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Credit-Card Backlash Mounts as Kroger Weighs Expanding Visa Ban

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Re: Credit-Card Backlash Mounts as Kroger Weighs Expanding Visa Ban

#331

Post by finaliteration »

extrapickles wrote: post #211
so33 wrote: post #151

Earlier quoted context omitted.

It’s win-win: Starbucks keeps their most loyal customers loyal and likely uses the “unspent” money to subsidize the loyalty program.

I doubt they are able to use that money without it showing up as a loan (oversimplification). While they get $25 in cash, they also get $25 in obligation/debt to you (eg: they owe you $25 in products). If you don’t use it, after a jurisdiction dependent time, it goes to the jurisdictions treasury (at least in some areas). Or in other words they can’t count that $25 as money they have until you the use credit. It’s pr…

I know that typically with gift cards the dollars fall into a "deferred revenue" account until they are actually realized as a sale against a product/service tied to an income account. You can say "We have X amount in deferred revenue" but can't actually show it as recognized until certain things happen (VSOE rules for software, etc). In the case of Starbucks I think it would be similar, though I'm not sure if using their app for payment qualifies as a "gift card" in the same sense or not.

I believe there are also different laws in different states and jurisdictions related to "breakage", e.g. some states don't allow gift cards to expire whereas others do, so in the latter you can forecast breakage upon set dates whereas in the former it's a lot harder to do because you basically "owe" a product or service indefinitely.

PS I am not an accountant but I've worked with a lot of them via backend billing systems implementation and development.

Re: Credit-Card Backlash Mounts as Kroger Weighs Expanding Visa Ban

#332

Post by linuxftw »

cycrutchfield wrote: post #64
cagenut wrote: post #3

Good? I hate the asinine secondary market of "points". Just don't take the money in the first place and then we don't have to sort out how I can reclaim it somehow.

I love points. I get to fly first or business class internationally all the time, and it's all pretty much paid for by rubes that subsidize my travels.

I love the points as well, though I typically fly economy. Combine the credit cards with airline shopping portals which give you bonus points for things you were going to buy anyway, and the points go so much farther.

Re: Credit-Card Backlash Mounts as Kroger Weighs Expanding Visa Ban

#333

Post by stevesimmons »

stickfigure wrote: post #154
kccqzy wrote: post #94

Relevant: due to Ohio v. American Express , merchants are generally unable to steer customers from using a particular card. For example if a merchant accepts Visa at all, the merchant has to accept all Visa cards, not selectively choose the lower-fee cards; the merchant also cannot tell the customer to use Discover instead to save costs and only use Visa if that's the customer's only card. This anti-steering provisio…

It has been asserted elsewhere in this HN discussion that Visa charges merchants higher amounts for transactions with higher-end rewards cards. Assuming this is true, and these anti-steering provisions prevent merchants from discriminating, what prevents Visa from issuing cards with 200% fees? What's holding the cash back level at a mere 1-2%?

Visa actually does that from time to time, though not to the degree you suggest :).

Here is one example from Australia, where 15 years ago I worked on credit card pricing and product design...

When Platinum cards were introduced to Australia, the banks agreed to a high interchange rate for Platinum and an offsetting reduction in interchange on other cards. I forget the exact interchange rates; they were on the order of 150bp (1.5%) and 50bp, giving a weighted average around the then regulatory cap of 65bp.

My bank was ready for this, so we moved most of our high-spending customers to Platinum ("in recognition of their status") and reaped a windfall from the higher interchange. Part of that was used to fund more loyalty rewards on Platinum. But most was pure profit...

Over time, regulators got wise to this, and reduced the overall interchange rates to the minimum (possibly 35bp in Australia now). Essentially in Australia it is enough to covers the scheme running costs and disputes/fraud. Loyalty has to be funded in other ways (annual fees, cross-subsidies from other customer revenue, points caps, reduce value of points, making it harder for customers to redeem points, etc).

This means customers in shops are no longer paying the cost of loyalty schemes even if they pay with cash.

(Amex operates under slightly different rules from Visa and MasterCard because the legal relationship between the merchant, scheme, issuing and acquiring banks and customer is not the same. That is why Amex can often offer better rewards that Visa/MC in regulated markets like Australia, UK and Europe)

Re: Credit-Card Backlash Mounts as Kroger Weighs Expanding Visa Ban

#334

Post by unethical_ban »

kccqzy wrote: post #94

Relevant: due to Ohio v. American Express , merchants are generally unable to steer customers from using a particular card. For example if a merchant accepts Visa at all, the merchant has to accept all Visa cards, not selectively choose the lower-fee cards; the merchant also cannot tell the customer to use Discover instead to save costs and only use Visa if that's the customer's only card. This anti-steering provisio…

When I heard about this ruling, I was shocked. Information and transparency in agreements should not be against the law.

Re: Credit-Card Backlash Mounts as Kroger Weighs Expanding Visa Ban

#335

Post by frockington »

pixl97 wrote: post #325
gruez wrote: post #292

Earlier quoted context omitted.

>50% of the country is broke what is meant by this? is this the often cited "50% of Americans don't have any savings " number? in savings accounts only

>Some 50.8 million households or 43% of households can’t afford a basic monthly budget for housing, food, transportation, child care, health care and a monthly smartphone bill, according to an analysis of U.S. government data released this month by the United Way Alice Project, a nonprofit based in Cedar Knolls, N.J. that aims to highlight the number of people who live in poverty.

I'm going to assume they grossly overestimated when creating that number. Their aim is "to highlight the number of people who live in poverty". I think I am technically "poor" by a number of standards because I don't have any money in a savings account because I prefer higher yield investments.

Re: Credit-Card Backlash Mounts as Kroger Weighs Expanding Visa Ban

#336

Post by frockington »

mercutio2 wrote: post #155
jamie_ca wrote: post #122

Earlier quoted context omitted.

I believe it. My MasterCard is 2% cashback (through points, but that just means I batch it), but has an annual fee of $150 for two cards, and a minimum household income. I need to spend $7500 on the card just to break even, but if I funnel nearly all my expenses through the card I can net $1000 or more a year. These "rewards" come from the merchant, in the form of higher fees, and because the merchant can't discrimin…

There are many zero fee 2% cash back cards available in the USA. Why pay fees?

By paying $500 for a card last year, I was able to net at least 1.5k in additional savings. As long as you remember your point systems and use appropriately its a great system. To get the benefits most require travel or some other expenditure

Re: Credit-Card Backlash Mounts as Kroger Weighs Expanding Visa Ban

#338

Post by [deleted] »

mikeash wrote: post #288
randomsearch wrote: post #199

Earlier quoted context omitted.

Very interesting quote from Musk: “saying you like moats is another way of saying you like oligopolies”. I like Musk’s focus on innovation, and I also thought this was interesting because it came from one of the PayPal+ group.

If your only goal is to turn a large amount of money into an even larger amount of money, you ought to love oligopolies.

[deleted]

Re: Credit-Card Backlash Mounts as Kroger Weighs Expanding Visa Ban

#339

Post by jen20 »

Nursie wrote: post #173
Symbiote wrote: post #162

Earlier quoted context omitted.

Careful generalising the whole EU on stuff like this. These cards were very common in the UK until the new rules limiting fees were introduced. It looks like there are still a few: https://www.moneysavingexpert.com/credit-cards/cashback-cred...

I live in the UK, and that's kinda what I mean - since that rule was brought in, such things are basically unheard of. The most you can get these days seems to be Avios or Amex rewards points.

Some recent rules appear to have caused basically all rewards credit cards in the UK (other than American Express-issued Amex cards with a fee) to be withdrawn from the market - particularly those offering airline miles.

Re: Credit-Card Backlash Mounts as Kroger Weighs Expanding Visa Ban

#340

Post by pard68 »

what-the-grump wrote: post #277
smileysteve wrote: post #136

Earlier quoted context omitted.

I don't buy this because it discounts the high costs of cash controls. Cash has high costs that likely make electronic forms of payment competitive. You have - Employees skimming the till; - Theft insurance for a safe, the nightly amount in the safe - Managers balancing the cash registers with change/safe - Armored trucks picking up the money (2-3 men guarding the transfer) - Banks processing the money - Employee tim…

Not really. 2% on your gross is a lot and any standard commercial policy will cover cash on hand. 50% of the country is broke, 80% live pay check to pay check. Many working minimum wage, low income bracket do not have bank accounts. The idea that cash is ‘hard to operate’ is a stretch, we’ve been exchanging currency for as long as commerce existed. If you handle enough cash to need an armored truck, you are far above…

Especially in the grocery business. Where I use to work our margin was 2%. Grocery stores are very tight.
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