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I have a Revolution card. I got $50 off at Buy.com a year ago, so I signed up. Haven't used it since. The rate was absurd -- about 27% for a guy with a good

I have a Revolution card. I got $50 off at Buy.com a year ago, so I signed up. Haven't used it since. The rate was absurd -- about 27% for a guy with a good credit score. So, I think they're just transferring the cost from merchant to consumer, at least for those who keep a balance. I don't use the card because I have other cards with good "rewards" equal to a percent or two of purchases. If a merchant charges me the same price for a widget no matter what card I use, why wouldn't I use the one with the bribe? The obvious solution for merchants is to offer a percent or two off the normal price, but the Visa/Mastercard cartel requires the same price to be charged to consumers no matter if a Visa/MC is used or not (IIRC). So, Revolution would have to have market penetration close to Visa/MC to convince merchants to opt out of the cartel's grasp. Unlikely to happen without a lot more than $42M spent in marketing. So, while I hope somebody disrupts the current state of affairs, I don't understand how Revolution thinks its going to pull it off.

dminor 18y ago
Actually, just being able to keep more of the transaction should be incentive enough for merchants. All that's really needed is a high enough consumer buy-in to make it worthwhile to deploy. Credit card processing fees are ridiculously high given how much of the risk is offloaded onto merchants and other parties.
- ShabbyDoo 18y ago
  Getting merchants to sign up should be really easy. But, how do you get them to pull the plug on Visa/MC? They'd have to be sure that they wouldn't lose too much revenue, and that would require a significant portion of the card-holding population to have a revolution card. And, you'd have to deal with corporations that only have one of Visa/MC/AmEx for corp purchases. I suppose merchants could feature Revolution prominently to increase its use, but they can't make it too hard to use other cards or they'll lose out. And, given my 1%-2% bribe for using my Visa/MC, why wouldn't I look for the little button down in the corner? Discover (Sears) was able to introduce a new card, but they too the opposite route -- they bribed consumers to use it. So, even though it has basically the same fees as the others (IIRC), consumers could see an effectively lower price through its use.
  - dminor 18y ago
    The bribe in this case is free consumer to consumer transfers (and I don't think this bribe should be underestimated), but you're right, savvy consumers will still just use their rewards cards and continue to be subsidized by those who don't have rewards cards. I don't think anyone will pull the plug on Visa/MC any time soon, but more competition would be nice.

dminor 18y ago

Actually, just being able to keep more of the transaction should be incentive enough for merchants. All that's really needed is a high enough consumer buy-in to make it worthwhile to deploy. Credit card processing fees are ridiculously high given how much of the risk is offloaded onto merchants and other parties.

ShabbyDoo 18y ago
Getting merchants to sign up should be really easy. But, how do you get them to pull the plug on Visa/MC? They'd have to be sure that they wouldn't lose too much revenue, and that would require a significant portion of the card-holding population to have a revolution card. And, you'd have to deal with corporations that only have one of Visa/MC/AmEx for corp purchases. I suppose merchants could feature Revolution prominently to increase its use, but they can't make it too hard to use other cards or they'll lose out. And, given my 1%-2% bribe for using my Visa/MC, why wouldn't I look for the little button down in the corner? Discover (Sears) was able to introduce a new card, but they too the opposite route -- they bribed consumers to use it. So, even though it has basically the same fees as the others (IIRC), consumers could see an effectively lower price through its use.
- dminor 18y ago
  The bribe in this case is free consumer to consumer transfers (and I don't think this bribe should be underestimated), but you're right, savvy consumers will still just use their rewards cards and continue to be subsidized by those who don't have rewards cards. I don't think anyone will pull the plug on Visa/MC any time soon, but more competition would be nice.