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Visa and Mastercard agree to lower average credit card interchange fee below 1%

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Re: Visa and Mastercard agree to lower average credit card interchange fee below 1%

#281

Post by tpurves »

arcticbull wrote: post #48
e63f67dd-065b wrote: post #45

Earlier quoted context omitted.

Maximum interchange is public, but most of those numbers are lies -- big merchants negotiate their own rates, and big merchants are a big chunk of most CC spend (Amazon does not pay a number that appears on that sheet, for example). Costco (in)famously negotiated that number down to basically zero. It's true that Visa/MC technically doesn't keep any of the interchange -- but the interchange goes to the issuing bank,…

I’m pretty sure their average take is the number I provided from their FY2022 statement.

Visa takes zero from interchange but charges volume based service fees in the single-digit basis points (each) to the acquirer and issuer. Visa makes additional yield from cross-border payments and grosses up revenue from value-added services such as issuer or merchant processing (e.g Cybersource) and from other value add services like risk/fraud tools, consulting etc. Source: 12 years at Visa. Around 20something bps yield on volume averaged-out is correct math.

Re: Visa and Mastercard agree to lower average credit card interchange fee below 1%

#282

Post by usernew »

adrr wrote: post #279
usernew wrote: post #96

Earlier quoted context omitted.

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…

Multiple restaurants around me only take card. Also airlines. I work for a dtc company and we would go cashless at our stores unless we are forced to by mall management. Cash is expensive to handle. https://www.usatoday.com/story/money/2018/04/15/cashless-res...

Got it - I was wrong about that second part. The restaurants around you don't serve people who are poor, or people under 18. Smart choice.

Several restaurants around you (I've never seen one, ever) being bigoted and rejecting business, does not mean your general statement is true. 99.(99999?)% of physical businesses also take cash. A blanket generalization, like the statement to which I replied, is based on - umm - the general case. a .0001% case of it being true doesn't make it true.

Trees you see, don't grow on land. Because I saw one growing through the water in a shallow lake once.

Here in the real world, the polar opposite of what was stated is actually true. In fact, I'll bet you a lot more businesses Only take cash than only take credit. Adding credit to a business that does cash (most businesses), is expensive. Adding cash to a business that does credit (count them on one hand) is also expensive.

You seem to not understand that, so I do have more tree and fern examples - just ask. You'll have to wait a couple of days if you want other kinds of flora however, as my brain turns slowly.

Re: Visa and Mastercard agree to lower average credit card interchange fee below 1%

#283

Post by hakfoo »

qwytw wrote: post #254
carlosjobim wrote: post #240

Earlier quoted context omitted.

Visa electron/maestro are they debit cards now? Back in the day they were only for ATMs and very few businesses. Don't most people have the normal visa/mc debit cards there?

> Visa electron/maestro Don't even exist in many places anymore. e.g. in the EU country where I live both were replaced ~8 or so years ago by Visa/Mastercard Debit (since they removed embossed characters the only way to distinguish them is the word 'debit' written in a tiny font.

Maestro is literally starting to wind down this year, supposedly they've decided to switch everyone towards Debit Mastercard products.

I assume there's gradually less and less appeal for a card that isn't as broadly accepted, and if it encourages more fee generation, all's the better.

Re: Visa and Mastercard agree to lower average credit card interchange fee below 1%

#284

Post by throwawayy1224 »

e63f67dd-065b wrote: post #12
arcticbull wrote: post #6

Visa and Mastercard don't keep much of interchange at all and never have. The vast majority is paid to issuing banks to pay for loan origination, fraud and, most significantly, to return in the form of cash back or points. These networks charge 0.2% for debit and 0.3% for credit in Europe as per regulation, you just don't get rewards there. Kinda sounds like they're just going to squeeze issuing banks. Cash back and…

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…

Pix and other types of instant payments systems are very different products from credit cards. I'm not sure if it is a fair comparison.

Re: Visa and Mastercard agree to lower average credit card interchange fee below 1%

#285

Post by arcticbull »

acherion wrote: post #173
mdasen wrote: post #31

Earlier 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…

> Instead of capping prices, you could simply require any fees to be paid by the cardholder. This already happens in Australia. The price is the price, until you go to pay and if the shopkeeper sees you pull out a credit card, would adjust the total to include a 1.5% surcharge (Visa or Mastercard, and you'll likely be turned away if you pull out a different card like Amex). The problem with this is that especially si…

> The price is the price, until you go to pay and if the shopkeeper sees you pull out a credit card, would adjust the total to include a 1.5% surcharge (Visa or Mastercard, and you'll likely be turned away if you pull out a different card like Amex).

That's not required in AU, btw, it's optional. It's up to the merchant.

Re: Visa and Mastercard agree to lower average credit card interchange fee below 1%

#286

Post by arcticbull »

MichaelZuo wrote: post #234
no1lives4ever wrote: post #219

Earlier quoted context omitted.

Back in 2005, I bought a car in India. I was trying to pay a part of the purchase price using my credit card. My auto dealer wanted me to add a surcharge. When I called up my card company and complained about this, i was asked to pay the surcharge by my card issuer's call center employee :-(

The parent is likely referring to AMEX cards, which is the only issuer that enforces it as a global policy. And hence why in developing countries only luxury and ultra-luxury establishments accept AMEX cards.

It's not a global policy. It's regional.

Re: Visa and Mastercard agree to lower average credit card interchange fee below 1%

#287

Post by [deleted] »

tpurves wrote: post #281
arcticbull wrote: post #48

Earlier quoted context omitted.

I’m pretty sure their average take is the number I provided from their FY2022 statement.

Visa takes zero from interchange but charges volume based service fees in the single-digit basis points (each) to the acquirer and issuer. Visa makes additional yield from cross-border payments and grosses up revenue from value-added services such as issuer or merchant processing (e.g Cybersource) and from other value add services like risk/fraud tools, consulting etc. Source: 12 years at Visa. Around 20something bps…

[deleted]

Re: Visa and Mastercard agree to lower average credit card interchange fee below 1%

#288

Post by arcticbull »

bombcar wrote: post #268
arcticbull wrote: post #265

Earlier quoted context omitted.

When I said "nobody is taking FedNow" I meant nobody is going to be taking FedNow at the point of sale after launch in July. It'll work just fine, but it enables things like Cash App, Zelle and Venmo to avoid using debit rails. It's quite unlikely it'll actually exist at cash registers. Out of curiosity which product are you referring to in the EU? To my knowledge they just use Visa/MC Debit or local debit schemes at…

Lots of larger purchases use the equivalent of what would be in the USA a routing number and a bank account number.

At which retail point of sale?

Re: Visa and Mastercard agree to lower average credit card interchange fee below 1%

#289

Post by arcticbull »

nailer wrote: post #231
arcticbull wrote: post #139

Earlier quoted context omitted.

You are failing to price in counter-party risk, exchange rate risk, and myriad other risks. Not to mention the cost of having a whole separate point of sale for a currency nobody has - or the fees for converting it back into a currency you can pay your suppliers and taxes with. Or the cost associated with reporting. You can pay a very similar flat 1/3 of a cent fee for an instant FedNow payment with none of those ris…

Cash, bank transfers, etc don't price in counter-party risk either. The only thing that does is Visa, and that's a layer on top of your existing statutory rights. Agreed re: fiat onramp/offramp. 0.3c is still far in excess of 0.0025c but maybe that won't matter.

The wild fluctuations in exchange rate and having a terminal for a currency nobody uses are a dramatically bigger risk than 0.3c - and yes, your counter-party risk is a non-issue in legacy finance.

Re: Visa and Mastercard agree to lower average credit card interchange fee below 1%

#290

Post by eru »

Reason077 wrote: post #164
eru wrote: post #137

Earlier quoted context omitted.

Here in Asia we have alternatives to Visa and Mastercard popping up. Merchants are typically happy to take them, because their fees are lower. > Regulation is warranted in monopoly/oligopoly situations. Either by changing the rules to favour/promote increased competition, or, as the EU has done here, by capping the fees which they can charge. I suspect you might want to look into lightening regulations, so that upsta…

Right. That’s exactly what I mean by “changing the rules to promote increased competition”. This is unlikely to happen in the US, however, where market-dominant corporations have huge lobbying power and can ensure the rules are written in their favour, and any potential upstarts drowned in a sea of red tape.

Yes. My emphasis was that the specific rule changes you want are probably the removal of special rules, whenever possible.
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