3 ms·

I'm stumped as to how this can work. The logic can't be embedded in the card, as the card doesn't know what you're charging to it -- the merchant's category cod

I'm stumped as to how this can work. The logic can't be embedded in the card, as the card doesn't know what you're charging to it -- the merchant's category code (i.e. gas station, restaurant) isn't programmed into their terminals, that data gets relayed through the various backend networks between banks. So this can't be sending a card swiper the number of one of your cards, which means it must be a valid credit card itself. It has to be issued by some Visa/MasterCard/Amex/Discover member-bank to be widely accepted, though none of those logos appear on the website's mockup. If that's the case, I still haven't a clue how they turn a capture against their card into a capture against one of your "real" cards based on the type of store you used it at. They can't be charging your real cards themselves, as all the charges would come from a single category code, whatever one was assigned to their own merchant account, so you won't get the right rewards. They'd also lose money on every transaction that way, as they'd have to pay card-not-present fees to charge your cards themselves, while only collecting lower card-present fees when you use the Wallaby card. Puzzling. They must be trying to get some kind of relationship somewhere else in the network that no other company has (either direct relationships with issuers, or permission from Visa/MC to sit on the processing network somewhere and do some kind of MITM).

eksith 13y ago
I think how it works is that the charge initially goes to Wallaby so the merchant is paid. They then charge the amount taken from Wallaby from one of the listed cards according to where the charge originated from and which deals your listed cards have. It's a network switch for cards, basically.
- RandallBrown 13y ago
  I wonder how that works for getting you the rewards and stuff that you should be getting. If all charges are from Wallaby, how will it know it's a car rental or groceries?
- dangrossman 13y ago
  If you use your Wallaby card at a gas station, then Wallaby separately charges your card that offers cash back on gas, you won't get any cash back as Wallaby's MCC is not that of a gas station. They'd also have to pay transaction fees every time they charged one of your cards, and those fees would necessarily be higher than any fees they could collect through usage of the Wallaby card. That can't be what they're doing.
  - 21echoes 13y ago
    they wouldn't be a merchant sending their own MCC-- they'd be a card processor on the Visa / MC / etc networks.
  - smsm42 13y ago
    They'd have to talk to the processor to allow them to identify as "gas station" or "grocery store" and so on depending on where it came from. I'm sure there's a way to do this - there are many third-party processing systems that do pretty much exactly the same - process transactions from different vendors and put labels on them depending on who actually sent it.
- abalone 13y ago
  Absolutely not. A second charge would result in Wallaby paying extra interchange fees on everything which would kill them. They also wouldn't be able to authorize properly. A "network switch", yes, but not using that particular method. They must be a real-time MITM proxy.
tehwebguy 13y ago
My guess is deals with the issuing banks / companies. Here's my thought process: the parties running rewards programs are doing it because they want people maximizing their spend a) on the card, because spending -> interest and b) on the items / shops / etc that they are incentivizing, because they have backend deals (such as being the airline that is incentivized, or receiving affiliate fees from retailers with low costs). It doesn't even seem too ridiculous to me that they would be able to work out 0 fee / passthrough rates with the bigger players based on those incentives, though it would probably be a first!
- deleted 13y ago
  [deleted]
deleted 13y ago
[deleted]
21echoes 13y ago
they'd likely be a card processor-- the one who receives the auth request from the swipe terminal and responds with whether or not the charge is approved. they then relay the original request to one of your cards.

eksith 13y ago

I think how it works is that the charge initially goes to Wallaby so the merchant is paid. They then charge the amount taken from Wallaby from one of the listed cards according to where the charge originated from and which deals your listed cards have. It's a network switch for cards, basically.

RandallBrown 13y ago
I wonder how that works for getting you the rewards and stuff that you should be getting. If all charges are from Wallaby, how will it know it's a car rental or groceries?
dangrossman 13y ago
If you use your Wallaby card at a gas station, then Wallaby separately charges your card that offers cash back on gas, you won't get any cash back as Wallaby's MCC is not that of a gas station. They'd also have to pay transaction fees every time they charged one of your cards, and those fees would necessarily be higher than any fees they could collect through usage of the Wallaby card. That can't be what they're doing.
- 21echoes 13y ago
  they wouldn't be a merchant sending their own MCC-- they'd be a card processor on the Visa / MC / etc networks.
- smsm42 13y ago
  They'd have to talk to the processor to allow them to identify as "gas station" or "grocery store" and so on depending on where it came from. I'm sure there's a way to do this - there are many third-party processing systems that do pretty much exactly the same - process transactions from different vendors and put labels on them depending on who actually sent it.
abalone 13y ago
Absolutely not. A second charge would result in Wallaby paying extra interchange fees on everything which would kill them. They also wouldn't be able to authorize properly. A "network switch", yes, but not using that particular method. They must be a real-time MITM proxy.

tehwebguy 13y ago

My guess is deals with the issuing banks / companies. Here's my thought process: the parties running rewards programs are doing it because they want people maximizing their spend a) on the card, because spending -> interest and b) on the items / shops / etc that they are incentivizing, because they have backend deals (such as being the airline that is incentivized, or receiving affiliate fees from retailers with low costs). It doesn't even seem too ridiculous to me that they would be able to work out 0 fee / passthrough rates with the bigger players based on those incentives, though it would probably be a first!

deleted 13y ago
[deleted]

deleted 13y ago

[deleted]

21echoes 13y ago

they'd likely be a card processor-- the one who receives the auth request from the swipe terminal and responds with whether or not the charge is approved. they then relay the original request to one of your cards.