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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%

#91

Post by danpalmer »

Havoc wrote: post #85
danpalmer wrote: post #80

Earlier quoted context omitted.

> where they previously would have kept as little as $97 in some cases Or lower. A number of years ago I worked in an Apple reseller, and there were Apple products that wouldn't break even when the customer paid with AMEX, and that's only based on margin/card fees, not counting all other business costs. IIRC AMEX could reach as high as 5% and Apple's wholesale discount could be as low as 5%. Possibly the worst two co…

Yeah as much as I like my amex I fully understand when retailers tell me no amex accepted

I think it works against them so much. I barely use mine because I can't use it at many small shops, can't use it abroad (because it's ~2% exchange fee), and often buy flights in other currencies to save so can't use it for those (big purchases).

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

#92

Post by codetrotter »

arcticbull wrote: post #17
KRAKRISMOTT wrote: post #13

Earlier quoted context omitted.

A bunch of fintechs are going to die :(

Fintechs seem to do just fine in Europe, so I would suggest this is a pretty myopic take. Have you seen Adyen (Dutch, $ADYEY)? PayPal? Like it or not those companies provide value to their merchants so they're able to charge for their services. That isn't going to change with lower interchange.

> Adyen (Dutch, $ADYEY)

I never realised Adyen was Dutch. The name had me thinking they were from a country in Asia!

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

#93

Post by AmericanChopper »

e63f67dd-065b wrote: post #62
AmericanChopper wrote: post #37

Earlier quoted context omitted.

> 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…

The world you described exists, and it’s called Alipay (in China), TNG (in Malaysia), Pix (Brazil), etc (that's why I listed them in my original comment). Alipay and Wechatpay is the standard in China, a country with a population triple that of the US, and only charges 55-60bps, a quarter that of the US. So yes, I do believe that we can gain efficiency by switching. Also note that interchange is capped in the EU at 3…

I use several such systems, including TNG, and they have all of the same fee structures as credit cards.

The TNG cash back program: https://fintechnews.my/33848/e-wallets-malaysia/fave-offers-...

The TNG loyalty program: https://www.touchngo.com.my/promotion/redeem-your-points/

The TNG cardholder fees: https://www.touchngo.com.my/policies/touch-n-go-card-fees-an...

There’s also merchant fees (which are confidential). All of these systems are just reinvented credit cards. They often try to compete with credit cards on merchant fees, but you’re still paying for exactly the same thing. This “alternative” is just the same thing with a different name. You might find a few base points difference in merchant fees here and there (especially during the growth phase of these technologies), but the alternative isn’t to eliminate the premium charged for processing credit cards, it’s simply to allocate it to a different service provider.

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

#94

Post by Scoundreller »

arcticbull wrote: post #15
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 think the EU model - and as you say the Durbin model - is completely reasonable. I will say the Durbin exemption for banks with under $10B in assets is pretty silly.

Are there some abusers of the exemption out there?

I kinda like smaller orgs getting a small leg up against bigger ones. Discourages excessive consolidation. It’s like an anti-oligopoly provision.

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

#95

Post by [deleted] »

hyperbovine wrote: post #83
withinboredom wrote: post #71

Earlier quoted context omitted.

That is usually against the card-processing agreement. If you want to have fun, you can report them to Visa/MC and watch that go away within a few days.

Nope, this is completely (laws vary by state) legal as of ten years ago. https://www.lawpay.com/about/blog/credit-card-surcharge-rule...

[deleted]

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

#96

Post by usernew »

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.

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 costs a lot less.

But don't take my word for it. Just look at how many places kept trying to offer discounts for cash, how hard and for how many decades the card companies lobbied against that, and how many places do that now since it became illegal for credit cards to force that into their vendor agreements.

Let me give you an example of the logic used for the statement. A 5 ton truck is faster than a porshe 911.

When the truck is cruising on the highway and the porshe is starting off a red light.

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

#97

Post by jiggywiggy »

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…

Still don't understand why US is so obsessed with credit cards. Debit is much more easy and straight forward, it's the standard in EU. Most of us only have cc to purchase stuff from US sites. Why such a complicated solution? Looks like a bank product.

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

#98

Post by arcticbull »

Scoundreller wrote: post #94
arcticbull wrote: post #15

Earlier quoted context omitted.

I think the EU model - and as you say the Durbin model - is completely reasonable. I will say the Durbin exemption for banks with under $10B in assets is pretty silly.

Are there some abusers of the exemption out there? I kinda like smaller orgs getting a small leg up against bigger ones. Discourages excessive consolidation. It’s like an anti-oligopoly provision.

Before Durbin there used to be a lot of banks that offered points-earning debit cards. After Durbin, for many years SunTrust had a debit card that earned Delta miles. I think that's since moved to Truist. [1]

I guess it depends on what you mean by 'abuse.'

Is Truist abusing non-Durbin status by giving out points for PIN debit transactions? Or are all the other non-Durbin banks who give back nothing abusing the exemption by keeping the interchange?

[1] https://www.truist.com/checking/debit-cards

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

#99

Post by crooked-v »

jiggywiggy wrote: post #97
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…

Still don't understand why US is so obsessed with credit cards. Debit is much more easy and straight forward, it's the standard in EU. Most of us only have cc to purchase stuff from US sites. Why such a complicated solution? Looks like a bank product.

You can't use a US debit card online, because functionality for that just doesn't exist in the US banking system.

Edit, for clarity: You can't use it as a debit transaction. You can plug it into credit card systems, where it's run as a credit card transaction and interchange fees apply.

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

#100

Post by ztrww »

polotics wrote: post #89
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…

You are talking about fractions of a percent, for transactions where banks in aggregate take some risk, while Google and Apple keep their 30.000/100.000 ransom on all transactions...

Because it’s a relatively insignificant market? However it’s pretty remarkable that Apple only makes a few billion less than Visa from its AppStore despite of the processed amount being 100x+ lower.

I guess the problem with the 30% is that it seemed like a very good deal for developers back in ~2010 compared to all other options.. but well it there is no incentive to lower it even more since there is no competition

Then again Steam and GOG for instance can still take 30% despite operating on perfectly open platforms so they must provide some value.

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