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It still blows my mind that we have credit card fees structured mostly in percentages of the payment amount instead of what essentially the costs associated wit

It still blows my mind that we have credit card fees structured mostly in percentages of the payment amount instead of what essentially the costs associated with payments are: fixed.

Reason077 5y ago
Not all costs are fixed. Dealing with fraud, for example, becomes more costly with higher transaction values.
- chinathrow 5y ago
  Can you explain that a bit? Isn't the anti-fraud system in place (software, people) roughly the same, no matter if 2B or 20B are transferred per day?
  - 7steps2much 5y ago
    If a person were to commit fraud they would do it on big, high value transactions. Fraudulently buying a pizza isn't really all that much payoff for our fraudsters after all. They will buy stuff that's expensive. This means that to credit card companies, the bigger the transaction, the more likely that they will have to spend time and effort on fraud investigations etc. Man hours are expensive though, and as such it is important someone pays for it. And well, that's where the percentage system comes from.
    - Ichthypresbyter 5y ago
      >Fraudulently buying a pizza isn't really all that much payoff for our fraudsters after all. Although they will sometimes do that as a test before making a bigger purchase. When my mother's card was cloned, the first fraudulent purchase was a coffee or sandwich at a railway station in a different city (but one close enough that it was believable she might have been there). Her bank only alerted her the next day when it was used to buy jewelry.
      - notahacker 5y ago
        But I think the low cost stuff just gets eaten by the parties involved (I once had a stolen card used to make a single $1 payment on iTunes. Refund was as automatic as the new cards and I doubt Apple or the bank cared at all). Not so much when theres $1k at stake and the distinct possibility that the customer, the merchant or both could be lying
  - Raidion 5y ago
    The more payments there are, the more reducing fraud is worth it. 1% savings on 20B is worth 10x the effort than 1% savings on 2B.
MattPalmer1086 5y ago
I guess it's because otherwise the fixed cost would overwhelm small payments.
lillecarl 5y ago
Are they really though? Chargebacks on higher amounts = more lost money

It still blows my mind that we have credit card fees structured mostly in percentages of the payment amount instead of what essentially the costs associated with payments are: fixed.

Reason077 5y ago

Not all costs are fixed. Dealing with fraud, for example, becomes more costly with higher transaction values.

chinathrow 5y ago
Can you explain that a bit? Isn't the anti-fraud system in place (software, people) roughly the same, no matter if 2B or 20B are transferred per day?
- 7steps2much 5y ago
  If a person were to commit fraud they would do it on big, high value transactions. Fraudulently buying a pizza isn't really all that much payoff for our fraudsters after all. They will buy stuff that's expensive. This means that to credit card companies, the bigger the transaction, the more likely that they will have to spend time and effort on fraud investigations etc. Man hours are expensive though, and as such it is important someone pays for it. And well, that's where the percentage system comes from.
  - Ichthypresbyter 5y ago
    >Fraudulently buying a pizza isn't really all that much payoff for our fraudsters after all. Although they will sometimes do that as a test before making a bigger purchase. When my mother's card was cloned, the first fraudulent purchase was a coffee or sandwich at a railway station in a different city (but one close enough that it was believable she might have been there). Her bank only alerted her the next day when it was used to buy jewelry.
    - notahacker 5y ago
      But I think the low cost stuff just gets eaten by the parties involved (I once had a stolen card used to make a single $1 payment on iTunes. Refund was as automatic as the new cards and I doubt Apple or the bank cared at all). Not so much when theres $1k at stake and the distinct possibility that the customer, the merchant or both could be lying
- Raidion 5y ago
  The more payments there are, the more reducing fraud is worth it. 1% savings on 20B is worth 10x the effort than 1% savings on 2B.

MattPalmer1086 5y ago

I guess it's because otherwise the fixed cost would overwhelm small payments.

lillecarl 5y ago

Are they really though? Chargebacks on higher amounts = more lost money