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How credit cards make money

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Re: How credit cards make money

#401

Post by notfromhere »

rsj_hn wrote: post #339
TulliusCicero wrote: post #338

Earlier quoted context omitted.

You can have federalism without anti-democratic institutions like the Senate. If the Senate was abolished or starting apportioning senators by population, the US would remain federalist, because there'd still be plenty of powers devolved to the states. That's what makes it federalist.

No, you can't. The only way you can truly prevent states from having their interests overriden by a majority of the nation is to give them a direct role in the legislative process. Democracy is three wolves and two sheep voting on what to have for dinner. It's last thing we want. So when the three wolves invite the two sheep to join them in a democracy, the sheep wisely say "Not a democracy, but a federal union, with…

States don’t have interests, states are a pass through entity for the people they represent. The current structure disenfranchises the people actually living in those states. They’re semi autonomous provinces, not independent nations in a confederation (especially since we’ve settled the question of whether anyone can leave the union).

The voting blocs aren’t between small states and large states, those basically don’t and haven’t existed for a long time. The senate is not a moderating body; the founders entirely failed to account for political parties.

The constitution isn’t a suicide pact, the founders lived in a completely different world, and it’s very apparent that the US federal government system is dysfunctional and failing.

The US legislature is designed to not do much, especially with the filibuster. Which is a huge problem when there are a succession of crises that the legislature has failed to address.

Re: How credit cards make money

#402

Post by dan-robertson »

Smashure wrote: post #391
causi wrote: post #315

Earlier quoted context omitted.

Sounds like a bad thing to me. Why not offer the service to retailers for free and then make your money by charging interest on unpaid customer debt? Making retailers cover the operating costs of your moneylending business just seems like bullying.

Isn’t Amex a no interest, pay in full every month type of CC? Or am I thinking of something else?

I think Amex offers that as well as actual credit cards.

Re: How credit cards make money

#403

Post by dan-robertson »

xmprt wrote: post #311
treyfitty wrote: post #234

One of the under appreciated legal precedents set a couple years ago was the Ohio V AmEx anti trust case. The case predicated against AmEx’s merchant contract forbidding merchants to steer customers away from using their Amex card. This was a common practice for many years, especially at restaurants since AmEx charged restaurants 6%. The Supreme Court ruled that amex was able to keep the anti-steering provision in me…

I had to take a few minutes to understand this case. So essentially, merchants who were already accepting Amex cards couldn't tell their customers to use a Visa card instead if they had one. If a merchant didn't want to accept Amex cards then they shouldn't have partnered with Amex.

Merchant’s can’t do it because the contract they have with Amex says they can’t. The case said that Amex were allowed to have such terms in their contact (ie that it’s not anticompetitive to have them)

Re: How credit cards make money

#404

Post by yial »

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...

Small hardware stores do this still for businesses, but some still do it even just for personal accounts. (Pennsylvania, Centre County area…)

Re: How credit cards make money

#405

Post by fma »

rsj_hn wrote: post #388
fma wrote: post #387

Earlier quoted context omitted.

Wife and I own a brick and mortar service based business with recurring revenue. Credit card customers get a 3% transaction fee added while ACH we swallow the 1% cost. I don't believe the terms of services says we can do that. I doubt Visa will send someone to investigate. If we didn't, we would need to increase prices for everyone. (Our ACH used to be cheaper but Intuitwants to squeeze small business owners : https:…

Interesting! Would it be possible for you to not accept credit card but accept ACH?

No, I mean we don't mind offering it if they pay the fee. Customers have different reasons for preferring credit cards.

Maybe they honestly can't afford it and need to use it for the credit aspect.

Some aren't comfortable with automatic withdrawal from their checking account.

Some it's just a habit and don't use checking accounts.

I'd say about 15% pf customers would rather take the fee.

The normal cash back on a card is 1% and some even higher so to them its not that big of a deal...but to a business it ads up.

Our profit margin is about 20% of sales. If we gave up 3% of sales, that is taking away 15% of our profits!

To give example numbers, if we charge $100 per month we pocket $20 after expenses (rent, payroll, etc)...but If we swallow the credit card fees that's $3, and makes the profit down to $17. So after all this hard work of customer acquisition, providing services etc, such a little thing takes away 15% of our profits (and that's before it passes through to us as income tax!).

ACH used to be a flat $.50 per transaction...it takes time to reconcile invoices and payments so right now just sucking it up.

Re: How credit cards make money

#406

Post by madeofpalk »

Dwolb wrote: post #394
madeofpalk wrote: post #393

Earlier quoted context omitted.

The funny part about Ohio v Amex is the same lawyers who defending Amex and the anti-steering measure are now on the other side in the Epic vs Apple case. Cravath, Swaine & Moore was the law firm defending Amex and the anti-steering measures, and now they're Epic Games' lawyers attacking anti-steering measures.

I’d wager that on average lawyers aren’t on any specific side.

I believe it. Just mildly humorous to me.

Re: How credit cards make money

#407

Post by 101keyboard »

bosie wrote: post #75
darkwater wrote: post #67

Earlier quoted context omitted.

> ("why are wire transfers free in Europe but not in the US") this applies only to a subset of Europe or european banks.

Do you want to expand where it isn't the case?

IBAN EU Transfers have to be free by law AFAIK

Instant transfers may cost fees

Europe is bigger than EU.

Re: How credit cards make money

#408

Post by TulliusCicero »

shapefrog wrote: post #352
TulliusCicero wrote: post #338

Earlier quoted context omitted.

You can have federalism without anti-democratic institutions like the Senate. If the Senate was abolished or starting apportioning senators by population, the US would remain federalist, because there'd still be plenty of powers devolved to the states. That's what makes it federalist.

> anti-democratic institutions like the Senate Representitive democracy is anti-democratic, not allowing babies to vote is anti-deomcratic. Based on the role purpose of the Senate, its more democratic that those examples. Its purpose is 2 votes per state, with representitives elected by the people of those states. You may not like that that is its role, and that is fine, but you can not say it would be more democrati…

Democracy is rule by the people, so yes, the current setup is anti-democratic, precisely because it gives greater representation and voting power to some people than others.

Each person's vote for a senator in Wyoming is worth 50x or more what it is in California. That's wrong, and it's anti-democratic. People ought to be on an even playing field.

Re: How credit cards make money

#409

Post by TulliusCicero »

rsj_hn wrote: post #339
TulliusCicero wrote: post #338

Earlier quoted context omitted.

You can have federalism without anti-democratic institutions like the Senate. If the Senate was abolished or starting apportioning senators by population, the US would remain federalist, because there'd still be plenty of powers devolved to the states. That's what makes it federalist.

No, you can't. The only way you can truly prevent states from having their interests overriden by a majority of the nation is to give them a direct role in the legislative process. Democracy is three wolves and two sheep voting on what to have for dinner. It's last thing we want. So when the three wolves invite the two sheep to join them in a democracy, the sheep wisely say "Not a democracy, but a federal union, with…

States' interests matter and should be explicitly represented at the state level.

But we're not talking about the state level, we're talking about the federal level. Senators are there to represent the people of their state, and the fact that some people get vastly more representation than others is wrong. People should be as equal as possible for a given playing field.

Funny how the people arguing that it's okay to do this to protect 'minorities' are never, ever okay with doing this for any other minorities. Give extra voting power to people in low pop states to shield them from the majority? Great! Give extra votes to black people, or Asians, or Muslims, or Jews? Uhhhhhh, no, no thank you.

Re: How credit cards make money

#410

Post by SilasX »

Thorrez wrote: post #351
SilasX wrote: post #307

Earlier quoted context omitted.

The part where the banking system is a giant kumbaya circle run on gentlemen’s agreements to do the right thing. When you are clearly defrauded or scammed, banks do nothing about it. His entire thread advertises, “I’ve never wired money to a scammer”.

The thread seems to be saying banks get along with each other. It doesn't seem to me to be saying banks get along with their customers.

It's saying they'll drop everything to Do The Right Thing. Letting scammers walk away with easily recoverable money isn't the right thing, and doesn't benefit the banks either.
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