4 ms·
This 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
by supernova87a 7y ago
This 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.
- supernova87a 7y agoAlso, in most other countries, merchants are allowed to explicitly charge extra for paying by credit card.
- pkaye 7y agoMerchants are allowed to charge a surcharge for credit card usage in the US.
- oasisbob 7y agoIIRC, even now they're still not allowed under the network rules. A cash discount IS allowed. So, a $.10/gal cash discount for gas is OK. The register having a sign that says "we charge $.75 for card transactions under $30" is not. Not that you don't see that all the time... (It's been a while since I've drank the regulatory alphabet soup on this, could be mistaken. )
- pkaye 7y ago> Businesses are allowed to impose a surcharge on credit card purchases made on Visa and Mastercard, under a court settlement that took effect in January 2013. https://www.creditcards.com/credit-card-news/what-are-my-rights-avoid-surcharges.php https://www.creditcards.com/credit-card-news/what-are-my-rig...
- ChrisLomont 7y agoI don't think this is true. I lived in the UK, and there were same costs for cash and card. EU laws have this statement: >Today’s ban means that it will be unlawful for retailers to charge additional fees when someone uses a particular credit or debit card, or other payment systems like PayPal, to make a purchase. This will ensure consumers can be confident that there won’t be any nasty surprises, and they won’t be penalised for wanting to pay in a particular way. https://www.gov.uk/government/news/card-surcharge-ban-means-no-more-nasty-surprises-for-shoppers https://www.gov.uk/government/news/card-surcharge-ban-means-...
- Someone1234 7y agoCap fees or just have more competition in general (typically tied to smartphones).
- Alex3917 7y agoIt's insane that credit card rewards are even legal, given that they're basically just a direct transfer of wealth from the poor to the wealthy.
- jbapple 7y agoCan you explain more?
- Alex3917 7y agoPeople with no money can't get credit cards. People with and without credit cards (usually) pay the same price for any given item, and since credit card rewards are payed for by merchant fees, that means that every time someone buys something with cash a percentage of their money is being skimmed off the top to subsidize those who buy the same items using credit cards.
- jbapple 7y agoGot it; thanks for explaining. I suppose in a microecon 101 model, there’s some elasticity that causes the cost of the fees to be borne partially by the merchants?
- deleted 7y ago[deleted]