How credit cards make money • Hacker News Board

Re: How credit cards make money

#361

Post by biztos » Sat, Nov 06, 2021, 9:17 AM UTC

nikitaga wrote: post #341

noduerme wrote: post #314

Earlier quoted context omitted.

Just my on-the-ground view as an American, I've seen both major parties in this country change radically in my lifetime to the point of being unrecognizable. In the case of the Republican party this has happened twice. The USSR had only one Party, but intra-party politics were all the more fierce as a result. I'm not saying that a full or even reasonably varied spectrum of true, non-spectacular or intelligent alterna…

> The ideological spread between Joe Manchin and AOC covers most of the ground covered by center and left European parties. Most Americans don't have the option to vote for AOC or Joe Manchin (nor for their ideological equivalents). Neither for congress, nor for the President. They get shit candidates and still vote for them because the only viable alternative is an even worse candidate from a party you hate more tha…

I used to be really impressed with European-style proportional representation, until I spent a lot of time in Germany.

I still prefer it to two-party system, but the last German election ultimately came down to two wet-noodle candidates absolutely nobody liked nor respected, and one of the wet noodles won. Now the establishment lumbers on, having lacked anything like a political vision for generations now.

I really wish there were more of a market of systems in the world, so we could think bigger. Probably wouldn't matter to the US, but just in principle.

Re: How credit cards make money

#362

Post by makeitdouble » Sat, Nov 06, 2021, 9:34 AM UTC

quantified wrote: post #317

makeitdouble wrote: post #293

Earlier quoted context omitted.

To add to dantheman’s point, a lot of merchants are more than willing to spend 3~5% in fees if it means making a register line 10~15% faster, or reduces the cash stock they need to keep at hand and manage thorough the day. Privileging cash as a customer isn’t universally better for the merchant.

Then, politeness suggests you ask if you’re thinking about it.

It’s an interesting approach, as you wouldn’t enter a restaurant and ask what dish would make them the most margin. Or go to the post office to ask what packaging is cheaper for them to ship. In that respect I think asking what payment means costs more to the shop would break a social norm, so I’m surprised you file it under politness.

Otherwise shop owners have many many ways to signal how much they want you to do something or not. Wether the card reader is hidden under the counter or the most prominent thing when you need to pay could be a very clear signal for instance.

Re: How credit cards make money

#363

Post by saint_angels » Sat, Nov 06, 2021, 9:36 AM UTC

conductr wrote: post #124

teej wrote: post #3

> It’s often forgotten, but prior to credit cards, many Main Street retailers like e.g. pharmacies maintained hundreds or thousands of credit accounts for customers individually, necessitating their own back offices, accounting, and collections headache. This article is a great history of how the modern credit card came into being https://www.washingtonpost.com/archive/lifestyle/magazine/19...

My great grandfather owned a grocery store in our town somewhere around 1940s-1970s (the only one at the time). Town was much smaller then but about 200,000 people now (edit: I looked it up, it went from about 10K people to 200K since 1940). My last name is somewhat unique in spelling and it was called "$LASTNAME Grocery" so I still occasionally* get a random old timer that asks me if I'm related to him. When I say y…

do you know if the grocery store was relatively successful? I imagine that doing business with whole town, instead of just 75%, is economically preferable

Re: How credit cards make money

#364

Post by dguest » Sat, Nov 06, 2021, 9:50 AM UTC

leetcrew wrote: post #204

TeMPOraL wrote: post #195

Earlier quoted context omitted.

> At the end of the day, credit cards are still significant better for customers. (...) Yeah, I don't know. Thing is, I don't like the stress involved. I prefer to deal with the money I have, not with the money I hope I'll have in one month's time. Not to mention, the cognitive burden of constantly keeping in mind the various balances and expected money flows, and having to manually push money around. It all feels li…

it's not like debit cards are extremely safe to begin with. banks (in the US, at least) will happily let you withdraw $XXX more than you actually have and charge you a fee on top of it. do you routinely overdraw your bank account? if not, you probably a) keep more than enough in checking to cover a typical month's expenses, or b) carefully track your balance to ensure each purchase won't take you past zero. unless ha…

I've never owned a credit card. Can you have them automatically pay off the balance every month? It seems like this would cut into their profits.

I think the point above was more or less:

- With a debit card if you have 10k in the bank and spend 100 dollars a month, you don't need to do anything extra.

- With a credit card, you need to remember to pay off your balance.

Re: How credit cards make money

#365

Post by sofixa » Sat, Nov 06, 2021, 9:51 AM UTC

nottorp wrote: post #214

sofixa wrote: post #151

Generally good article, but this part bothers me: > For another, this ended up being an almost peculiarly American experience. In Europe, regulators were worried about the cost of interchange to businesses (rather than consumers) and capped it. Since issuers didn’t have the margin to compete on rewards paid for by interchange, they instead leaned into branding and convenience, and credit cards became a smaller portio…

> In Europe, regulators were worried about the cost of interchange to businesses (rather than consumers) and capped it. Hmm not everywhere. I recently went to the Netherlands and was surprised to see not everyone accepted credit cards - while they do accept (local) debit cards. My cards are Romanian, so you can't blame US banks. In one small store they explained to me that accepting Visa/MC would cost them 10%, which…

The Netherlands is an outlier. They say they don't accept credit cards, but actually they mean they don't accept Visa and MasterCard, regardless if it's credit or debit. Maestro is the network most used locally.

However, it's gotten drastically better in the past few years, with at least the bigger stores accepting Visa/MasterCard now.

Re: How credit cards make money

#366

Post by dguest » Sat, Nov 06, 2021, 9:54 AM UTC

tacocataco wrote: post #332

leetcrew wrote: post #204

Earlier quoted context omitted.

it's not like debit cards are extremely safe to begin with. banks (in the US, at least) will happily let you withdraw $XXX more than you actually have and charge you a fee on top of it. do you routinely overdraw your bank account? if not, you probably a) keep more than enough in checking to cover a typical month's expenses, or b) carefully track your balance to ensure each purchase won't take you past zero. unless ha…

Some banks let you disable overdraft protection. Your card will just be declined when there isn't enough to cover the balance.

I thought courts had required banks to allow opt-out for a long time. Apparently more recently [1] this was expanded so that account holders have to opt in.

[1]: https://www.huffpost.com/entry/overdraft-protection-expi_n_6...

Re: How credit cards make money

#367

Post by throaway46546 » Sat, Nov 06, 2021, 10:02 AM UTC

jackson1442 wrote: post #174

reaperducer wrote: post #93

Earlier quoted context omitted.

I'm in a renting situation where my landlord demands rent land in their account on the first of the month. Receiving rent on the 26th (i.e. 5 days early, not 26 days late) was deemed "too confusing" for them. I ran into this at my last place. I'm the sort of person who likes to pay things ahead so I don't have to think or worry about them. I was used to paying my rent ahead and quarterly. When I moved to the new plac…

Ha! My current apartment wants me to pay $19.95 to do a one-time eCheck (direct debit, it's basically free on their end) but allows me to drop checks in the office for free. What a backwards system.

My landlord demands cashier's checks or money orders. It is really annoying. I just want to automate it. With my previous landlord I had automatic bill pay set up.

Re: How credit cards make money

#368

Post by dguest » Sat, Nov 06, 2021, 10:04 AM UTC

perl4ever wrote: post #228

TeMPOraL wrote: post #195

Earlier quoted context omitted.

> At the end of the day, credit cards are still significant better for customers. (...) Yeah, I don't know. Thing is, I don't like the stress involved. I prefer to deal with the money I have, not with the money I hope I'll have in one month's time. Not to mention, the cognitive burden of constantly keeping in mind the various balances and expected money flows, and having to manually push money around. It all feels li…

Yes, but what happens when someone does make fraudulent charges with it? "The major difference between a thing that might go wrong and a thing that cannot possibly go wrong is that when a thing that cannot possibly go wrong goes wrong it usually turns out to be impossible to get at or repair." I'm especially leery of anything that someone powerful and/or authoritative says can't go wrong, because when it does go wron…

I've had people make fraudulent charges on my debit card. The answer to your question: It wasn't a big deal.

The bank contacted me immediately and said they noticed strange behavior on my card and had thus blocked it. They sent me a transcript with the obvious fraudulent charges highlighted, and asked me to identify any additional ones.

When I asked about reimbursement the man sighed and said they might not get everything back, but then quickly corrected himself: they were legally required to reimburse me, it was just the bank that would potentially loose some money. I had everything back in my account within 24 hours.

So I have a question, to people who warn me of the dangers of debit card fraud and preach the advantages of credit: was I just exceptionally lucky with my bank? My bank was just a run-of-the-mill small town local bank, I wouldn't have expected anything extraordinary out of them. But yet their response to fraud was stellar. It's really left me wondering what all the hype is about.

Re: How credit cards make money

#369

Post by nikitaga » Sat, Nov 06, 2021, 10:05 AM UTC

noduerme wrote: post #350

nikitaga wrote: post #341

Earlier quoted context omitted.

> The ideological spread between Joe Manchin and AOC covers most of the ground covered by center and left European parties. Most Americans don't have the option to vote for AOC or Joe Manchin (nor for their ideological equivalents). Neither for congress, nor for the President. They get shit candidates and still vote for them because the only viable alternative is an even worse candidate from a party you hate more tha…

>> Most Americans don't have the option to vote for AOC or Joe Manchin (nor for their ideological equivalents). Neither for congress, nor for the President. But Americans do usually have a wide variety of choices in the primaries. It's the primaries where the actual policy ideological positions are fought out. There would be no AOC - or MTG, for that matter - but for some highly motivated sets of voters with various…

> how close France was recently, to Marine Le Pen and genuine fascism. Or how quickly Venezuela turned into a one-party state under Chavez.

People who have strong opinions against proportional representation invariably seem to be completely uninformed about its particulars, and love nothing more than to bring up random countries that they know nothing about and that have little to do with proportional representation, or blame all the country's problems on an election system for no reason.

1) Both French and Venezuelian presidential elections were held under a simple voting system that is a lot closer to FPTP than to proportional representation in its mechanics. The only difference from FPTP is that they have a second round between the two candidates who got the most votes. In the US two party system that second round wouldn't make any difference 99% of the time.

2) It takes some epic lack of self awareness to complain about some right wing loser in another country, when your own country's FPTP system elected Trump despite him losing the popular vote, and then almost elected him again. Whereas the French loser you're complaining about lost 66%-to-34%, and even worse than that the previous time she ran.

3) Venezuela's problems have nothing to do with their election system. Nor do presidential elections have anything to do with proportional representation. But if you like looking at random countries and assigning all their problems to their voting systems, why don't you look at this map and tell me how well those countries have been served by FPTP: https://en.wikipedia.org/wiki/First-past-the-post_voting#/me...

> most Americans prefer political gridlock to any well-tuned agenda

You don't know what Americans prefer, because currently they are exhibiting their preferences under duress. The primaries only serve to choose a candidate who will be "electable" under a broken FPTP system come election time – it is a losing proposition from the very start. Americans are only given the illusion of choice, with all the fanfare to keep them happy. They never see any real choice the way people living in proportional representation countries do.

> a lot better than letting the more extreme left or right-wing agendas come in and flip the table.

Lol. US politics is disintegrating largely because of FPTP elections, UK did Brexit largely because of FPTP elections, you think other countries on that FPTP map are doing much better? Proportional representation systems are a lot better at keeping extremists out of power, because in FPTP extremists hijack mainstream parties who win elections and end up governing.

In proportional representation systems, extremists get elected in small quantities and then productive coalitions form to keep them out of power, so they end up just warming the seats in parliament instead of destroying the country. This isn't just my opinion, it's been studied, researched and proven. Look. It. Up.

Re: How credit cards make money

#370

Post by lotsofpulp » Sat, Nov 06, 2021, 10:05 AM UTC

nobody9999 wrote: post #330

lotsofpulp wrote: post #101

Earlier quoted context omitted.

> How is it very clear that most merchants earn more? Because they do not offer discounts for cash/debit, and they also do not charge a fee for using credit card. As I showed in my post, legally, merchants are clear to advertise higher prices for credit card users. The fact that they do not means they do not want to dissuade credit card use. From there, it follows that since businesses are interested in earning more…

>Because they do not offer discounts for cash/debit, and they also do not charge a fee for using credit card. Except they do. Especially smaller, mom & pop stores, as I mentioned here[0]. [0] https://news.ycombinator.com/item?id=29128007

I also mentioned it…

> Note that my above post specified “most merchants”, not all merchants. Obviously, some merchants do benefit from dissuading credit card use, such as the examples I gave, or many gas stations and small restaurants or convenience stores.