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Yes, and scale eats directly into that rate. The Big Box Stores are paying pennies per swipe.

• umanwizard 9y ago
  If that's true for credit cards, then they're losing massive amounts of money on cash back and rewards
  • lmm 9y ago
    They make it back from the smaller merchants that are paying the full 2.75%. Local stores need Visa a lot more than Visa needs any one of them, but when you get to the Walmarts of this world the dynamic is rather different; if Walmart stopped taking Visa it would hurt Visa almost as much as it hurt Walmart.
  • mitchellst 9y ago
    The "issuing bank," which issues your cash back or rewards credit card, has its cut protected by the payment networks. Part of the "interchange," the wholesale cost of processing a payment, is reserved for paying out the issuing bank. The interchange rates are set for the payment processors by the card networks (Visa, Mastercard, Discover, Amex). Whether you spend $100 at the locally owned boutique or Costco, they get paid the same amount. The middleman— the payment processor— gets squeezed by merchants like Walmart and Costco, competing to shrink the margin for the promise of massive volume. But Chase, Captial One, etc. don't have their consumer credit card divisions affected by who processes the card. (Unless you're Citi's processing side with Costco, and only accept Visa. Then your competitors get zero volume from Costco on their mastercards, discovers, and amex cards)