9 ms·

We're All Subsidizing People Who Use American Express

38 points by devy 8y ago

gruez 8y ago
>But then the merchants lose out on the business of customers who want to pay with their Amex, often to get points for rewards. who actually does this? I'd imagine most amex users probably have a mastercard/visa anyways, and it's not like they're going to switch merchants to save an extra 1-2% on their purchase, presumably when the merchant they chose already have the lowest prices to begin with.
- neon_electro 8y ago
  I did when Costco's credit card was American Express-based, but then they ditched AmEx for Visa[1]. I don't mind not being with AmEx anymore. [1] https://www.npr.org/sections/thetwo-way/2016/06/20/482797151/the-big-costco-credit-card-switcheroo https://www.npr.org/sections/thetwo-way/2016/06/20/482797151...
- toomuchtodo 8y ago
  I charge about $120k/year on my Amex charge card. I use my Chase Visa when a merchant doesn’t take Amex (rare), but I’d rather use my Amex whenever possible. To not maximize credit card rewards means to subsidize others who do. To fix the problem, you have to regulate interchange fees down so that rewards aren’t sustainable and are no longer offered. The problem isn’t American Express, it’s lax financial regulation. Personally, I fully support the cramdown of interchange fees and the resulting impact on financial institutions.
- empath75 8y ago
  I get back 6% on groceries and I absolutely would go to a different grocery store if they didn’t take amex.
  - toasterlovin 8y ago
    6% on groceries is insane. If you look at the income statements of large grocery chains, their profit margins are in the low single digits.
    - empath75 8y ago
      Amex everyday cash 6% on groceries, 3% on department store and gas. $95 yearly fee but you easily make that back.
- JoshTriplett 8y ago
  > I'd imagine most amex users probably have a mastercard/visa anyways I didn't, for several years, until a Visa card came out with better terms (1.5% cash back) than the Amex variant I was using (1%). Also, some companies provide an Amex Corporate card for travel expenses, and it's less convenient to charge things to any other card.
  - gruez 8y ago
    was it for convenience reasons (didn't want to deal with 2 credit cards)? because from a purely rational point of view, using debt/cash when a place doesn't take amex is always worse than using a no yearly fee visa with some amount of cashback.
    - JoshTriplett 8y ago
      I almost never ran into a merchant that didn't accept Amex, so I didn't have any particular reason to go to the trouble of getting another card. In fact, I more frequently ran into places that didn't take credit cards at all.
- jwhitlark 8y ago
  Well, now that I keep my driver's licence and one credit card in my phone case, and have to make a point of carrying another card, any but a favorite shop loses out to someone who takes amex.
tclancy 8y ago
This seems rather one-sided in terms of the costs of using a credit card. Yes an Amex costs me a fee each year and yes I can't use it in lots of places, but when my dad's iPhone died 2 months after the 1 year warranty ended, I realized he was on my phone plan and I pay for that with the Amex card, so I'm in the process of getting that paid for, which will offset more than a decade of fees.
- thebigspacefuck 8y ago
  My AMEX doesn't even have fees.
- MaxBarraclough 8y ago
  I don't follow. What is it that offset the years of fees?
  - enra 8y ago
    Amex has additional 1-warranty for your purchases. So instead of buying a new phone (since the manufacturers warranty ended), he is getting a replacement phone for free from Amex. Just that one event is paying back for the fees occurred in the previous years.
  - fuzzybeard 8y ago
    Amex offers 1 extra year of warranty coverage beyond what the store/manufacturer offer. So after your warranty ends, and you're within that extra 1 year with Amex, they'll reimburse you the cost of the item. Many Amex cards, the ones with better benefits, charge you an annual fee to use. Hence, the reimbursement you get from your item can offset the fees.
- ac29 8y ago
  Every no-fee Visa card I've had in the past 5 years or so offers the same benefit. https://usa.visa.com/support/consumer/card-benefits.html/ https://usa.visa.com/support/consumer/card-benefits.html/
empath75 8y ago
Rewards cards are really just a way to reward wealthy people for being wealthy. I went through a bankruptcy in my early 30s, largely because of credit card debt, and then immediately started getting big pay raises. 7 years later, I came out of it with an 800 credit score and a six figure salary and it was an incredible eye opener how much money and kickbacks credit card companies are giving to wealthy people for the privilege of using their card, while I was getting fucked 10 ways to Sunday on interest when I was making 30k a year and struggling to make minimum payments. I worked out the math later and it turned out that even with the bankruptcy I had paid well over the amount I borrowed in interest and had barely put a dent in the principle. These days I’m regularly getting $100 cash back rewards and free flights or hotel rooms and not paying a penny in interest. I don’t really get the economic incentive of shoveling money at wealthy people while grinding down lower class people into debt slavery.
- mikeash 8y ago
  Wealthy people are more profitable for them. Who would you rather have as a customer, someone who puts $3,000/month on their cars (warning you a nice 2% or so of that) and always pays, or someone who puts $500/month on the card and is likely to go into default due to overspending or losing their job or an illness in the family or something? There’s no conspiracy here, any more than there’s a conspiracy behind the large discount you can get if you buy a year’s supply of toilet paper at once.
  - blang 8y ago
    I'm pretty sure the opposite is true for credit card companies. The wealthy tend to pay down the balance before interest is even charged, while the poor tend to carry balances forever paying mostly interest while getting hit with other fees. It is true, however, that wealthy people carry much less risk for them so they may have similar expected values (this is just a guess)
    - mikeash 8y ago
      You’d expect for them to hit an equilibrium where the expected values are similar. You’re absolutely right that a poor person who carries a balance forever and pays a ton of interest is extremely valuable, but that’s countered by people who stop paying altogether. It’s the same reason a wealthy person (or rather, a person with good credit, which I’m sure correlates strongly with wealth) can get a better interest rate on a mortgage or car loan.
bradfa 8y ago
I'm in the USA and I much prefer to use my personal Amex card whenever I can because Amex has always had excellent customer service. My cards have been used fraudulently a few times over the years and I've always gotten a call from a human about it explaining everything and the next morning FedEx delivers new cards to me. When ever I've called them, they handle my issues very well. I don't think I've ever had a bad experience with Amex.
- enra 8y ago
  Same here. Also got the premium rental car insurance from them, and ended up breaking the tail light on the rental while in France. I had to just to call them a file a short form, and then they took care of everything else.
segphault 8y ago
Off topic, but the totally pointless animated gifs in this article are distracting and made it painful to read. I don't understand why they felt the need to make an article about a serious topic look like a teenager's tumblr post.
- Jarb 8y ago
  Thank you, I had the exact same thought.
  - ss2003 8y ago
    Me too. I thought I would have a seizure with that last one.
- Asooka 8y ago
  Just use NoScript, it stops the media from playing and you get a static image.
mikeash 8y ago
Are we all subsidizing people who use cash? Keeping large drawers full of valuable paper isn’t cheap, nor is insuring it against theft, hiring armored cars to move it around, etc. There’s a lot of hand wringing about credit card users being subsidized by other customers. If it were that significant, we’d expect to see a lot of stores only accept cash and compete with other stores by offering lower prices. In my experience, cash-only stores are extremely rare.
- CompelTechnic 8y ago
  the nash equilibrium is weird. Customers are incentivized to carry credit cards because of cash back rewards, need for a short term loan, convenience of not having to carry cash, and fraud protection. Merchants are incentivized to accept credit cards because many potential customers carry little cash because it is inconvenient. And in all this, we are implicitly paying a 2-3% tax for everything we buy that goes straight to the credit card companies.
  - scott_s 8y ago
    mikeash makes a different point, one I often make: accepting cash is not free. It's a physical item that can get lost or stolen, which means it needs significant physical security when storing or transporting. There are card-only stores, and I imagine the reason is how much is simplifies their physical logistics. (No need for cashing out drawers at the end of shifts, no need for safes on site, no need to pay a company to transport cash to the bank.) How much does that cost the consumer? Is it less or more than the "tax" what we pay to the credit card companies?
    - killjoywashere 8y ago
      I'm reasonably confident I lose, burn, have stolen from me, or otherwise fail to enjoy the benefit of far less than 2 of every hundred dollars in my wallet.
      - anothergoogler 8y ago
heimidal 8y ago
The same argument can be made about credit card users generally being subsidized by those who pay with cash.
- kasey_junk 8y ago
  This presumed that cash handling is cheaper than merchant fees. Not true for many businesses.
zwieback 8y ago
I feel cheated - my company card is Amex and I don't get any reward, I wonder if that goes to my employer.
- lostcolony 8y ago
  It probably goes to Amex. What they offer the employer is likely a higher level of service and risk mitigation.
- cmurf 8y ago
  Yes it does. But how are you cheated? The purchases should only be business purchases, and the company is paying the entire bill.
  - zwieback 8y ago
    Right, I wasn't really serious but it would be interesting to know what the details of the deal are. I'd prefer if we used something other than Amex since it's definitely not universally accepted. Based on the other comments it must be the level of service.
lostcolony 8y ago
Strange that Discover both has the lowest merchant acceptance, and the lowest merchant rate based on what is given here. And from what I've noted, some of the most aggressive holder rewards, too.
busterarm 8y ago
Hit piece much? Visa & MC's fees have been steadily climbing for years... I use all of the above, but I _love_ my AmEx (Zync, because I'm cheap) charge card.
greggarious 8y ago
Rewards are nice, but usually only a few percent. Even at 5% cash back, you'd need to spend sixty dollars to pay for a $3 dollar coffee. (200 dollars at the more common 1.5% mark). Personally, I've found I generate way more "rewards" by using cash for my entertainment budget. Having to look into my wallet at the month's "fun money" and pull out some of it engenders critical thinking. (This is one of the main reasons casinos use chips - to abstract away the value of your money and induce spending)
Xixi 8y ago
In the EU the ceiling in the regulation is 0.2% for debit card rates and 0.3% for credit cards. 1% cash back credit cards are virtually non-existent...
nfriedly 8y ago
I really wish we could just make credit card rewards schemes go away entirely. I don't expect that to happen any time soon, but they just feel like such a waste of time and effort. I don't even like the name "rewards" - it's really more of a rebate/refund (on the raised prices of everything), with the catch that you forfeit the refund if you pay with anything except a "rewards" card.
- stevesimmons 8y ago
  A sensible response is for national regulators to cap credit card interchange rate. Banks are free to offer more generous rewards, just they can't fund it via the retailer. The EU's cap is 0.3%, Australia's was 0.55%. By comparison, typical credit card interchange rates in the US are 2%+.
dmckeon 8y ago
Credit card users in the EU have a different situation: https://en.wikipedia.org/wiki/Interchange_fee https://en.wikipedia.org/wiki/Interchange_fee > ... interchange fees are typically a flat fee plus a percentage of the total purchase price (including taxes). In the United States, the fee averages approximately 2% of transaction value.[2] In the EU, interchange fees are capped to 0.3% of the transaction for credit cards and to 0.2% for debit cards.[3] That 1.8% difference pays for a lot of rewards, marketing, etc. As a small merchant accepting cards in the US, the best rate one will see is about 1.65% for a high-volume business (plus lots of fiddly fees). Square ran 2.95% when we first started using it, but was worth the difference to a small business to avoid all the fiddly fees (per-transaction, per-month for statements, per-month for online access! (years ago)). We have seen card usage go from 80/20 cash/card to 20/80 cash card over the last 15 years, and the ease of making additional sales on credit has increased our volume a lot. YMMV. Most merchant agreements disallow charging customers a penalty for paying by card, but (implicitly) allow a discount for paying by cash (or having 2 prices: cash xor credit). This decision about Amex is part of the same perspective. True disruption will not reach the US card payment market until some business big enough to take on Visa & MasterCard offers card acceptance to merchants at much lower fees - perhaps without all the rewards, points, and other faddle they now pay to card users.
- lostcolony 8y ago
  A no/low reward card that charges far lower merchant fees? We have those. They're called "debit cards". Sure, not quite the same, but the only way to do it (since debit cards also remove the risk that credit cards do, namely, defaulted payments, which causes the fees to inflate a bit).
  - dmckeon 8y ago
    Good point. To be more explicit, I'd like to see credit cards with good fraud protection for card-holders, no rewards/points systems, far lower & competitive merchant fees, and minimal fees to card-holders, other than interest on balances, of course. It sounds like card issuers in the EU and AU are doing this, or most of it, but that those in the US are not, presumably because they are making a nice profit doing it at 2%-3% now, and have a good moat around their businesses. By "good fraud protection" I mean the kind that US banks do for credit-card holders now, and not the kind they do for debit-card holders.
guelo 8y ago
It's scary to think that this court is going to get more conservative for decades to come. I wonder if any consumer or environmental protections will survive.
IshKebab 8y ago
Meh not really. When this was actually true very few places accepted AmEx anyway - at least in Europe. Mostly high margin tourist shops. Now more places accept them but they are basically the same as Mastercard or Visa. They charge similar fees but you can't get decent cashback like you used to either.
bassman9000 8y ago
Customers who use cheaper forms of payment are in effect subsidizing AmEx card holders, Non-sequitur. You can rephrase Businesses are making more profit off non AmEx card holders
chmaynard 8y ago
It's sad that the Supreme Court ever decided to take this case in the first place. What a waste of time.
busterarm 8y ago
The thing that isn't mentioned anywhere is that while Amex's fees are about 1% higher, their customers spend more than twice as much on average (in the US).
newscracker 8y ago
For those arguing that cash also has costs: cash usually doesn't cost the poorer classes of people, but cards, even when used by relatively wealthier people, make things more expensive for the poorer classes. The title of a different article, written by someone who uses cash, could be "We're all subsidizing people who use cards", and it would ring higher on the moral scale.

38 points by devy 8y ago

>But then the merchants lose out on the business of customers who want to pay with their Amex, often to get points for rewards. who actually does this? I'd imagine most amex users probably have a mastercard/visa anyways, and it's not like they're going to switch merchants to save an extra 1-2% on their purchase, presumably when the merchant they chose already have the lowest prices to begin with.

neon_electro 8y ago
I did when Costco's credit card was American Express-based, but then they ditched AmEx for Visa[1]. I don't mind not being with AmEx anymore. [1] https://www.npr.org/sections/thetwo-way/2016/06/20/482797151/the-big-costco-credit-card-switcheroo https://www.npr.org/sections/thetwo-way/2016/06/20/482797151...
toomuchtodo 8y ago
I charge about $120k/year on my Amex charge card. I use my Chase Visa when a merchant doesn’t take Amex (rare), but I’d rather use my Amex whenever possible. To not maximize credit card rewards means to subsidize others who do. To fix the problem, you have to regulate interchange fees down so that rewards aren’t sustainable and are no longer offered. The problem isn’t American Express, it’s lax financial regulation. Personally, I fully support the cramdown of interchange fees and the resulting impact on financial institutions.
empath75 8y ago
I get back 6% on groceries and I absolutely would go to a different grocery store if they didn’t take amex.
- toasterlovin 8y ago
  6% on groceries is insane. If you look at the income statements of large grocery chains, their profit margins are in the low single digits.
  - empath75 8y ago
    Amex everyday cash 6% on groceries, 3% on department store and gas. $95 yearly fee but you easily make that back.
JoshTriplett 8y ago
> I'd imagine most amex users probably have a mastercard/visa anyways I didn't, for several years, until a Visa card came out with better terms (1.5% cash back) than the Amex variant I was using (1%). Also, some companies provide an Amex Corporate card for travel expenses, and it's less convenient to charge things to any other card.
- gruez 8y ago
  was it for convenience reasons (didn't want to deal with 2 credit cards)? because from a purely rational point of view, using debt/cash when a place doesn't take amex is always worse than using a no yearly fee visa with some amount of cashback.
  - JoshTriplett 8y ago
    I almost never ran into a merchant that didn't accept Amex, so I didn't have any particular reason to go to the trouble of getting another card. In fact, I more frequently ran into places that didn't take credit cards at all.
jwhitlark 8y ago
Well, now that I keep my driver's licence and one credit card in my phone case, and have to make a point of carrying another card, any but a favorite shop loses out to someone who takes amex.

tclancy 8y ago

This seems rather one-sided in terms of the costs of using a credit card. Yes an Amex costs me a fee each year and yes I can't use it in lots of places, but when my dad's iPhone died 2 months after the 1 year warranty ended, I realized he was on my phone plan and I pay for that with the Amex card, so I'm in the process of getting that paid for, which will offset more than a decade of fees.

thebigspacefuck 8y ago
My AMEX doesn't even have fees.
MaxBarraclough 8y ago
I don't follow. What is it that offset the years of fees?
- enra 8y ago
  Amex has additional 1-warranty for your purchases. So instead of buying a new phone (since the manufacturers warranty ended), he is getting a replacement phone for free from Amex. Just that one event is paying back for the fees occurred in the previous years.
- fuzzybeard 8y ago
  Amex offers 1 extra year of warranty coverage beyond what the store/manufacturer offer. So after your warranty ends, and you're within that extra 1 year with Amex, they'll reimburse you the cost of the item. Many Amex cards, the ones with better benefits, charge you an annual fee to use. Hence, the reimbursement you get from your item can offset the fees.
ac29 8y ago
Every no-fee Visa card I've had in the past 5 years or so offers the same benefit. https://usa.visa.com/support/consumer/card-benefits.html/ https://usa.visa.com/support/consumer/card-benefits.html/

empath75 8y ago

Rewards cards are really just a way to reward wealthy people for being wealthy. I went through a bankruptcy in my early 30s, largely because of credit card debt, and then immediately started getting big pay raises. 7 years later, I came out of it with an 800 credit score and a six figure salary and it was an incredible eye opener how much money and kickbacks credit card companies are giving to wealthy people for the privilege of using their card, while I was getting fucked 10 ways to Sunday on interest when I was making 30k a year and struggling to make minimum payments. I worked out the math later and it turned out that even with the bankruptcy I had paid well over the amount I borrowed in interest and had barely put a dent in the principle. These days I’m regularly getting $100 cash back rewards and free flights or hotel rooms and not paying a penny in interest. I don’t really get the economic incentive of shoveling money at wealthy people while grinding down lower class people into debt slavery.

mikeash 8y ago
Wealthy people are more profitable for them. Who would you rather have as a customer, someone who puts $3,000/month on their cars (warning you a nice 2% or so of that) and always pays, or someone who puts $500/month on the card and is likely to go into default due to overspending or losing their job or an illness in the family or something? There’s no conspiracy here, any more than there’s a conspiracy behind the large discount you can get if you buy a year’s supply of toilet paper at once.
- blang 8y ago
  I'm pretty sure the opposite is true for credit card companies. The wealthy tend to pay down the balance before interest is even charged, while the poor tend to carry balances forever paying mostly interest while getting hit with other fees. It is true, however, that wealthy people carry much less risk for them so they may have similar expected values (this is just a guess)
  - mikeash 8y ago
    You’d expect for them to hit an equilibrium where the expected values are similar. You’re absolutely right that a poor person who carries a balance forever and pays a ton of interest is extremely valuable, but that’s countered by people who stop paying altogether. It’s the same reason a wealthy person (or rather, a person with good credit, which I’m sure correlates strongly with wealth) can get a better interest rate on a mortgage or car loan.

bradfa 8y ago

I'm in the USA and I much prefer to use my personal Amex card whenever I can because Amex has always had excellent customer service. My cards have been used fraudulently a few times over the years and I've always gotten a call from a human about it explaining everything and the next morning FedEx delivers new cards to me. When ever I've called them, they handle my issues very well. I don't think I've ever had a bad experience with Amex.

enra 8y ago
Same here. Also got the premium rental car insurance from them, and ended up breaking the tail light on the rental while in France. I had to just to call them a file a short form, and then they took care of everything else.

segphault 8y ago

Off topic, but the totally pointless animated gifs in this article are distracting and made it painful to read. I don't understand why they felt the need to make an article about a serious topic look like a teenager's tumblr post.

Jarb 8y ago
Thank you, I had the exact same thought.
- ss2003 8y ago
  Me too. I thought I would have a seizure with that last one.
Asooka 8y ago
Just use NoScript, it stops the media from playing and you get a static image.

mikeash 8y ago

Are we all subsidizing people who use cash? Keeping large drawers full of valuable paper isn’t cheap, nor is insuring it against theft, hiring armored cars to move it around, etc. There’s a lot of hand wringing about credit card users being subsidized by other customers. If it were that significant, we’d expect to see a lot of stores only accept cash and compete with other stores by offering lower prices. In my experience, cash-only stores are extremely rare.

CompelTechnic 8y ago
the nash equilibrium is weird. Customers are incentivized to carry credit cards because of cash back rewards, need for a short term loan, convenience of not having to carry cash, and fraud protection. Merchants are incentivized to accept credit cards because many potential customers carry little cash because it is inconvenient. And in all this, we are implicitly paying a 2-3% tax for everything we buy that goes straight to the credit card companies.
- scott_s 8y ago
  mikeash makes a different point, one I often make: accepting cash is not free. It's a physical item that can get lost or stolen, which means it needs significant physical security when storing or transporting. There are card-only stores, and I imagine the reason is how much is simplifies their physical logistics. (No need for cashing out drawers at the end of shifts, no need for safes on site, no need to pay a company to transport cash to the bank.) How much does that cost the consumer? Is it less or more than the "tax" what we pay to the credit card companies?
  - killjoywashere 8y ago
    I'm reasonably confident I lose, burn, have stolen from me, or otherwise fail to enjoy the benefit of far less than 2 of every hundred dollars in my wallet.
    - anothergoogler 8y ago

heimidal 8y ago

The same argument can be made about credit card users generally being subsidized by those who pay with cash.

kasey_junk 8y ago
This presumed that cash handling is cheaper than merchant fees. Not true for many businesses.

zwieback 8y ago

I feel cheated - my company card is Amex and I don't get any reward, I wonder if that goes to my employer.

lostcolony 8y ago
It probably goes to Amex. What they offer the employer is likely a higher level of service and risk mitigation.
cmurf 8y ago
Yes it does. But how are you cheated? The purchases should only be business purchases, and the company is paying the entire bill.
- zwieback 8y ago
  Right, I wasn't really serious but it would be interesting to know what the details of the deal are. I'd prefer if we used something other than Amex since it's definitely not universally accepted. Based on the other comments it must be the level of service.

lostcolony 8y ago

Strange that Discover both has the lowest merchant acceptance, and the lowest merchant rate based on what is given here. And from what I've noted, some of the most aggressive holder rewards, too.

busterarm 8y ago

Hit piece much? Visa & MC's fees have been steadily climbing for years... I use all of the above, but I _love_ my AmEx (Zync, because I'm cheap) charge card.

greggarious 8y ago

Rewards are nice, but usually only a few percent. Even at 5% cash back, you'd need to spend sixty dollars to pay for a $3 dollar coffee. (200 dollars at the more common 1.5% mark). Personally, I've found I generate way more "rewards" by using cash for my entertainment budget. Having to look into my wallet at the month's "fun money" and pull out some of it engenders critical thinking. (This is one of the main reasons casinos use chips - to abstract away the value of your money and induce spending)

Xixi 8y ago

In the EU the ceiling in the regulation is 0.2% for debit card rates and 0.3% for credit cards. 1% cash back credit cards are virtually non-existent...

nfriedly 8y ago

I really wish we could just make credit card rewards schemes go away entirely. I don't expect that to happen any time soon, but they just feel like such a waste of time and effort. I don't even like the name "rewards" - it's really more of a rebate/refund (on the raised prices of everything), with the catch that you forfeit the refund if you pay with anything except a "rewards" card.

stevesimmons 8y ago
A sensible response is for national regulators to cap credit card interchange rate. Banks are free to offer more generous rewards, just they can't fund it via the retailer. The EU's cap is 0.3%, Australia's was 0.55%. By comparison, typical credit card interchange rates in the US are 2%+.

dmckeon 8y ago

Credit card users in the EU have a different situation: https://en.wikipedia.org/wiki/Interchange_fee https://en.wikipedia.org/wiki/Interchange_fee > ... interchange fees are typically a flat fee plus a percentage of the total purchase price (including taxes). In the United States, the fee averages approximately 2% of transaction value.[2] In the EU, interchange fees are capped to 0.3% of the transaction for credit cards and to 0.2% for debit cards.[3] That 1.8% difference pays for a lot of rewards, marketing, etc. As a small merchant accepting cards in the US, the best rate one will see is about 1.65% for a high-volume business (plus lots of fiddly fees). Square ran 2.95% when we first started using it, but was worth the difference to a small business to avoid all the fiddly fees (per-transaction, per-month for statements, per-month for online access! (years ago)). We have seen card usage go from 80/20 cash/card to 20/80 cash card over the last 15 years, and the ease of making additional sales on credit has increased our volume a lot. YMMV. Most merchant agreements disallow charging customers a penalty for paying by card, but (implicitly) allow a discount for paying by cash (or having 2 prices: cash xor credit). This decision about Amex is part of the same perspective. True disruption will not reach the US card payment market until some business big enough to take on Visa & MasterCard offers card acceptance to merchants at much lower fees - perhaps without all the rewards, points, and other faddle they now pay to card users.

lostcolony 8y ago
A no/low reward card that charges far lower merchant fees? We have those. They're called "debit cards". Sure, not quite the same, but the only way to do it (since debit cards also remove the risk that credit cards do, namely, defaulted payments, which causes the fees to inflate a bit).
- dmckeon 8y ago
  Good point. To be more explicit, I'd like to see credit cards with good fraud protection for card-holders, no rewards/points systems, far lower & competitive merchant fees, and minimal fees to card-holders, other than interest on balances, of course. It sounds like card issuers in the EU and AU are doing this, or most of it, but that those in the US are not, presumably because they are making a nice profit doing it at 2%-3% now, and have a good moat around their businesses. By "good fraud protection" I mean the kind that US banks do for credit-card holders now, and not the kind they do for debit-card holders.

guelo 8y ago

It's scary to think that this court is going to get more conservative for decades to come. I wonder if any consumer or environmental protections will survive.

IshKebab 8y ago

Meh not really. When this was actually true very few places accepted AmEx anyway - at least in Europe. Mostly high margin tourist shops. Now more places accept them but they are basically the same as Mastercard or Visa. They charge similar fees but you can't get decent cashback like you used to either.

bassman9000 8y ago

Customers who use cheaper forms of payment are in effect subsidizing AmEx card holders, Non-sequitur. You can rephrase Businesses are making more profit off non AmEx card holders

chmaynard 8y ago

It's sad that the Supreme Court ever decided to take this case in the first place. What a waste of time.

busterarm 8y ago

The thing that isn't mentioned anywhere is that while Amex's fees are about 1% higher, their customers spend more than twice as much on average (in the US).

newscracker 8y ago

For those arguing that cash also has costs: cash usually doesn't cost the poorer classes of people, but cards, even when used by relatively wealthier people, make things more expensive for the poorer classes. The title of a different article, written by someone who uses cash, could be "We're all subsidizing people who use cards", and it would ring higher on the moral scale.