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Payment processing costs are a scam. They're 10x as expensive as they need to be to fund rewards programs and fund the financial system. EU max credit card tr
by colechristensen 5mo ago
Payment processing costs are a scam. They're 10x as expensive as they need to be to fund rewards programs and fund the financial system.
EU max credit card transaction fees are 0.3%, in the US they can be up to 4%.
It just doesn't cost 4% of a transaction to handle the exchange of funds. Just wealth transfer to finance people and the upper class who take advantage of credit card perks.
- fragmede 5mo agoExcept in the US, it does. Depending on the card, it can cost as much as 4.5% (or more!) to run the card. You can argue that it shouldn't, but that's a different statement than it doesn't.
- colechristensen 5mo agouh, I'm including the card issuers as participants in this multi-party scam
- bijowo1676 5mo agoit is illegal for Merchants to charge credit card processing fees by law, they have to absorb these fees and cannot display them to the customer. This naturally protects the artificial oligopoly of visa/mc/discover systems. The moment you allow Merchants to charge cc fees (even 2-3%) and allow customer to choose low processing option (ACH/debit card/cash), the whole scheme falls apart and Visa/MC will slowly go bankrupt
- colechristensen 5mo ago>it is illegal for Merchants to charge credit card processing fees by law, This is only true in 4 states.
- bijowo1676 5mo agothe typical Merchant<->bank agreements all have clauses forcing them to absorb these fees and explicitly barring them from separately charging customer CC fee. and most small/med businesses dont have clout to protest that, so they have to accept these terms in order to earn money
- lxgr 5mo ago> the typical Merchant<->bank agreements all have clauses forcing them to absorb these fees and explicitly barring them from separately charging customer CC fee. These clauses would be illegal in many states and countries these days, so they don’t.
- colechristensen 5mo agoThis hasn't been the case for a wide variety of payment processors for quite a while now. Many of the new startup-based ones have features to help you pass through the fees even. Small business can use Stripe, Square, Clover, or one of many other payment processors that don't ban them from passing credit card fees forward to consumers.
- Scaled 5mo agoFYI there was a lawsuit about this a while back and part of the settlement was merchants can pass on fees now.
- FireBeyond 5mo ago> they have to absorb these fees absorb and then pass on as general "costs have risen". It's not like it's coming out of their profits, exclusively.
- bijowo1676 5mo agoif people could choose Debit card for no fee vs Credit card for 2.5% fee, then customers would reduce their usage of cc for purchases
- fragmede 5mo agoIt's still costing them > 3%.
- switz 5mo agoCan someone explain to me if EU card transactions are capped, why Stripe charges me (US) the full ride on my EU customer's cards? In fact, I get charged even more for EU cards – perhaps as much as 2.5% extra. I just checked and I get charged ~8% in fees on a 10 euro transaction on Stripe. Of course some of that is the low transaction amount (flat 0.30), but it's brutal for a small business like myself. 2.9% + 1.5% (intl card) + 1% (currency conversion) + 0.30 Payment amount (€1.00 EUR = $1.15253 USD) €10.00 EUR -> $11.53 USD Fees Total: - $0.93 USD Stripe currency conversion fee - $0.12 USD Stripe processing fees - $0.81 USD Net amount $10.60 USD I guess the NA interchange is charging the card, rather than the EU? Could using a MOR reduce the fee structure?
- bijowo1676 5mo agoperhaps they are capped only for EU merchants, because EU government works to protect their own companies and citizens from foreign artificial unregulated monopolies. in US, the government is more protective of private monopolies due to lobbying
- sam345 5mo agoHow are you defining monopolies? Companies that are successful? Because you seem to be defining most US companies that do business in Europe as monopolies. It seems that this is the kind of mindset that has kept Europe behind. Too bad. Regulation that keeps out competition or needlessly puts obstacles in place is bad for the consumer, bad for employment, and bad for the general standard of living. And If you think US companies are unregulated then you haven't seen the 20 ft of federal CFR regulations together with the regulations of 50 different states that US companies have to deal with everyday.
- bijowo1676 5mo agoMonopolies are one-two companies that capture the market and lobby the government to fortify the regulatory capture via: 1. regulatory bloat, artificial increase in cost of business to prevent new competition 2. lack of anti-trust enforcement, government fails to protect the consumer and instead protect the monopolies' income
- enos_feedler 5mo agoAs someone who really enjoys rewards programs, keep those scams alive!
- ArmadilloGang 5mo agoMight want to think twice about that: https://www.nytimes.com/2023/11/21/opinion/credit-card-rewards-inequality.html?unlocked_article_code=1.n1A.MjZQ.eJqAzK3IJuWs&smid=nytcore-ios-share https://www.nytimes.com/2023/11/21/opinion/credit-card-rewar...
- lennessy 5mo agoYou are assuming they don't know about all this already when I feel like they have made it quite clear they do.
- enos_feedler 5mo agoI briefly skimmed this, but why are you wasting my time? What does this have to do with me earning free trips from being smart about how I buy things? does not compute.
- KetoManx64 5mo agoThe irony is that every couple you shop with just increases the prices of their items to deal with the fees, so you're just paying more for items to feel good about getting reward program benefits.
- PearlRiver 5mo agoThe only good use case for a credit card is if you are buying something from someone you do not trust. I have a CC and it use it a few times a year. But using them to pay for groceries or ordering something from Amazon is just moronic. The way I see it: you are either rich and don't care or you are poor and need to spend money that is not in your account (no judging I grew up poor and had to hide from debt collectors when I was a kid).
- lxgr 5mo agoThird option: You have the money and like paying less than people paying with non-rewards cards.
- rswail 5mo agoFourth option: You use tap-to-pay and pay the balance in full every month for the convenience at zero cost.
- thunderfork 5mo agoDo American debit cards not have tap?
- rswail 5mo agoI'm in Australia, I have my credit card set up as the default to tap. Means one payment from my savings account a month to cover all daily expenses.
- deleted 5mo ago[deleted]
- trumpdong 5mo agoIn some places Visa/MC is the default way to pay. Such as large parts of Europe now that the fees are capped. The cashier asks you to pay, you hold your card up to the terminal, and you've paid. Some places like Australia have their own local systems that are more commonly used by locals and probably have lower fees, but those POS also support Visa/MC. It's just the default way to pay internationally now.
- trumpdong 5mo agoThe funny thing about that is that HN used to say if the fee was 4% it's because that's what it costs and if it was any lower the card networks would just abandon the country that forced it to be lower, since they'd lose money.
- JumpCrisscross 5mo ago> HN used to say if the fee was 4% it's because that's what it costs Do you have a link to the comment you're thinking of?
- bigfudge 5mo agoI remember people saying the same thing. It was some time ago. Turns out some markets really aren’t that efficient and corporate capture really is a thing…