks
#242Related : GNU Taler. You can apply to a fund to implement this system. https://nlnet.nl/taler/
Has the characteristics to implement the digital Euro. Plus guarantees anonymity of buyers. And should be extremely cheap to operate. But is not under bank’s control.
Re: What do Visa and Mastercard do? An intro to card networks
#243I 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…
Agreed.
I will admit that sometimes I do have fun playing the game (certainly a lot more when I was younger), but not often anymore. I feel like I "have" to do it, because there's no such thing as a free lunch, and as such stores price in the fees and so I might as well get it back in the form of traveling, but it is very weird that we just expect credit cards to do that.
Re: What do Visa and Mastercard do? An intro to card networks
#244Earlier 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.
> has the purpose of taking money from the poor and giving them to the rich
Are you saying it is intentional? Is it not more simply explained as simple greed by two companies colluding to keep competitors out of their market?
Re: What do Visa and Mastercard do? An intro to card networks
#245Earlier quoted context omitted.
Debit cards aren't that, in practice, because as you say they typically get the same 3% fee whenever I've asked. Toast and other point of sale networks just charge it based on the network and not the card type. But even so, I still prefer the credit card instrument, used as a "charge card". For those that don't know, a "charge card" is common with businesses and is expected to be paid off every month. But it helps wi…
As a Canadian , I thought that was the expected de facto way of using credit cards: you pay everything with it so you get rewards (ie money) at the end of the year as a function of how much you used the card during the year. At the end of the month, you pay whatever the outstanding balance is, otherwise you pay high interests.
Many of us use it exactly that way, though the rewards (in my personal experience) are immediate as soon as a transaction clears and not yearly. Carrying a revolving balance is a quick way to spiral into bankruptcy because the rates are so high (and the minimum payment is typically 1% of the balance).
Re: What do Visa and Mastercard do? An intro to card networks
#246Earlier quoted context omitted.
Debit cards are not subject to surcharging, and any merchant doing so is violating Visa/Mastercard regulations. (And possibly state law in several places -- Colorado where I live caps surcharge at the lesser of 2% or the cost of payment processing.)
Prices reflect the credit card merchant fees, even if there's no separate surcharge. People pay higher prices and anyone who doesn't use a credit card to recoup some in "rewards" is effectively getting taxed.
There is some nuance there. Cash is hardly free to process, and I have seen arguments that it is not far from the same overhead as credit card fees. So people who pay in cash are not subsidizing credit card users. Maybe it could be argued that debit card users are, though.
Re: What do Visa and Mastercard do? An intro to card networks
#247Earlier quoted context omitted.
You get charged higher prices and then have to use a credit card to recoup the loss, so that rent-seeking monopolists can make money. And Americans are also seemingly baffled by the idea of regulating this away, as if other countries doing this don't exist. Credit cards are the USA epitomized.
It was regulated away in the Durbin Amendment of the 2010 Dodd-Frank law: https://www.congress.gov/crs-product/R41913 https://www.ftc.gov/business-guidance/resources/new-rules-el... American sellers have had the option to collect however much extra they want from people paying with credit cards, and many do. The government, utilities, mobile network providers, insurance, schools, healthcare, gas stations, home contra…
It is interesting the breadth of experiences in this regard. I pay basically everything on my card, to the tune of 5-6 grand a month, including utilities. The only time I have ever seen a surcharge is for things like contractors doing work at my house. The gas company, electric, the city, all take the card with no extra charge. I rack up a lot of airline miles just from day-to-day use.
Re: What do Visa and Mastercard do? An intro to card networks
#248Earlier quoted context omitted.
Yes, let's bring the experience of waiting at the DMV or dealing with the IRS to payment systems. Great idea
My experiences with the DMV have actually been pretty decent. I think a lot of their negative reputation is from how it used to be, but that they have improved substantially since then?
DMV is a state level agency and varies a lot depending on where you are. It's partially privatized here in Oklahoma and mostly painless (you only need the actual DMV for driver's tests, CDL background checks, etc.) but when I lived on the Illinois side of St. Louis I routinely heard of people spending hours in line.
Normally I'm not a huge fan of privatization but the way it's done here works great. The fees are set by the state and the agency gets a percentage, so if an area is underserved someone just opens another one.
Re: What do Visa and Mastercard do? An intro to card networks
#249Earlier quoted context omitted.
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.
As someone who has been hit with fraud on a debit card and a credit card, the process to recover money from fraud on a credit card is so much easier and more hassle-free than a debit card. The big difference is that with a debit card, it's your money that is hit by fraud. The debit card is basically just a proxy. You have to go file a police report. You have to hope the bank will give you the money back. When the cre…
This is where you find out which banks suck, and which do not. I will say that while USAA is a long ways from perfect, when someone swiped my wife's debit card and took $5000 from our checking account, they put that money back within a day while the investigation was pending. No police report necessary, either.
Re: What do Visa and Mastercard do? An intro to card networks
#250Earlier quoted context omitted.
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…
Each of those networks carry a lot, a lot of ancient stuff. Gov is better off building a brand new network from scratch and promote it as a standard for banks to join. There are plenty of great examples from this century all over the world. Even Iran has a better payment infra than the US.
> Even Iran has a better payment infra than the US.
That is a big claim. What would prevent someone from setting up something equally as good in the US, aside from the network effect and users unwilling to try something new for uncertain gain?