3 ms·

as I understand it, Discover gets to charge higher fees on debit cards (than eg visa and mc) due to some regulatory carve out, so capital one wants to take adva

as I understand it, Discover gets to charge higher fees on debit cards (than eg visa and mc) due to some regulatory carve out, so capital one wants to take advantage of this and Discover’s payment network

gruez 1y ago
Are you talking about the Durbin amendment? That's available to every bank with assets under $10B, not just Discover. If Capital One wanted higher swipe fees, there's hundreds of small banks that they can partner with to issue the cards. That's what many neobanks do.
- lxgr 1y ago
  Neither Discover nor Capital One are exempt by asset size: https://www.federalreserve.gov/paymentsystems/regii-interchange-fee-standards.htm https://www.federalreserve.gov/paymentsystems/regii-intercha... However, Discover is (largely; I believe at least Pulse is available to issuing banks other than Discover) also a three-party network, which is inherently exempt from the Durbin amendment: https://www.congress.gov/crs-product/R41913 https://www.congress.gov/crs-product/R41913
trollbridge 1y ago
Yes. This is exactly the same special advantage that American Express also has. However, Amex lacks enough know-how and presence in retail banking to really be able to issue enough debit cards to leverage this the way Capital One could. The effect of this is that merchants end up hating taking Amex since it costs more, and I foresee Discover (which is even more niche) ending up the same way - there will simply be no reason to bother accepting Discover at all. How many people only have a Discover debit card in their wallet and no other?
- jdeibele 1y ago
  I only have a Discover debit card. Discover pays 1% back on its debit cards, which is unusual. I have idly wondered why they did that. The fact that they're not subject to the restrictions on debit fees makes it clear why. I shop for name brand stuff at Winco, a grocery chain in the Northwest US that doesn't take credit cards and makes you bag your own groceries. I'll be curious to see if they stop taking Discover debit cards if the fees increase.
deleted 1y ago
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gruez 1y ago

Are you talking about the Durbin amendment? That's available to every bank with assets under $10B, not just Discover. If Capital One wanted higher swipe fees, there's hundreds of small banks that they can partner with to issue the cards. That's what many neobanks do.

lxgr 1y ago
Neither Discover nor Capital One are exempt by asset size: https://www.federalreserve.gov/paymentsystems/regii-interchange-fee-standards.htm https://www.federalreserve.gov/paymentsystems/regii-intercha... However, Discover is (largely; I believe at least Pulse is available to issuing banks other than Discover) also a three-party network, which is inherently exempt from the Durbin amendment: https://www.congress.gov/crs-product/R41913 https://www.congress.gov/crs-product/R41913

trollbridge 1y ago

Yes. This is exactly the same special advantage that American Express also has. However, Amex lacks enough know-how and presence in retail banking to really be able to issue enough debit cards to leverage this the way Capital One could. The effect of this is that merchants end up hating taking Amex since it costs more, and I foresee Discover (which is even more niche) ending up the same way - there will simply be no reason to bother accepting Discover at all. How many people only have a Discover debit card in their wallet and no other?

jdeibele 1y ago
I only have a Discover debit card. Discover pays 1% back on its debit cards, which is unusual. I have idly wondered why they did that. The fact that they're not subject to the restrictions on debit fees makes it clear why. I shop for name brand stuff at Winco, a grocery chain in the Northwest US that doesn't take credit cards and makes you bag your own groceries. I'll be curious to see if they stop taking Discover debit cards if the fees increase.

deleted 1y ago

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