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How it works: > No. Zero fees. TreeCard will be 100% free to use. > Every time you use your TreeCard, Mastercard processes the transaction and charges merchan

How it works: > No. Zero fees. TreeCard will be 100% free to use. > Every time you use your TreeCard, Mastercard processes the transaction and charges merchants (online and physical stores) a small fee. This is a standard fee paid by all merchants to1 accept card payments. We'll use that fee to plant trees. I'm confused though. Surely this fee Mastercard charges goes to Mastercard, not the card company? https://www.treecard.org/how-it-works https://www.treecard.org/how-it-works

chrisseaton 6y ago
How do you think card companies make money at the moment? In exactly the same way - you buy something, the merchant is charged a fee, the payment provider takes a cut, the card company gets a cut. Sometimes they pass some of this cut on to the customer as well (the cashbacks and rewards.)
- eatonphil 6y ago
  It's the wording that confuses me. It would make sense if the card company were responsible for paying a fee to Mastercard on each purpose. That way they could increase that fee and take the difference. But the way this is worded (and I suppose it must be how it works) it means that Mastercard charges a fee and you have an agreement to take some of that fee from Mastercard on each transaction. Just seems a little backwards.
  - chrisseaton 6y ago
    > But the way this is worded (and I suppose it must be how it works) it means that Mastercard charges a fee and you have an agreement to take some of that fee from Mastercard on each transaction. Just seems a little backwards. I don't really see why that's backwards? The mechant pays for a service (accepting card payments) from Mastercard. Mastercard take some of that fee and give it to the card provider so they can cover the costs of running your card, such as their website and phone lines, or in this case planting trees as well. Where's the backwards bit?
    - eatonphil 6y ago
      Well just historically speaking the easiest way to be a middleman is to charge a fee on top of what you're middleman-ing. And this doesn't work like that. But who am I to say what's backwards? :D
      - avianlyric 6y ago
        Don’t try applying logic to Mastercard fees. The PDF the lists out all the fees and how they’re calculated is hundreds of pages long. Even the banks who pay some of these fee don’t understand them all.
throwbacktictac 6y ago
It probably works similar to an affiliate program but for credit/debit cards. I'd imagine that Mastercard benefits from Treecard encouraging their members/customers to make purchases using Mastercard's network.
zrail 6y ago
The keyword is "interchange". (disclosure: I work for Stripe but this is my own recollection of how this all works and could be wrong in the details) There are multiple parties at play in a card network transaction: 0. The card holder 1. The card brand (TreeCard) 2. The issuing bank (unknown right now, but this is usually a bank like HSBC, Citi, Wells Fargo, etc) 3. The card network itself (MasterCard) 4. The merchant 5. The merchant's acquirer (Square, for example) 6. The merchant's acquiring bank (whoever Square uses as their baking provider) Each entity other than the card holder and the merchant charge fees. The card holder _sometimes_ is charged a fee, but in this case TreeCard does not. The merchant is always charged a fee (which they can pass onto the customer in certain countries/circumstances). The per-transaction fee the merchant pays is split between the card network and the issuing bank. The issuing bank then generally will share a portion of this revenue with the card brand. Merchants are also charged by their acquiring bank, either on a per-transaction basis or a flat monthly fee.
- ghgdynb1 6y ago
  If you want to know why the Collison brothers are so rich, it’s because they were the only deeply technical guys who also had the ability, interest, and energy to deal with all this.
- xyst 6y ago
  Looking at this chain of middlemen between the buyer and seller, it's a bit nauseating. No wonder products cost so much.
  - throwaway201103 6y ago
    It all adds up to just a couple of percent. That's a lot in aggregate, but for most people the convenience is worth it. Remember having to go to the bank every payday and getting enough cash for the week? Or carrying a checkbook everywhere? If you're under 40, you probably don't.
thiscatis 6y ago
The bulk of the fee the merchant pays is actually interchange. It goes to the issuing institution (your bank, challenger bank or fintech). The rest goes to the processor (Stripe, Adyen, etc.. and the scheme such as Visa or Mastercard).

chrisseaton 6y ago

How do you think card companies make money at the moment? In exactly the same way - you buy something, the merchant is charged a fee, the payment provider takes a cut, the card company gets a cut. Sometimes they pass some of this cut on to the customer as well (the cashbacks and rewards.)

eatonphil 6y ago
It's the wording that confuses me. It would make sense if the card company were responsible for paying a fee to Mastercard on each purpose. That way they could increase that fee and take the difference. But the way this is worded (and I suppose it must be how it works) it means that Mastercard charges a fee and you have an agreement to take some of that fee from Mastercard on each transaction. Just seems a little backwards.
- chrisseaton 6y ago
  > But the way this is worded (and I suppose it must be how it works) it means that Mastercard charges a fee and you have an agreement to take some of that fee from Mastercard on each transaction. Just seems a little backwards. I don't really see why that's backwards? The mechant pays for a service (accepting card payments) from Mastercard. Mastercard take some of that fee and give it to the card provider so they can cover the costs of running your card, such as their website and phone lines, or in this case planting trees as well. Where's the backwards bit?
  - eatonphil 6y ago
    Well just historically speaking the easiest way to be a middleman is to charge a fee on top of what you're middleman-ing. And this doesn't work like that. But who am I to say what's backwards? :D
    - avianlyric 6y ago
      Don’t try applying logic to Mastercard fees. The PDF the lists out all the fees and how they’re calculated is hundreds of pages long. Even the banks who pay some of these fee don’t understand them all.

throwbacktictac 6y ago

It probably works similar to an affiliate program but for credit/debit cards. I'd imagine that Mastercard benefits from Treecard encouraging their members/customers to make purchases using Mastercard's network.

zrail 6y ago

The keyword is "interchange". (disclosure: I work for Stripe but this is my own recollection of how this all works and could be wrong in the details) There are multiple parties at play in a card network transaction: 0. The card holder 1. The card brand (TreeCard) 2. The issuing bank (unknown right now, but this is usually a bank like HSBC, Citi, Wells Fargo, etc) 3. The card network itself (MasterCard) 4. The merchant 5. The merchant's acquirer (Square, for example) 6. The merchant's acquiring bank (whoever Square uses as their baking provider) Each entity other than the card holder and the merchant charge fees. The card holder _sometimes_ is charged a fee, but in this case TreeCard does not. The merchant is always charged a fee (which they can pass onto the customer in certain countries/circumstances). The per-transaction fee the merchant pays is split between the card network and the issuing bank. The issuing bank then generally will share a portion of this revenue with the card brand. Merchants are also charged by their acquiring bank, either on a per-transaction basis or a flat monthly fee.

ghgdynb1 6y ago
If you want to know why the Collison brothers are so rich, it’s because they were the only deeply technical guys who also had the ability, interest, and energy to deal with all this.
xyst 6y ago
Looking at this chain of middlemen between the buyer and seller, it's a bit nauseating. No wonder products cost so much.
- throwaway201103 6y ago
  It all adds up to just a couple of percent. That's a lot in aggregate, but for most people the convenience is worth it. Remember having to go to the bank every payday and getting enough cash for the week? Or carrying a checkbook everywhere? If you're under 40, you probably don't.

thiscatis 6y ago

The bulk of the fee the merchant pays is actually interchange. It goes to the issuing institution (your bank, challenger bank or fintech). The rest goes to the processor (Stripe, Adyen, etc.. and the scheme such as Visa or Mastercard).