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Visa & Mastercard do not keep any of the interchange fee. It all goes to the issuer of the card. Visa & MC charge "scheme fees" which are much lower (except for

• e63f67dd-065b 3y ago
  Maximum interchange is public, but most of those numbers are lies -- big merchants negotiate their own rates, and big merchants are a big chunk of most CC spend (Amazon does not pay a number that appears on that sheet, for example). Costco (in)famously negotiated that number down to basically zero. It's true that Visa/MC technically doesn't keep any of the interchange -- but the interchange goes to the issuing bank, and then visa/mc turns around and charges their scheme/network fees, which basically means that the issuing bank only gets to keep about 2/3rds of the interchange (that was set and negotiated by Visa/MC). You can dice it up into the processor fee, the network fee, the whatever fees, but I believe that the general consensus is that the networks keep about a third. I don't quite remember where I read that, so if you have better info please let me know.
  • deleted 3y ago
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  • arcticbull 3y ago
    I’m pretty sure their average take is the number I provided from their FY2022 statement.
    • e63f67dd-065b 3y ago
      The link shows their consolidated revenue across the entire world. If you have a source that breaks it down to the US, and specifically US revenue on their credit products (Visa is by far the largest issuer of debit cards, for example, and debit cards got their fees capped by the Durbin amendment), I would love to take a look.
      • arcticbull 3y ago
        I'd love to see it too - maybe I'm having trouble following your point. If those are their maximums, then that's the worst case for the customer right? It is these rates that would yield the biggest spread between cash and credit. Merchants that are able to negotiate better rates inherently have less of a spread between cash and card prices right, and are therefore able to offer a better relative deal to all customers including cash customers. Walmart can better control their costs than a mom-and-pop shop, has more volume, and hence more leverage against $V. So if you're a low-income person at Walmart, you're going to be least relatively affected by card surcharges. Definitely at Costco as you point out, I think Citi actually went below cost to take the portfolio from Amex. Even in the case of smaller shops, Square, Stripe, Adyen, etc have done a ton to level the playing field by aggregating volume and using it against networks.
    • tpurves 3y ago
      Visa takes zero from interchange but charges volume based service fees in the single-digit basis points (each) to the acquirer and issuer. Visa makes additional yield from cross-border payments and grosses up revenue from value-added services such as issuer or merchant processing (e.g Cybersource) and from other value add services like risk/fraud tools, consulting etc. Source: 12 years at Visa. Around 20something bps yield on volume averaged-out is correct math.
      • deleted 3y ago
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