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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%

#41

Post by ramraj07 »

adrr wrote: post #35
e63f67dd-065b wrote: post #12

Earlier 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…

Cash is more expensive to take as a payment method than interchange unless you’re cheating on taxes.

Nationalize a universal payment interface like india did. India, a very corrupt, bureaucratic place with billions of people did it. There’s no excuse but lobbying.

Credit card rewards are evil. They incentivize crafty behavior to secure miles or whatever and shaft normal people who just want to live life and get what’s equitable without playing shenanigans. I’d rather live in a world where when you pay for a coffee, you pay for the fucking coffee. Not a million equations of cashback and miles with perverse incentives.

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

#42

Post by godelski »

ramraj07 wrote: post #41
adrr wrote: post #35

Earlier quoted context omitted.

Cash is more expensive to take as a payment method than interchange unless you’re cheating on taxes.

Nationalize a universal payment interface like india did. India, a very corrupt, bureaucratic place with billions of people did it. There’s no excuse but lobbying. Credit card rewards are evil. They incentivize crafty behavior to secure miles or whatever and shaft normal people who just want to live life and get what’s equitable without playing shenanigans. I’d rather live in a world where when you pay for a coffee,…

> Nationalize a universal payment interface like india did

> a very corrupt, bureaucratic place with billions of people did it.

You're not making a great sell here... you're just saying that this is a thing that a corrupt country does and therefor others should.

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

#43

Post by ivan_gammel »

mdasen wrote: post #31
e63f67dd-065b wrote: post #12

Earlier 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…

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.

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

#45

Post by e63f67dd-065b »

pbreit wrote: post #34
e63f67dd-065b wrote: post #12

Earlier 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…

Visa & Mastercard do not keep any of the interchange fee. It all goes to the issuer of the card. Visa & MC charge "scheme fees" which are much lower (except for cross-border txns). Interchange is public information: https://usa.visa.com/dam/VCOM/download/merchants/visa-usa-in...

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, and then visa/mc turns around and charges their scheme/network fees, which basically means that the issuing bank only gets to keep about 2/3rds of the interchange (that was set and negotiated by Visa/MC). You can dice it up into the processor fee, the network fee, the whatever fees, but I believe that the general consensus is that the networks keep about a third. I don't quite remember where I read that, so if you have better info please let me know.

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

#46

Post by [deleted] »

e63f67dd-065b wrote: post #45
pbreit wrote: post #34

Earlier quoted context omitted.

Visa & Mastercard do not keep any of the interchange fee. It all goes to the issuer of the card. Visa & MC charge "scheme fees" which are much lower (except for cross-border txns). Interchange is public information: https://usa.visa.com/dam/VCOM/download/merchants/visa-usa-in...

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,…

[deleted]

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

#47

Post by arecurrence »

AmericanChopper wrote: post #37
anonymouskimmer wrote: post #28

Earlier 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…

Canada already has a national electronic system called Interac. It was established in 1984 and has a somewhat complicated fee schedule that generally maxes out around 35 cents per transaction. https://www.interac.ca/en/business/support/understanding-fee...

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

#48

Post by arcticbull »

e63f67dd-065b wrote: post #45
pbreit wrote: post #34

Earlier quoted context omitted.

Visa & Mastercard do not keep any of the interchange fee. It all goes to the issuer of the card. Visa & MC charge "scheme fees" which are much lower (except for cross-border txns). Interchange is public information: https://usa.visa.com/dam/VCOM/download/merchants/visa-usa-in...

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.

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

#49

Post by e63f67dd-065b »

mdasen wrote: post #31
e63f67dd-065b wrote: post #12

Earlier 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…

As a sidenote I hate that sales tax is not shown on the price tags here in the US. I strongly believe that you should be able to walk out of the store paying the price shown on the price tag -- not a cent more. This obviously clashes with the obvious solution of making credit card surcharges a thing and letting consumers deal with it. I genuinely don't know what's the best solution here -- I think the EU did a good job, but I'm skeptical of government intervention generally, so I'm trying to come up with more structural solutions that make it so it's competition that drives the price down, not government price caps.

Edit: Actually I think there's a simple solution: the fee should be assessed on the consumer side, not on the merchant side. Your issuing bank charges you 200bps on your end instead of taking it from the merchant cut. The net effect is the same.

People would hate it, and it would never happen, but it's fun to think about :/

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

#50

Post by godelski »

AmericanChopper wrote: post #23
e63f67dd-065b wrote: post #12

Earlier 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…

> Credit card rewards are a regressive tax on the poor Maybe credit card loyalty systems are specifically, but if you want to make comments about the entire system of credit cards then you should look at the entire system of credit cards to figure out who’s subsidising who. On the other side of credit card rewards the fact that revenue from high spenders subsidises credit account defaults. If you chose to only focus…

For those not understanding this comment, think about microtransactions. Who "subsidizes"? The people that can spend a lot but are also addicted. Connection? People that spend a lot on credit cards and gather late fees but not enough to ruin their credit or lose their card.

You know who banks love? That person who has 5 overdraft fees on their checking account per month while maintaining a healthy balance in their savings account. Know who banks hate? Poor people defaulting on their loans that won't get collected. Know who banks love the most? People who park large amounts of money in them. That money makes banks bank. Banks and credit card companies aren't just leeching off the poor. They have various sources of income.

There's more nuance to the system than just "fuck the poor" and framing it that way just muddies the waters.

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