...in Canada
Where we also get surcharged +2% when using a credit card for USD purchases and no one seems to care what a massive ripoff that is.
Visa and Mastercard agree to lower average credit card interchange fee below 1%
101–110 of 304 posts
Re: Visa and Mastercard agree to lower average credit card interchange fee below 1%
#102Earlier quoted context omitted.
I think you misread the point GP was making. The poor-poor don't have credit cards. They have cash and debit cards. They pay the same as we do at most[1] merchants, despite credit card transactions nominally costing the merchant more money than cash or debit transactions. Most merchants budget the cost of credit card fees into their regular prices that all people pay regardless of method of payment. [1] - https://www…
> The existence of credit cards is basically an automatic 2-3% inflation on prices. If you want to draw this conclusion you’d have to calculate the cost of the alternative. What would the impact on prices be if there were no electronic payments? What would the impact on prices be if every bank had to implement its own electronic payment system with every merchant? The credit card system integrates a huge portion of t…
> What would the impact on prices be if there were no electronic payments?
According to the local gas station, 10 cents cheaper per gallon. Which is about 2%.
Re: Visa and Mastercard agree to lower average credit card interchange fee below 1%
#103Earlier quoted context omitted.
Cash is more expensive to take as a payment method than interchange unless you’re cheating on taxes.
This is a perpetuated lie based on half-information. It is technically correct. If you are comparing a place that only takes cash, and a place that only takes plastic. This place does not exist. This thing exists, is called a vending machine, and it is indeed cheaper for my bag of chips to be cashless. If a business takes both cash and cards, allowing cards In Addition to already taking cash, does not cost more. It c…
What is your argument here?
I believe the oft-cited reason cash is more expensive is primarily due to shrinkage, which is on the same order as the credit card fees (unless you’re a family-run business or have only amazingly trustworthy employees). Cash-only discounts can be just as easily explained by the “flexibility” cash provides — you can’t assume the conclusion as a fact. The fact that most cash discounts are greater than 1% generally supports this idea, since a business offering a 3% cash discount definitely earns less than taking plastic. (But the accounting “flexibility” is worth more than that 3%.)
Are you saying this is not true, and cash shrinkage is less than the fees?
Re: Visa and Mastercard agree to lower average credit card interchange fee below 1%
#104Earlier quoted context omitted.
> I'm weary of government intervention in capping prices, but I'm not sure what's the alternative here Instead of capping prices, you could simply require any fees to be paid by the cardholder. Combine that with a standard for payment processing so that lots of companies could compete for payment processing and fees would drop really fast. If someone is using a POS terminal like Toast or Square, it should be trivial…
You won’t sell this idea in Europe. Here the price tag for anything is the full amount you pay - including all commissions and taxes. People use debit cards, the paid amount is immediately deducted from bank account. If customers are forced to calculate how much they actually will spend on each transaction, they will instantly switch back to cash.
You can show the full price and the breakdown at the same time. That’s how it works eg in the Airbnb app: I see the price host charges and the fee I pay to Airbnb. The taxi apps show their fee as well.
Re: Visa and Mastercard agree to lower average credit card interchange fee below 1%
#105> Companies agree on product pricing.
Shouldn't a free market handle that with competition?
Re: Visa and Mastercard agree to lower average credit card interchange fee below 1%
#106Earlier quoted context omitted.
That is usually against the card-processing agreement. If you want to have fun, you can report them to Visa/MC and watch that go away within a few days.
Nope, this is completely (laws vary by state) legal as of ten years ago. https://www.lawpay.com/about/blog/credit-card-surcharge-rule...
Legal, yes, you're not going to go to jail for it. However, in accordance with the contract they signed to get access to the card network… they probably are not allowed to do this. Each card issuer has a dedicated form to report this activity.
Re: Visa and Mastercard agree to lower average credit card interchange fee below 1%
#107Earlier quoted context omitted.
These numbers are not public, but the grapevine is that visa/mastercard keeps about a third of all interchange. Credit card rewards are a regressive tax on the poor -- literally, only those like us here on HN with good credit can get 2% cashback on everything, the rest who pay with debit/cash effectively subsidise our 2% discount. I enjoy my 2% cashback, but really would rather see a world where, like the EU, interch…
> I'm weary of government intervention in capping prices, but I'm not sure what's the alternative here Instead of capping prices, you could simply require any fees to be paid by the cardholder. Combine that with a standard for payment processing so that lots of companies could compete for payment processing and fees would drop really fast. If someone is using a POS terminal like Toast or Square, it should be trivial…
This is pretty much what Australia does: credit card surcharges have to be clearly disclosed and must be commensurate with the actual fees.
Nevertheless, partly thanks to COVID, cash usage is way down and many people seem happy to pay the standard 1.6%-ish for the convenience.
Re: Visa and Mastercard agree to lower average credit card interchange fee below 1%
#108Earlier quoted context omitted.
I’m pretty sure their average take is the number I provided from their FY2022 statement.
The link shows their consolidated revenue across the entire world. If you have a source that breaks it down to the US, and specifically US revenue on their credit products (Visa is by far the largest issuer of debit cards, for example, and debit cards got their fees capped by the Durbin amendment), I would love to take a look.
I'd love to see it too - maybe I'm having trouble following your point.
If those are their maximums, then that's the worst case for the customer right? It is these rates that would yield the biggest spread between cash and credit.
Merchants that are able to negotiate better rates inherently have less of a spread between cash and card prices right, and are therefore able to offer a better relative deal to all customers including cash customers. Walmart can better control their costs than a mom-and-pop shop, has more volume, and hence more leverage against $V. So if you're a low-income person at Walmart, you're going to be least relatively affected by card surcharges. Definitely at Costco as you point out, I think Citi actually went below cost to take the portfolio from Amex.
Even in the case of smaller shops, Square, Stripe, Adyen, etc have done a ton to level the playing field by aggregating volume and using it against networks.
Re: Visa and Mastercard agree to lower average credit card interchange fee below 1%
#109Earlier quoted context omitted.
Nope, this is completely (laws vary by state) legal as of ten years ago. https://www.lawpay.com/about/blog/credit-card-surcharge-rule...
Legal, yes, you're not going to go to jail for it. However, in accordance with the contract they signed to get access to the card network… they probably are not allowed to do this. Each card issuer has a dedicated form to report this activity.
Parent provided you a link explaining how this changed 10 years ago. You are unequivocally allowed in the United States to pass along credit card surcharges in all but two states. It's permitted by law, and it's permitted by merchant agreements!
If you don't believe parent, and you don't believe me, I hope you believe Visa's own FAQ.
> Q. Can I add a surcharge to card transactions?
> As a result of a legal settlement to resolve claims brought by a group of U.S. merchants, merchants in the U.S. and U.S. territories may add a surcharge to certain credit card transactions, starting January 27, 2013. Merchants who choose to surcharge must follow consumer disclosure and other requirements agreed to as part of the settlement.
[1] https://usa.visa.com/dam/VCOM/download/merchants/surcharging...
Re: Visa and Mastercard agree to lower average credit card interchange fee below 1%
#110Headline is slightly misleading:
> Businesses with annual Visa sales volume below $300,000 will qualify for the lower fee, as will those who do less than $175,000 from MasterCard.