9 ms·
Visa is planning the biggest changes to merchant fees in a decade
- pawelos 7y agoMeanwhile in EU the interchange fee is 0.3% on credit and 0.2% on debit cards: https://www.visa.co.uk/dam/VCOM/regional/ve/unitedkingdom/PDF/fees-and-interchange/Intra-Europe-EEA-December-2019.pdf https://www.visa.co.uk/dam/VCOM/regional/ve/unitedkingdom/PD...
- pixelpoet 7y agoMy Czech bank (Equabank) also made withdrawals free anywhere in the world a few days ago; I was worried that this would come with hideous rate increases, but apparently not. Weird instance of banking actually getting better with time?!
- pawelos 7y agoCheck what is the currency exchange fee - while you might not pay for withdrawal, they can still add a few % of the exchange fee (that’s at least the case for some of Polish cards).
- hocuspocus 7y agoMore and more traditional banks are getting rid of these fees too. Mastercard rates are very good (typically better than Transferwise's), and Visa has been catching up as well.
- glogla 7y agoIt is definitely the case for Czech banks. GP's Equa has about 2.5 % in fact. Worse, there's basically no banks that have under 2 %.
- lotsofpulp 7y agoSchwab's currency exchange fee (via withdrawal at non-US ATMs in local currency) has basically been the spot rate in my experience, for a decade or more that I've been using it. And there's no other fees so it's basically free forex (for small amounts I presume, they're not going to let you do that for $1M I bet).
- nemothekid 7y agoSame - I’ve found Schwabs rates to be better than virtually any other option
- User23 7y agoGiven that the daily forex volume is around $5 trillion[1], I wouldn't be surprised if they'll give you $1 million at the same rate as $1000. [1] https://www.quora.com/How-much-volume-is-traded-per-day-in-the-forex-market https://www.quora.com/How-much-volume-is-traded-per-day-in-t...
- gnicholas 7y agoHow do you find out what exchange rate they use and how it compares to the spot rate? I have cynically assumed that they make money on this (despite claiming “no foreign transaction fee!”) but never knew how to check one company versus another.
- lotsofpulp 7y agoI google “USD to GBP” or whichever currency right after I get the money. My BoA/Chase credit cards also give me basically spot rate conversions. Although this article explains why it might not make sense to use that number: https://www.thinmargin.com/blogs/why-comparing-against-exchange-rates-from-google-is-wrong https://www.thinmargin.com/blogs/why-comparing-against-excha...
- ValentineC 7y agoWith HSBC, the bank rate they use at their ATMs isn't as good as the interbank exchange rate I would get if I used some other bank's ATM.
- zyberzero 7y agoI think that's due to pressure from a number of fintech-companies such as revolut, monzo, transferwise, and what not. They focus on exactly just that, lower exchange rates and simpler money transfers.
- _trampeltier 7y agoA friend went to a talk from a large swiss bank and there was also this question, why they did not go faster forward. The answer was pretty short. Why kill a cashcow.
- madeofpalk 7y agoI believe actually there was EU regulation that forced this... When Monzo made EU withdrawals completely free (again), they said > After a change in EU regulation on cross-border payments we've decided to remove ATM fees and limits for countries in the European Economic Area (EEA). This means in all EU countries (and a few more) your cash withdrawals are now free! You can see the full list of countries here.
- martin8412 7y agoWhat I hear from people in the traditional banking sector, they actually don't mind the newer fintech companies such as Revolut, N26 and so on because they'll mainly attract the kind of customers that the traditional banks would rather not have. If you don't have a mortgage, loans, credit cards, stock or so on, then you're not really worth the hassle of having you as a customer. The fintech startups offer none of those things.
- mantap 7y agoNo surprises that shortsightedness pervades the traditional banking sector. These services appeal to people who like to travel, i.e. people who are relatively more well off. Then they hope to upsell other financial products to them.
- marc3842h 7y agoA Fintech banking startup in Switzerland (Neon) recently did the same. They also removed the surcharge on the exchange rate and now give the official MasterCard exchange rate.
- rsynnott 7y agoThe interchange rates are governed by EU rules. They’re not up to the banks.
- astura 7y agoThe EU caps interchange fees by law, the US doesn't (except on debit cards). As a result, credit card fees are much higher in the US because they can be. Credit card issuers kickback some of the fees collected from merchants in the form of rewards for using the credit card.
- Slartie 7y agoThis is also called the "poor people tax", because the merchants all bake these fees into their prices, which rise accordingly for all customers, including those who pay cash, or use debit cards or credit cards without those kickbacks. In order to evade the "tax", you are basically forced to pay with a credit card that has good kickbacks (>= 2% is acceptable if I remember correctly) so you recoup those 2% that are implicitly included in any price of any good in any store. Those who lose out are people with poor credit rating, because they either have no access to the best cards or have to pay ridiculous fees to get them. In my eyes it's useless circulation of money in the best case (when recouping via kickback) and a tax on the financially illiterate or poor in the worst case. In any case it is creating a lot of expensive administrative overhead for no economic purpose whatsoever, and thus a healthy capitalistic society should want to get rid of it - which is even relatively easy to do in this case, as the European regulation demonstrates.
- jcrben 7y agoSurcharging is becoming more common with a couple companies like CardX focusing on it: https://thepaypers.com/expert-opinion/credit-card-surcharging-a-new-model-for-payments-in-america-part-2--777887 https://thepaypers.com/expert-opinion/credit-card-surchargin... Particularly driven by https://en.m.wikipedia.org/wiki/Expressions_Hair_Design_v._Schneiderman https://en.m.wikipedia.org/wiki/Expressions_Hair_Design_v._S...
- Slartie 7y agoThis is an interesting development. I didn't know about that Supreme Court decision. So it effectively allows merchants to communicate a credit card surcharge as exactly that to customers, letting them know that it is caused by using a particular card? Does that also allow merchants to put an additional surcharge depending on the card used onto a receipt? Or has that been deemed legal in an earlier ruling? Because I always thought the big card networks had some kind of legally binding contract with merchants which prohibits the addition of surcharges that only apply to their particular payment method - contract clauses that they could only muscle through because merchants effectively didn't have the possibility to just not accept Visa or MasterCard payments, while most of their competitors accepted them.
- adrr 7y agoI bet the banks lose money on credit cards in EU. They are loaning out money up to 60 days for only a 0.3% fee. Interchange is meant to cover these loans.
- rsynnott 7y agoThat’s 1.8% annually. Better rates than European banks are getting on most low-risk lending.
- Rexxar 7y agoIt's even better, 3 month euribor rates are currently negative. So it's a safe way to use their money without "paying" the negative interest rate.
- adrr 7y agoYou can get home loans in EU with 1.8%? That’s the lowest risk since it has collateral. These are unsecured loans.
- rsynnott 7y ago(A) Yes, in many countries. (B) that card loan is only at effective 1.6% for 60 days; if it’s not paid at that point it turns into potentially 20%. (c) Most card payments are debit anyway afaik; no loan longer than a day or so involved.
- bufferoverflow 7y agoStill ridiculous, considering it's just updating balances in a few rows of a database. Cryptocurrencies, except BTC and a couple of others, are doing it right. A transfer should cost a fraction of a cent.
- rsynnott 7y agoBank transfers in Europe are now typically free. Cards expose the bank to a certain (small) degree of risk Nd administrative cost, so they’d probably stop offering the service if rates were regulated to zero.
- 3fe9a03ccd14ca5 7y agoBut unlike bitcoin, visa doesn’t create an enormous carbon footprint every time somebody buys a pack of gum at a gas station.
- bufferoverflow 7y agoEvery time you Google something, you create an enormous carbon footprint. Every time you drive. Every time you eat. Every time you watch a movie.
- gregmac 7y agoI'm out of the loop on this stuff, but are others doing things to prevent the situation Bitcoin had a couple years ago, when it hit $37 per transaction? That seemed to happen due to a massive price and volume increase, so is hard to design for. At the same time, at peak, it was still doing a tiny fraction of the volume that any of the credit card networks do.
- bufferoverflow 7y agoYeah, BTC limited the block size, so transaction cost went through the roof. Thankfully there are many alternatives. BCH is great.
- leppr 7y ago
- throw0101a 7y agoIn case of paywall: * https://outline.com/P2kyXX https://outline.com/P2kyXX
- christophilus 7y ago> For banks, the $91.2 billion in fees they earn on credit-card portfolios is now more than the interest they charge on the loans That really surprises me, given how high CC interest rates are and how many people carry a balance.
- dylan604 7y agoThat was surprising to me as well. Then again, if there is a per transaction fee multiplied by the amount of credit card transactions per day, I could see where those add up quick. A cursory search online stated over 100 billion transactions annually. So I could see where the fees are making more money than interest.
- gowld 7y agoInterested rates are 25%/yr. People are carrying a balance either have a low balance or we bankrupt and don't pay. Meanwhile fees are on every months spending. If you spend to your limit every month, that's 12x the carried balance.
- wtmt 7y agoThe TL;DR I got from this article: * Fees will go up for card not present transactions (online and phone) and fall a bit for card present transactions. * Overall, Visa is increasing fees to make more money than before since there aren’t any other details provided. My take is that if Mastercard plays it right, this is a good time to capture a higher market share at Visa’s expense (though it wouldn’t come anywhere close to toppling Visa’s lead).
- lotsofpulp 7y agoI have yet to see a merchant not accept Visa and accept Mastercard. I'm betting all the networks will increase their fees to raise revenue.
- dundercoder 7y agoKroger did that very thing last year it was messy.
- jankassens 7y agoAnd the published fees for large supermarkets are going down. Probably because they have the leverage and could even shape consumer behavior by making them used to some alternative.
- watersb 7y agoYes. Potentially confusing to customers, because Kroger continued to accept Visa debit cards. In the context of this conversation, the distinction is clear. And Kroger tried super hard to communicate effectively regarding this fight.
- deleted 7y ago[deleted]
- ckdarby 7y ago> I have yet to see a merchant not accept Visa and accept Mastercard Costco in Canada.
- thunga 7y agoPay later companies have started disrupting this space over the last few yrs
- pimmen 7y agoThe Swedish company Klarna is a good example. It’s now so common among Swedish consumers to have a Klarna account that it’s probably the most frictionless way for customers to pay online. I have a colleague who worked there like five years ago. She bought as much stock as she could. Once it IPO or gets acquired I suspect she’ll get a hefty contribution to her retirement.
- benhurmarcel 7y agoIt's a shame we don't yet have a European-wide equivalent.
- paulcarroty 7y agoRevolut have free transfers between two users: https://www.revolut.com/legal/fees https://www.revolut.com/legal/fees
- hocuspocus 7y agoLike pretty much every bank in Europe? Maybe you meant something else? Revolut is interesting in many ways, but they get the interchange just like any other debit card issuer.
- toomuchtodo 7y agoMost major banks in the US participate in Zelle, which enables free money transfers between consumer bank accounts. You can even setup unique Zelle users for your accounts at different financial institutions, so you can transfer your own funds between accounts at different financial institutions instantly and at no cost.
- random3 7y agoYou're limited to $3000/day with Zelle and forced to use the much slower ACH or otherwise pay ~$25 for a wire transfer.
- toomuchtodo 7y agoFor transactions over those limits, you can break the payments up over several days. Wires are infrequent enough to disregard the fee (real estate transactions or similar). I don’t know many folks moving more than $3k/day to be honest. I don’t disagree though that Fed ACH modernization efforts need to pick up the pace, as Zelle is a shim until federal payment infra is up to par with Europe.
- ValentineC 7y agoRevolut also has a vested interest in making you spend whatever you receive using their prepaid card (that's how they earn money). If you receive money from another user and transfer it out to your bank account, Revolut might lose some money from using the third-party that provides the bank transfer service. (I have no details on what their arrangement is.) Revolut has been known to warn and suspend users that use their transfer feature too much.
- nabla9 7y ago> persuade more people to abandon checks What's the problem with US payment system? People still use checks? I have seen those only in movies. I think they were out in the 80s in Finland.
- niij 7y agoThere's no middle man taking a "cut" with a check. For large $ transactions, it's worth the hassle.
- nabla9 7y agoSo why are middle men taking a cut in the US that other countries don't have? Why electronic payment costs money in the US? That's the cheapest way to pay and process payments. In Finland that cost's nothing and it's the default for paying large bills and payments.
- dickeytk 7y agothe fees for credit cards are like a tenth in the EU vs US. It's not free though. EDIT: "for credit cards"
- 9nGQluzmnq3M 7y agoNope, since 2017 the law has been that bank transfers anywhere within the EU are free. https://brussels-express.eu/bank-transfers-will-immediate-free-within-europe/ https://brussels-express.eu/bank-transfers-will-immediate-fr...
- nulbyte 7y agoThis doesn't sound like it covers credit card interchange. Does it?
- deleted 7y ago[deleted]
- 7y ago
- smohnot 7y agoA lot of folks don’t know that merchants pay more for CNP transactions. Why? Well it’s simple, there is no alternative to cards for an online transaction, the issuers have power. people think it’s due to fraud... there is a lot more fraud with CNP transactions but not nearly enough to account for the 60 bp difference in rates.
- wtmt 7y ago> A lot of folks don’t know that merchants pay more for CNP transactions. Why? Well it’s simple, there is no alternative to cards for an online transaction, the issuers have power. That may be true in many countries, but in India, there are cardless (non-credit/non-debit card) online payments available that are used a lot more than card based payments and are all instantaneous (similar to cards): * Netbanking (where you're redirected to your bank's site and login to approve a specific payment) * UPI (Unified Payment Interface), a private consortium [1] managed payment system where anyone can create a user@paymentprovider ID and exchange that as the receiver address instead of complex bank account numbers, branch details, etc. This also allows payment requests from merchants that one can login and approve. * IMPS (Immediate Payment System), another service by the same private consortium. [1] * Rupay cards, a local payment network (now recognized in a few other countries) by the same private consortium [1] that's a replacement for Mastercard/Visa/Amex networks. * Digital wallets by payment providers and "payment banks" that work like wallets and/or allow direct transfers from one's linked bank account, like Paytm, Amazon Pay, Amazon Pay UPI, Google Pay, PhonePe, and many, many more. * Bank transfers that may take an hour or several minutes, as opposed to the instantaneous ones above, with systems like NEFT (National Electronic Funds Transfer, a batched inter-bank payments settlement system) and RTGS (Real Time Gross Settlement, a real time inter-bank settlement system). Though digital payments are still not huge in percentage terms, the ones above likely handle a lot more volume than Visa and Mastercard do. The government has also pushed for zero MDR (Merchant Discount Rate) on certain payment and transfer options, and made them more attractive to merchants. The U.S. is comparatively very backward in payment systems, costs and payment speeds. [1]: The private consortium is called NPCI, which stands for National Payments Corporation of India.
- closeparen 7y agoI suspect that TPM-backed digital signature systems, like the nascent Apple Pay for Safari, will eventually become ubiquitous and eliminate the fraud angle.
- ggcdn 7y agoI’m really surprised that the major credit card companies are not jumping into the mobile payment arena(similar to WeChat and Alipay). I think this is the future of consumer transactions. I spent three months in China, and had 1 opportunity to use my credit card: booking a flight home. Everywhere else, I was out of luck. That forced me to use WeChat wallet and Alipay, and I got to say that the experience was really good. There’s so little friction to spending money and can be used for basically everything in China. It must be way lower fees for everyone involved as well. I only need to do a single bank transaction for the month(loading my wallet) and then after that it’s just swapping credits. Perhaps that’s why cc companies are reluctant.
- eatbitseveryday 7y agoI was under the assumption WeChat and Alipay use in China for payments were restricted to those with PRC national ID cards (i.e., not foreigners).
- ggcdn 7y agoI think it was in the beginning, and its certainly easier to set up for Chinese citizens. The big hurdle is you needed a Chinese bank account. Alipay now has a Tourpass which is specifically made for foreigners.
- amaccuish 7y agoWeChat now allows you to use your own bank account, you just need to upload a copy of your passport.
- anfilt 7y agoI would rather use cash than mobile payment systems. Especially, those ones.
- bobthepanda 7y agoBeing a mobile payment system like that under Western regulations would be awfully close to a heavily-regulated bank. PayPal, for example, goes to great lengths to specifically stress that it is not a bank and doesn't need to be regulated like one. Honestly, with the chip readers these days also widely accepting NFC payments (Google/Apple/Samsung Pay) I think it'll allow the US to leapfrog WeChat and AliPay by obviating the need for yet another financial middleman.
- exabrial 7y agoAre there any alternatives to Visa and MasterCard? It's 2020, I'd love to be able to pay for a transaction using a secret key to sign an authorization proving I was there. Instead, credit card companies force us plain text numbers and somehow blame us when it gets stolen.
- wrboyce 7y agoI don’t know where you are, but in the UK the Consumer Credit Act means it is very much not the consumers fault.
- crazygringo 7y agoIsn't that what a chip does, which basically all modern credit cards have in the US now? And all my major credit cards also allow me to generate one-time use numbers to use online, which I need to sign in to generate using 2FA. Finally, I've never been "blamed" for fraudalent transactions. They've happened but I've never had to pay, nor do I know anybody who has. So really not sure what you're upset about?
- absurdmind 7y agoLess than a month has passed since Visa acquired Plaid[1] and now we know the reason for that $5.3B price tag. [1] https://techcrunch.com/2020/01/13/visa-is-acquiring-plaid-for-5-3-billion-2x-its-final-private-valuation/ https://techcrunch.com/2020/01/13/visa-is-acquiring-plaid-fo...