4 ms·

> premium cards [are] commercial, corporate, or business cards issued by Visa and Mastercard [and attract more expensive fees, even compared to Amex] Does anyo

> premium cards [are] commercial, corporate, or business cards issued by Visa and Mastercard [and attract more expensive fees, even compared to Amex] Does anyone know more about that? Why are they more expensive? Is there a different underlying cost structure, or simply price discrimination by some intermediary? There's more information on "premium cards" here[0], but it doesn't explain the price difference or why a separate category is needed. 0: https://support.stripe.com/questions/what-s-the-difference-between-standard-and-premium-cards https://support.stripe.com/questions/what-s-the-difference-b...

deleted 4y ago
[deleted]
Symbiote 4y ago
The EU regulation limiting card transaction fees does not apply to corporate cards or foreign cards. https://eur-lex.europa.eu/EN/legal-content/summary/fees-for-card-based-payments.html https://eur-lex.europa.eu/EN/legal-content/summary/fees-for-...
thiscatis 4y ago
Because they give more benefits (insurance, lounge access, cashback etc...) and someone has to pay for this (i.e. the merchants). For example R̶e̶v̶o̶l̶u̶t̶ ̶M̶e̶t̶a̶l̶ premium cards and corporate cards which offers benefits such as lounge access to pay-to-use lounges, travel insurance, cashback etc.. are mostly designed by the schemes in parternship with the issuing banks. Also note that mostly in the US and Europe AMEX works in another way than Visa and MasterCard. Where V and MC are in a 4 party model (Issuing Bank that gets interchange, Processor (like Stripe) that processes the payment and gets a cut, Merchant that pays the merchant discount rate (or processing fee) and the customer that got their card from their issuing bank getting some benefits) Amex mostly cuts out the issuing bank and issues the cards to the customers directly. Hence because they don't have to share the interchange with the banks they offer way better benefits on their cards (airmiles, centurion lounges, travel benefits, extensive insurance) but also at a high cost for the merchant because these are really premium cards. Some consumer banks do issue AMEX cards so they will get their interchange. In Asia there's also Amex Debit cards, I think definitely less popular in the rest of the world. Something to note, also a lot of people in Europe think Visa or MasterCard == a Credit Card, this is not true. A credit card is an actual revolving credit instrument issued to the consumer by a credit institution such as a bank that then uses Visa or MasterCard rails. A card that you get from Lloyds or HSBC when you open an account in the UK might say Visa or MasterCard but it's on a prepaid or debit programme with the scheme but using Visa and MasterCard payment rails. The interchange on these (pre-brexit) and still in Europe is capped by law. Furthermore a lot of EU, Latam and Asian countries have their local payment rails which run at way lower costs than Visa and MasterCard to the merchants (Wechat, Alipay, Giropay, Payconiq etc.. to name a few). One last thing, I do think Open Banking in the UK and Europe, especially when Variable Recurring Payments are coming will be a game changer. The banks have been lobbying to delay most of the UX improvements for the users because they just make too much money as an issuer to get interchange.
- BasedInfra 4y ago
  >premium cards [are] commercial, corporate, or business cards issued by Visa and Mastercard Revolut Metal (personal) is not one of these cards. Commercial cards (business banking, business credit etc) are what these cards are and they have less regulation in the EU. For instance no cap on interchange fees and they can show prices excluding the card fee and add that on at checkout for business card users.
  - thiscatis 4y ago
    I'm not saying Revolut Metal is one of these, I'm just saying the card schemes create different segments for cards that have their own benefits, for these benefits the cost is actually mostly going to either the user paying a membership fee or the MDR paid by the merchant to cover the cost. The benefits are not just a freebie given by the issuer or scheme, it's a marketint cost that someone has to pay for.
- avianlyric 4y ago
  > The banks have been lobbying to delay most of the UX improvements for the users because they just make too much money as an issuer to get interchange. To quote Hanlon’s razor “never attribute to malice that which is adequately explained by stupidity." Having been involved in these conversations, I can tell you with some confidence, that banks are far more worried about being unable to deliver the technical work on time, than they’re worrying about interchange. There will be fees to pay for OpenBanking Variable Recurring Payments, it’s not going to be free for merchants to use. Which makes sense, contrary to popular opinion, running a bank account, and transacting, costs quite a bit of money. Every Faster Payment you send costs your bank a couple of pennies, not much on an individual level, but it sure adds up.
  - thiscatis 4y ago
    Having been in some of the same conversations, although I'm a big believer in Hanlon's razor, if someone suggests that for an OpenBanking payment the "authentication" should be the bank calling the user and having them listend to a 45 second message to then key in a confirmation code it's no longer stupidity, it's creating artificial barriers. The same bank can perfectly do quicker ACS with OTP or tap to confirm using a push notification but for OB PISP it requires a phone call...
RC_ITR 4y ago
First some background: About 85% of payment fees are taken by the bank that issues the credit cards (this portion is called interchange). The remaining 15% is split between the card network and the merchant acquirer (in this case Stripe). Stripe collects some amount of of money from their merchant customers for each transaction. They could set their take rate to be whatever they’d like it to be, this is and unregulated part of the market and is the reason you hear about crazy 10%+ fees for porn, gambling, etc. websites. Stripe then sends a subset of that fee (interchange plus a network fee) to Visa. Visa has a public ratebook saying exactly how much Stripe needs to send them for a ton of different kinds of transactions. Visa keeps their fee and passes the interchange to the issuing bank and the transaction is settled. Issuing banks feel like they “earn” interchange by acquiring customers and taking on their credit risk. Now it’s important to remember that until very recently, Visa was wholly owned by the banks. This is because Visa is basically a “don’t shoot the messenger” actor who acts on the behalf of banks while taking a relatively small part of the pie for themselves. Now, on to premium cards. One of the things banks have started to do recently is say “Hey, we acquire really good customers and we give them airline miles so they use their cards way more than they would otherwise. We should be compensated for that!” The same thing happens for corporate cards, except worse since most regulations on interchange target consumer cards. What that looks like in practice is new classes of Visa cards (Google: Visa Infinite) that have higher interchange rates (because the banks do all the hard work of having rich customers). Because Visa is a “neutral party,” they can get away with “if you want to accept any Visa cards, you have to accept them all.” Therefore, cash/debit consumers continue to subsidize lavish vacations and corporate spend for the wealthy, because of course they do.
smca 4y ago
> it doesn't explain the price difference Commercial interchange isn't regulated in Europe. The card networks have increased their interchange rates for commercial and business cards in many European countries. > or why a separate category is needed These fees have been moved into a separate category to contain increases to cards where network costs have increased significantly. (Rather than apply them more broadly.)

deleted 4y ago

[deleted]

Symbiote 4y ago

The EU regulation limiting card transaction fees does not apply to corporate cards or foreign cards. https://eur-lex.europa.eu/EN/legal-content/summary/fees-for-card-based-payments.html https://eur-lex.europa.eu/EN/legal-content/summary/fees-for-...

thiscatis 4y ago

Because they give more benefits (insurance, lounge access, cashback etc...) and someone has to pay for this (i.e. the merchants). For example R̶e̶v̶o̶l̶u̶t̶ ̶M̶e̶t̶a̶l̶ premium cards and corporate cards which offers benefits such as lounge access to pay-to-use lounges, travel insurance, cashback etc.. are mostly designed by the schemes in parternship with the issuing banks. Also note that mostly in the US and Europe AMEX works in another way than Visa and MasterCard. Where V and MC are in a 4 party model (Issuing Bank that gets interchange, Processor (like Stripe) that processes the payment and gets a cut, Merchant that pays the merchant discount rate (or processing fee) and the customer that got their card from their issuing bank getting some benefits) Amex mostly cuts out the issuing bank and issues the cards to the customers directly. Hence because they don't have to share the interchange with the banks they offer way better benefits on their cards (airmiles, centurion lounges, travel benefits, extensive insurance) but also at a high cost for the merchant because these are really premium cards. Some consumer banks do issue AMEX cards so they will get their interchange. In Asia there's also Amex Debit cards, I think definitely less popular in the rest of the world. Something to note, also a lot of people in Europe think Visa or MasterCard == a Credit Card, this is not true. A credit card is an actual revolving credit instrument issued to the consumer by a credit institution such as a bank that then uses Visa or MasterCard rails. A card that you get from Lloyds or HSBC when you open an account in the UK might say Visa or MasterCard but it's on a prepaid or debit programme with the scheme but using Visa and MasterCard payment rails. The interchange on these (pre-brexit) and still in Europe is capped by law. Furthermore a lot of EU, Latam and Asian countries have their local payment rails which run at way lower costs than Visa and MasterCard to the merchants (Wechat, Alipay, Giropay, Payconiq etc.. to name a few). One last thing, I do think Open Banking in the UK and Europe, especially when Variable Recurring Payments are coming will be a game changer. The banks have been lobbying to delay most of the UX improvements for the users because they just make too much money as an issuer to get interchange.

BasedInfra 4y ago
>premium cards [are] commercial, corporate, or business cards issued by Visa and Mastercard Revolut Metal (personal) is not one of these cards. Commercial cards (business banking, business credit etc) are what these cards are and they have less regulation in the EU. For instance no cap on interchange fees and they can show prices excluding the card fee and add that on at checkout for business card users.
- thiscatis 4y ago
  I'm not saying Revolut Metal is one of these, I'm just saying the card schemes create different segments for cards that have their own benefits, for these benefits the cost is actually mostly going to either the user paying a membership fee or the MDR paid by the merchant to cover the cost. The benefits are not just a freebie given by the issuer or scheme, it's a marketint cost that someone has to pay for.
avianlyric 4y ago
> The banks have been lobbying to delay most of the UX improvements for the users because they just make too much money as an issuer to get interchange. To quote Hanlon’s razor “never attribute to malice that which is adequately explained by stupidity." Having been involved in these conversations, I can tell you with some confidence, that banks are far more worried about being unable to deliver the technical work on time, than they’re worrying about interchange. There will be fees to pay for OpenBanking Variable Recurring Payments, it’s not going to be free for merchants to use. Which makes sense, contrary to popular opinion, running a bank account, and transacting, costs quite a bit of money. Every Faster Payment you send costs your bank a couple of pennies, not much on an individual level, but it sure adds up.
- thiscatis 4y ago
  Having been in some of the same conversations, although I'm a big believer in Hanlon's razor, if someone suggests that for an OpenBanking payment the "authentication" should be the bank calling the user and having them listend to a 45 second message to then key in a confirmation code it's no longer stupidity, it's creating artificial barriers. The same bank can perfectly do quicker ACS with OTP or tap to confirm using a push notification but for OB PISP it requires a phone call...

RC_ITR 4y ago

First some background: About 85% of payment fees are taken by the bank that issues the credit cards (this portion is called interchange). The remaining 15% is split between the card network and the merchant acquirer (in this case Stripe). Stripe collects some amount of of money from their merchant customers for each transaction. They could set their take rate to be whatever they’d like it to be, this is and unregulated part of the market and is the reason you hear about crazy 10%+ fees for porn, gambling, etc. websites. Stripe then sends a subset of that fee (interchange plus a network fee) to Visa. Visa has a public ratebook saying exactly how much Stripe needs to send them for a ton of different kinds of transactions. Visa keeps their fee and passes the interchange to the issuing bank and the transaction is settled. Issuing banks feel like they “earn” interchange by acquiring customers and taking on their credit risk. Now it’s important to remember that until very recently, Visa was wholly owned by the banks. This is because Visa is basically a “don’t shoot the messenger” actor who acts on the behalf of banks while taking a relatively small part of the pie for themselves. Now, on to premium cards. One of the things banks have started to do recently is say “Hey, we acquire really good customers and we give them airline miles so they use their cards way more than they would otherwise. We should be compensated for that!” The same thing happens for corporate cards, except worse since most regulations on interchange target consumer cards. What that looks like in practice is new classes of Visa cards (Google: Visa Infinite) that have higher interchange rates (because the banks do all the hard work of having rich customers). Because Visa is a “neutral party,” they can get away with “if you want to accept any Visa cards, you have to accept them all.” Therefore, cash/debit consumers continue to subsidize lavish vacations and corporate spend for the wealthy, because of course they do.

smca 4y ago

> it doesn't explain the price difference Commercial interchange isn't regulated in Europe. The card networks have increased their interchange rates for commercial and business cards in many European countries. > or why a separate category is needed These fees have been moved into a separate category to contain increases to cards where network costs have increased significantly. (Rather than apply them more broadly.)