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The idea is that they would be sweeping it into short term treasuries, and no, they don't pay 3% either, but it's more than a chequing account pays. The remain
by Lazare 8y ago
The idea is that they would be sweeping it into short term treasuries, and no, they don't pay 3% either, but it's more than a chequing account pays.
The remainder would presumably come from interchange fees. Ie, you put $500 into Robinhood, you then pay for something using your debit card, a cut goes to Visa, a cut of that goes to Robinhood, and a cut of that goes to subsidise your 3% interest.
- dmoy 8y agoSo they're making up like 0.7% from fee cuts? As soon as they get big enough all debit card transactions are capped at 0.05% and like a quarter or something. If the average transaction size is like $20 then they would not be able to make ends meet unless they took basically all of the fee for themselves. In a universe where debit interchange fees are regulated to 0.05% and less than a quarter, I don't understand how this works. Edit: I looked up the average debit card transaction amount, and it's over $40. The math doesn't work out at all. Edit2: I guess if there's 3 more fed rate hikes the math might work out? That's not a good look though, if they don't increase rates along with the fed, because the gap between them and various savings account will shrink to almost nothing.