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Retailers Don’t Like Paying the Fees for Apple Card
- dddddaviddddd 7y agoAll credit card 'rewards' seem to work like this.
- crankylinuxuser 7y agoNote that back in November, @DHH from Basecamp had strong words about the Apple Card with regards to sexism. I know there's active investigations going on with it, but I know of no results. Then again, it's just been 1 month, which is pretty much 'yesterday' in bank time. https://twitter.com/dhh/status/1192540900393705474 https://twitter.com/dhh/status/1192540900393705474
- kstrauser 7y agoI have no opinions about DHH in general, but he's just wrong here. He tweets: > Hilarious how much mansplaining is flowing in this thread. Every single poster questioning my wife’s credit score, a man. Every single defense of Apple blaming GS, a man. Almost like men are over represented in the defense/justification of discrimination that doesn’t affect them? which immediately costs him all credibility in this specific case. Factually, it is GS making the decision. It's Apple's problem to address because they're contracting to GS, but it was GS's algorithms (oh no, he calls that out too!) that rendered the credit decision. And he glosses over that credit score pretty issue quickly, which is kind of sexist and bullshitty in itself. Without saying whether her score is decent, he says she should get the same credit he does because she's married to him, as though her creditworthiness derives from their relationship. What the...? Does the have income of her own? A credit history of her own? If DHH isn't co-signing, his existence even involved in the decision. There are plenty of things to protest in the credit score game. You can fairly criticize it in many, many ways. But I saw nothing in his complaint that was unique to Apple or GS, and DHH's complaint seems to come down a non sequitur complaint against Apple and GS for their use of industry-standard credit ratings. Edit: he does say her credit score was higher than his. My bad. He still doesn't mention their relative income.
- ceejayoz 7y ago> He still doesn't mention their relative income. Because it doesn't matter. As of 2013, you enter combined household income on a credit application, and your income isn't part of your credit score either.
- benjohnson 7y ago>>income isn't part of your credit score either True. However, income and current debt is used to in figuring out how much credit is extended.
- jellicle 7y agoThe allegations (made by quite a few people, not just one) were that Apple was turning down/giving worse terms to women that had better income/credit scores than their husbands.
- pkaye 7y agoA 2013 federal law allows one to include any income to which they have a reasonable expectation of access including income from spouse, partner or other member of household. I seem to recall that he mentioned his wife doesn't work so she stated her income at $0 instead of the household income.
- freehunter 7y agoThis seems pretty off-topic considering it's just rumors and hearsay at this point and the topic isn't about who can get an Apple Card.
- tedunangst 7y agoSo do retailers like paying the fees for other cards, or is the headline just apple bait?
- slg 7y agoThe article states that the fees are higher because it is designated an "elite" card. American Express cards also have a higher fee than the standard Visa or Mastercard and plenty of retailers complain about that or refuse to accept Amex.
- tedunangst 7y agoYeah, but unless I missed it, they didn't even claim the Apple card is a significant fraction of elite purchases. How is this any different from the "so popular they ran out of metal" sapphire card?
- dwild 7y ago> American Express cards also have a higher fee than the standard Visa or Mastercard and plenty of retailers complain about that or refuse to accept Amex. American Express isn't Visa or Mastercard, they are all on different payment network. I have no issue with them having different fees because they are different. The Apple Card is a Mastercard. Does Mastercard have different fees based on the type of card? I would certainly hate Mastercard more if that was the case.
- ceejayoz 7y ago> Does Mastercard have different fees based on the type of card? Visa and Mastercard both do. "Premium" cards with more rewards have higher interchange rates.
- oswamano 7y agoHonestly the headline feels like bait. Seems like it explicitly uses the apple card since that card is new and trendy.
- kstrauser 7y agoI don't like retailers storing my credit card info in dodgy databases that end up on the dark web. I understand that stores don't want to lose all their profit to interchange fees. That's reasonable. At the same time, I personally wouldn't be so dogmatic about using Apple Pay or an Apple Card if I hadn't had my debit card ganked five times in the last seven years. In other words, they've brought this on themselves, and any store that supports chipless transactions is part of the problem. (I can't wait until Apple Pay or an equivalent is widely accepted online, and then I'll be preferential about that, too.)
- tinus_hn 7y agoUltimately the problem is with the banks/issuers who refuse to support and require more secure solutions like chip cards, instead of clinging on to the hopelessly outdated standard of authenticating payments with knowledge of a number printed on a card.
- TylerE 7y agoChip cards aren't without their problems, also. I've yet to have one last more than 9-10 months before the chip stops working reliably.
- freehunter 7y agoI've been running into that a lot... I'm replacing my card once a year because the chip stops working. It's one of the most embarrassing things when your card is declined repeatedly and there are people in line behind you. Or worse you're on a date and your date thinks you're overdrafted.
- vorpalhex 7y agoIs your wallet made out of any odd materials?
- freehunter 7y ago
- brenden2 7y agoThis isn't really about Apple Card, it's just about high reward cards in general. The heading is clickbaity to generate more traffic. The tl;dr is: high reward cards (like Apple Card, or any other "premium" card) incur a high transaction fee for the credit card processor, thus they eat into the retailer's profits.
- distances 7y agoThat's why, say, Diners Club is accepted in so few places (on Europe). Germany even goes further and often doesn't accept cards to begin with.
- ceejayoz 7y ago> “It’s almost like an arms race of who can offer the most rewards,” says Chris Ligan, vice president for acquisitions at Auric, which has seen use of premium cards climb 7% this year. “The person stuck with the bill is the merchant.” And they pass it on to us.
- Dirlewanger 7y agoMaybe smaller places that can't absorb the merchant fees as easily, but big retail places don't usually charge more for using certain credit cards. It'd probably cost them a chunk of business if they did.
- OatMilkLatte 7y agoOr their merchant account. I think they disallow charging different prices based on the card type - there was a big blowup a few years back because retailers didn't want to pay the higher fees to accept debit cards, but had to because the debit cards had VISA or MasterCard logos and therefore had to be treated the same way as VISA or MasterCard credit cards.
- ceejayoz 7y agoTheir prices will be set to absorb the average mix of rewards and non-rewards card that retailer sees. They're certainly not going to consider it a charitable donation to high credit-score folks. It'd be much fairer if they surcharged rewards cards, or if we went the European approach and capped interchange fees at something reasonable. The current system is basically a regressive tax on people with lower credit scores.
- exhilaration 7y agoI think what the parent commenter was trying to say is that merchants raise prices on everything, whether you pay with card or cash, to offset credit card fees. What ends up happening is that customers that pay cash are paying for the rewards I get by using a credit card.
- infogulch 7y agoI've always thought this fee + cashback thing is weird, because the merchants just add it back to the cost of the item. Sure, you may be getting that cost back as cash, but the merchant charges you the same if you don't have the super elite card. So isn't this just a sneaky underhanded way to tax the poor which obviously don't have credit to get the super elite card?
- pg_is_a_butt 7y agoSo use your Discover card instead and let them pay more.
- supernova87a 7y agoThis system is completely convoluted, with the incentives all over the place between merchant, bank, CC processor, consumer. It's the kind of thing that will never change until you go to a different country or start an alternative payment system that is 10x better, because no one has the power or will to displace the existing infrastructure. Consumers don't care because they don't (directly) pay the bill for these benefits, and only see the kickback rewards as a positive. Banks don't care, actually they like it, because rewards help them attract customers who don't care who pays. Merchants can't put up too big a fight because they can't leave unless they're big enough to stomach the loss in revenue, or can make customers shift payment method (like Costco, say). CC processors love it because regardless, they get payment traffic and commissions. Whereas in other countries, this system would be crazy.
- ChrisLomont 7y agoWhat do other countries do?
- toomuchtodo 7y agoRegulate interchange fees (or use regulatory enforcement threats to obtain concessions from natural financial monopolies). https://ec.europa.eu/commission/presscorner/detail/en/IP_19_2311 https://ec.europa.eu/commission/presscorner/detail/en/IP_19_... Control-F "The Commitments" In the US, debit card fees are regulated (the Fed won it's case in 2015 at the Supreme Court regarding this), but not credit card interchange fees.
- tick_tock_tick 7y agoThe same stuff
- Ninn 7y agoNo, in the EU the user and retailer directly pay all fees, and the size of the fees and transparency is regulated.
- twobat 7y agoDo the retailers actually pay the fees? I always assumed that this is pushed into the price to the consumer.
- xorcist 7y agoThey do, in the sense that the consumer is charged the same price independently of which card they paid with.
- twobat 7y agoIf they really wanted they could ask what the payment method is and put the additional fees on the client's bill.
- pwinnski 7y agoDoing so would violate their contract with the credit card companies. In some states, it might even violate the law.
- gamblor956 7y agoThis is both true and false. In 2013, MC and Visa agreed in a settlement that they could not prohibit merchants from imposing a surcharge on credit card customers. However, 10 states prohibit such surcharges, including CA, NY, FL, MA, and TX...i.e., the states with most CC transactions.
- twobat 7y agoThis feels like 100% against the free market spirit.
- ryandrake 7y agoI would immediately stop doing business with a retailer who dared to do this. What’s next? Charging a customer N% more because he drove to your store and parking spaces are expensive? At some point you need to accept certain costs of doing business and not always be looking to segment your customers to selectively pass expenses to them.
- Someone1234 7y agoI'm incredibly naive but I don't understand why card networks would ever WANT to raise their percentage rates... Hear me out: - It is perfect rent collecting: minimal costs, benefits hugely from scale, high barrier for competitor entry. You're an "invisible" profit center, if done right. - It is percentage of transaction: So increases naturally with inflation and your client's success. Loses little on your client's failures. But instead of just sitting on their hands and raking in their 6% basically forever, they're inflating the percentage which is causing disgruntled clients to look elsewhere and to give a gap where competition can enter. This is one industry where "boring is king." But it seems like greed may result in legislative or competitive market correction if they keep engaging in these practices.
- thomascgalvin 7y ago> - It is perfect rent collecting: minimal costs, benefits hugely from scale, high barrier for competitor entry. This basically describes the Planet Fitness model. They sign up thousands of people around New Year's, none of them ever show up, and a handful of them can't be bothered to go into their location and cancel, so they just end up paying $10 / month forever.
- tedunangst 7y agoTaking in 6% and returning 7% rewards doesn't seem profitable, even in volume.
- ceejayoz 7y agoIf it attracts enough people who'll carry an interest-bearing balance, the math works out fine. Many of the higher-end rewards cards have annual fees, too - Chase's Sapphire Reserve card is $450/year. Amex's Platinum is $550.
- porknubbins 7y agoSound reasoning but then you’re thinking in the long term interest of the company. Visa went public so the individuals who jacked up the prices will probably make a big bonus on their quarter numbers and be gone, rich, or promoted before the backlash hits them.
- wmf 7y agoIf the card issuer can decide the fee, why don't all cards charge the max fee?
- heavyset_go 7y agoAmerican Express charges a higher fee, and as a result, it is accepted less at businesses than VISA.
- Someone1234 7y agoA lot of the additional fee goes to Visa/Mastercard instead of the issuer. Issuers want to focus on their own benefits, so they skip card network's premium tier cards and instead try to sell their own benefits (with or without a yearly fee).
- lopmotr 7y agoThe whole existence of credit card rewards seems like a failure of the system. Since merchants agree not to charge more to high fee credit card customers, all the other customers end up paying the fees for those rewards. So everyone has to use a credit card with rewards to compensate for that loss and the ultimate losers are the suckers who pay with cash or whatever else. I refuse to play those games and it surely costs me, but at least I don't have to deal with any of the stupid paperwork and multiple cards in my wallet and keep track of how much pocket money some pointless company is going to give me.
- ceejayoz 7y agoI think you're overestimating the complexity of all this. I pay most things via a 2% cash back card. Just the monthly statement to manage, no need for multiple cards, and no keeping track. I get $500/year back on health insurance premiums alone from that, let alone all the other spending. Everything except my mortgage can be run through it.
- lopmotr 7y agoPerhaps it's easy enough in America. Where I am, there are multiple rewards programs separate from credit cards. Some shops have their own special card, and some are part of a bigger scheme with a common card. It's all a mess. I hadn't thought of using it to pay for big things like a house or health insurance!
- ceejayoz 7y agoAh, here we'd call that a "loyalty program". There are certain credit cards with higher rewards at certain companies - if you buy a lot at Amazon, for example, it makes sense to get their 5% cash back card. Target has one as well.
- r00fus 7y agoThis was news to me - I thought all cards had similar processing fees for vendors. Do any banks or CUs offer rewards programs for debit cards?
- copperx 7y ago> Do any banks or CUs offer rewards programs for debit cards? Yes, Discover, for one. But percentage is lower, because I assume the fees are lower for debit.
- Someone1234 7y agoEven if they did you shouldn't use a debit card due to how fraud is handled (compared to a credit card). This article has a good summary: https://www.nerdwallet.com/blog/credit-cards/credit-card-vs-debit-card-safer-online-purchases/ https://www.nerdwallet.com/blog/credit-cards/credit-card-vs-... In general you should minimize your debit card transactions and make them via credit card (paying off the full balance each month).
- toomuchtodo 7y agoIf your bank supports it, get an ATM only card, or disable debit transactions while keeping ATM functionality.
- brahweh 7y agoIn addition to merchants, the group which really ends up losing are customers paying with cash/debit, as they don't harvest any CC rewards from their groceries but still pay the inflated price that merchants have to charge to keep up with swipe fees. I'd argue these high fees are a "tax" on those with poor creditworthiness/financial knowhow
- ksec 7y agoDespite the limit on processing fee in EU, Australia and China, Visa is a 400B Company while Master is 300B. Collecting ~1.5% on Global average spending turns out to be very lucrative business. ( Or they have other means of revenue I am not aware of )
- nojvek 7y agoI love what ARCO does. Pay with cash it’s cheaper. That’s what most businesses should do. Cash is 5% cheaper for businesses than card. Give that 5% discount. Customers love discounts.
- ceejayoz 7y ago> Cash is 5% cheaper for businesses than card. Do you have a source for this? https://squareup.com/us/en/townsquare/myths-about-cash https://squareup.com/us/en/townsquare/myths-about-cash (full disclosure: clearly a potentially biased source) > Research shows that cash-handling costs range from 4.7 to 15.3 percent of revenues for businesses that accept cash. The majority of those costs are associated with starting and closing drawers at the start and end of the day. > Said another way, for every $100 a business makes in cash, it’s spending $4.70–$15.30 to handle all the costs associated with managing the drawer, preparing deposits, making change orders, dealing with possible theft or fraud, and auditing. Fewer cash transactions means less time counting money, less time making change, and a lower likelihood of mistakes or theft.