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Does anyone know the true bottom to transaction fees? Are they taking a loss at 1.75% to acquire user base?
by chrisan 12y ago
Does anyone know the true bottom to transaction fees? Are they taking a loss at 1.75% to acquire user base?
- PeterisP 12y agoLarge volume can get costs of infrastructure per transaction absurdly low; the true floor is the interchange rate that you pay to the card issuer; it depends on type of card but it can be ~1% for many of them. American express is much higher, taking amex at 1.75% is definitely a loss.
- ddispaltro 12y agoI've always wondered what kind of deal Costco did with American Express to make it the only accepted credit card. It's probably membership + exclusivity that allows AMEX to have much lower fraud and therefore pass on the savings to Costco.
- jcampbell1 12y agoI do know the "true bottom", but it is 200 pages of documents, and will depend on the mix of debit cards, Amex, and card levels such as Business/Signature/etc, and international, and average transaction amount. If you are interested Visa alone, then the latest fee schedule is here: http://usa.visa.com/download/merchants/Visa-Interchange-Reimbursement-Fees-April-2014.pdf http://usa.visa.com/download/merchants/Visa-Interchange-Reim... 1.45%-1.65% + $0.10 is a very common interchange for retail. The 1.75%+$0.00 pricing is going to be zero margin for them. If some merchant just uses Amazon for Amex, they will lose on that merchant. If the merchant primarily serves debit card customers, Amazon will make a small amount of money.
- bhahn 12y agoI'd assume so because the 1.75% is available for a limited-time only. The fine print mentions that the standard rates (after the promotional period) are 2.5% and 2.75%.