Visa, Mastercard Mull Increasing Fees For Processing Transactions: Report (reuters.com) 263
Visa and Mastercard, the two biggest U.S. card networks, are preparing to increase certain fees levied on U.S. merchants for processing transactions that will kick in this April, the Wall Street Journal reported on Friday, citing people familiar with the matter. From a report: Some of the changes relate to so-called interchange fees, the report said. Interchange fees are what merchants pay to banks when consumers use a credit or a debit card to make a purchase from their store. Fees that Mastercard and Visa charge financial institutions, such as banks, for processing card payments on behalf of merchants are also set to increase, the report said.
Totally not collusion (Score:5, Informative)
Definitely not collusion
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Re:Totally not collusion (Score:5, Insightful)
The problem is that the customer makes the decision on which card to use, but the merchant pays the fee, and is banned from passing the fee onto the customer. So Visa and MC have no incentive to lower fees, since there is no incentive for the decision maker to care.
The solution is to ban the ban. Merchants should be able to pass on the fee. If customers can see that Visa costs them an extra 3% on their bill, while AmEx costs them 4%, that will be the end of AmEx. It will also open up competition for lower rates from alternative payment systems. Discover Card had lower rates, but it never caught on because the lower rates didn't actually benefit the customer.
This is similar to healthcare. The insurance company pays, not the patient, so the person making the decision has no incentive to care about the cost. The obvious result is spiraling prices.
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Re:Totally not collusion (Score:5, Insightful)
Re:Totally not collusion (Score:4, Informative)
Actually, with healthcare, the patient has virtually no way to know the cost of the services they receive. There were recent articles about how, when hospitals released the fees, the obtuse wording and jargon in the price lists made it almost impossible to know what a visit was going to cost. And it's not like there are that many hospitals near to an individual that they're going to take the time to wade through the confusing price lists to decide which one at which to have their surgery. If it's an emergency situation, you go to where the ambulance takes you costs be damned.
With the absurd rise in deductibles, people may begin taking the time to shop around for a cheaper family physician---if you know exactly what billing codes will be involved in whatever you're planning to have done (and there are no surprises when you get into the examination room) and can drag that information practices' billing staffers. Those are big "if"s.
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Or we just use this tool called "the legal system" to regulate this behavior.
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Stores usually just raise their costs. I can often get 5% off from Target, etc if I ask for a cash discount.
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There's a lot more than that going on with health care costs. The prices are all different depending on which insurance you have (or none). Everything is a charge code that makes no sense. Numbers appear and disappear without rhyme or reason. Did you actually need your white cells counted for an ingrown toenail? Who the hell knows? You thought just one thing was done, why are you getting 3 bills for it? Who knows. The bills don't even have names you recognize on them.
What is this bill for? Oh, it's for som
Re: Totally not collusion (Score:5, Interesting)
I have a business which process most purchases through credit cards a and I can tell you, it is almost impossible to determine at time of purchase what the fees will actually be. There are interchange fees and processing fees and they vary not only between Amex and Visa, but also what type of rewards program the card uses, and what bank the card is issued by. Amex cards issued by banks like a Citi Amex cards are billed different than Amex cards alone.
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And if the people who pay that fee are the ones who use AMEX and only the people who use AMEX, fair enough.
Re:Totally not collusion (Score:5, Insightful)
Oh, come on. It's totally a coincidence that both would raise their rates at the exact same time, right?
Recently, the two companies along with several U.S. banks, had to pay over $6 billion to settle a lawsuit brought by merchants who accused the credit card companies of violating federal antitrust laws by forcing merchants to pay swipe fees and prohibiting them from directing consumers toward other methods of payment.
How shocking. Gosh, if you can't trust a giant, international credit merchant, who CAN you trust these days?
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I actually looked up to make sure their username wasn't "mental reject". That sort of thing has happened a lot especially on Reddit.
"Why is this guy insulting them? OHH, their username is 'ambivalous-retard'."
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But that's not what happened, so your argument is a specious lame excuse to call someone a mental reject.
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For a while, the transaction fee on Bitcoin was even higher than what Visa and Mastercard are planning on charging.
Re:Totally not collusion (Score:4, Insightful)
At the 2017/2018 peak, I had two transactions with a low fee stuck for almost one month before they were finally accepted by the network.
Also, proof-of-work coins such as Bitcoin are energy wasteful by design.
Saturate the market (Score:5, Insightful)
When you saturate the market to the point where you can't grow anymore, you got to raise prices. Their cost of doing business hasn't gone up, so there's no real reason to raise prices other than to appease Wall Street.
Re:Saturate the market (Score:5, Insightful)
When you saturate the market to the point where you can't grow anymore, you got to raise prices. Their cost of doing business hasn't gone up, so there's no real reason to raise prices other than to appease Wall Street.
Wall Street: A bunch of greedy sociopaths with a sprinkling of hallucinating schizophrenics (also known as 'market analysts') thrown in.
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I would be inclined to think there is still continued growth in Visa/MC transactions as people use less and less cash, the growth in smartphone systems like ApplePay, etc.
And their costs probably do continue to increase in terms of fraud mitigation, regulatory compliance, etc.
My guess, though, is that its mostly a way of increasing net income. The real question is what is the tipping point before some other system begins to gain traction with banks and merchants.
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When you saturate the market to the point where you can't grow anymore, you got to raise prices. Their cost of doing business hasn't gone up, so there's no real reason to raise prices other than to appease Wall Street.
I'd wager that their cost of doing business has been steadily decreasing for a couple of decades. Computers, you know, get faster and do things better year-by-year.
Watch out Visa (Score:5, Insightful)
Google or Amazon could end you. It could happen fast and bad. All that's needed is a nudge, and raising merchant fees could be just that.
They should be lowering fees as an attempt to stave off the inevitable.
Re:Watch out Visa (Score:4, Insightful)
PayPal hasn't ended credit cards, so it's doubtful that Google or Amazon would do so overnight either. They could certainly inflict considerable damage though, and they surely have the resources to deal with the regulatory overheads of becoming a financial service.
Re:Watch out Visa (Score:5, Informative)
If PP charged lower merchant fees, they might. But they don't. So they haven't.
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Venmo might be the catalyst now for PayPal...
It's not just about lower merchant fees (Score:2)
It's easy to say "Just don't buy a fridge" but then we like to forget how many folks died of botulism back in the day. The folks I know aren't wasting a whole lot of money. Even that $5 Starbucks is down to once or twice a week, is mostly used to get them th
Re:It's not just about lower merchant fees (Score:4, Insightful)
Why caffeinate yourself with a $5 Starbucks coffee when you can buy a 500 mL bottle of Mtn Dew for 50 cents?
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Walmart often has a six pack of 500 mL bottles of Pepsi products for $3.00. Sometimes they go on sale for $2.50. Or you can buy the 2 L bottles.
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Isn't PayPal regulated as a bank at least in Europe these days?
That said, they do have a terrible reputation for how they treat merchants, particularly in the case of any disputes, and for that reason alone we ruled them out almost immediately for our businesses. People do occasionally ask if we have plans to support them, but nowhere near often enough to make us reconsider.
Compete with Visa? Good luck with that (Score:2)
Google or Amazon could end you. It could happen fast and bad.
Dream on. Google and Amazon are good at what they do but bumping Visa and Mastercard out of their market? Yeah, that isn't going to happen anytime soon. They have an installed network connected to virtually every retailer in the industrialized world and they are responsible for most of the online retail payments too. Creating a payment system that could seriously threaten their duopoly will be nigh impossible even for companies as well funded as Google or Amazon. It's telling that none of the big tech
Re: Compete with Visa? Good luck with that (Score:3)
If Apple and Google both decided to support the same stable cryptocurrency - e.g., USDC - Venmo would be out of business in a year or two and Visa and MC would be frantic.
Not a threat (Score:2)
If Apple and Google both decided to support the same stable cryptocurrency - e.g., USDC - Venmo would be out of business in a year or two and Visa and MC would be frantic.
A cryptocurrency would have to threaten the dollar to be a threat to Visa and MC and that isn't going to happen. Cryptocurrency is not a credible threat to Visa and MC. Not even a chance.
None.
Re: Not a threat (Score:2)
Go learn more about stablecoins.
Re: Compete with Visa? Good luck with that (Score:2)
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They have an installed network connected to virtually every retailer in the industrialized world
No, they don't. The card acquirers do, and they don't offer a VISA network, a Mastercard network and an Amex network. They offer card payment support.
Adding a new payment service is a back-end integration from a dozen acquirers and suddenly all those retail outlets can now accept NewCard too.
You overestimate Google greatly (Score:2)
But on the other side of the counter, the customer has a Google device already in their pocket, already connected to a network.
Which isn't accepted at most merchants and isn't likely to be any time soon. Visa also has a network and it's already in place. Do you know who is behind Visa? It's banks. Google would be competing head to head with banks in financial services. Stranger things have happened but that's not typically a recipe for success. You know what else people have in their pocket? A credit card (usually Visa) which works on a payment network in every retailer. Getting people to dump their plastic cards for smart
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Visa being installed to virtually every retailer in the industrialised world?
Yes. Outside of China proper they have approx 50% marketshare everywhere else on the globe. Outside of major cities China is still primarily a cash economy. UnionPay dominates in China but has virtually no presence outside of China. Credit cards in general are still a growing industry in China.
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Google or Amazon could end you.
Not that easily. Visa and Mastercard owns the network. Google/Amazon would have to deploy millions of POS terminals all around the world in order to compete with Visa/Mastercard.
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Google or Amazon could end you.
God, that's just what I need - more of my data handed over to Google...
Consumers will pay for this (Score:4, Insightful)
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Can't be done. Visa, Mastercard, and Amex all have clauses forbidding those cash discounts, which can cause a merchant's account to be pulled.
Re:Consumers will pay for this (Score:5, Informative)
Can't be done. Visa, Mastercard, and Amex all have clauses forbidding those cash discounts, which can cause a merchant's account to be pulled.
I'm pretty sure it can be done you just have to do it the right way. I see places all the time offer a ~2% cash discount but what you can't do is add on a 2% credit card fee.
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Can't be done. Visa, Mastercard, and Amex all have clauses forbidding those cash discounts, which can cause a merchant's account to be pulled.
I'm pretty sure it can be done you just have to do it the right way. I see places all the time offer a ~2% cash discount but what you can't do is add on a 2% credit card fee.
You should see the cash discount the trades offer
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Sadly, I nor anybody I know has ever seen a price difference in any establishment that offered a "cash discount".
Neither you nor anybody you know buys gasoline?
Re:Consumers will pay for this (Score:5, Informative)
Nope. That was outlawed in 2010 with the Dodd-Frank bill. They can and do offer cash discounts.
Re:Consumers will pay for this (Score:5, Informative)
Can't be done. Visa, Mastercard, and Amex all have clauses forbidding those cash discounts, which can cause a merchant's account to be pulled.
This is a well-worn urban myth. Merchants absolutely can and do offer discounts for paying with cash -- what they can't do is impose a surcharge for paying with a card. Here's a recent article [visa.com] where Visa explains the difference.
Re:Consumers will pay for this (Score:4, Informative)
But a discount for cash isn't the same thing as adding a surcharge for credit cards as far as pricing the CC cost into the retailer's prices. Since CC fees vary, fairly wildly, offering a set discount either means that some cards are still going to cost the retailer more than others. The best the retailer can hope for is an average. The retailer certainly can't offer a discount based on what credit card a customer might have used!
Re:Consumers will pay for this (Score:4, Insightful)
Since CC fees vary, fairly wildly, offering a set discount either means that some cards are still going to cost the retailer more than others. The best the retailer can hope for is an average.
This seems like an example of letting the perfect be the enemy of the adequate. The retail world is full of uncertainties that marginally affect the retailer's bottom line. And in any event, a retailer that moves any significant sort of volume will have enough payment data to be able to calculate that average fairly precisely (and then offer a slightly smaller cash discount to cover fluctuations and probably still come out ahead).
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But a discount for cash isn't the same thing as adding a surcharge for credit cards as far as pricing the CC cost into the retailer's prices. Since CC fees vary, fairly wildly, offering a set discount either means that some cards are still going to cost the retailer more than others. The best the retailer can hope for is an average. The retailer certainly can't offer a discount based on what credit card a customer might have used!
No, it is not the same, but that doesn't mean cash discount is a bad thing to do. Besides, adding surcharge on top of the total would also give more money to the credit card due to the cumulative value (of a transaction). Let me give you an example of how it works (some stores have already done this).
Let say the total bill (excluding taxes) of a purchase is $100. Taxes is 10% for easy calculation. There is no tips involved. Visa charges 3% transaction fees. If the store has a policy saying that if the custo
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Not in Canada. This clause was forcibly stripped out of merchant agreements a few years ago. They really kicked up a fuss that the time, but life went on. Except for big ticket items, I don't know of very many places that charge more for using your visa. It definitely happens. Local farm supply retailers will charge an additional 2% typically for large ticket purchases like herbicides or fertilizer. But the fees could depend on the type of card.
According to the US Visa website, retailers can offer a di
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A few more details and clarifications. Specifically, there was a class action lawsuit leveled against all the main credit card companies in Canada, and as a result of that lawsuit, retailers are allowed to charge surcharges for credit card starting last year sometime. The details are surprisingly murky right now. It's not clear whether merchants will be able to add on surcharges (some are doing that), or if it will be more like Visa US where retailers can offer a discount. If the court ruling allows the
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If an act is prohibited by all existing providers' contracts, and regulations make it impractical to start a new provider, then it's de facto illegal because of said regulations.
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It was never illegal, it was prohibited by the contract.
And it hasn't been prohibited for a couple years as of now.
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Can't be done. Visa, Mastercard, and Amex all have clauses forbidding those cash discounts, which can cause a merchant's account to be pulled.
This has already been settled in the courts. Credit card companies can't prevent merchants from charging customers transaction fees for using credit cards.
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So I was about to dispute the parent from knowledge of a class action lawsuit (settled circa 2012) against the big CC players, but it appears that that the settlement was thrown out in 2016. Prior to the 2012 settlement, I recall the "cash discount" angle being treated as against the terms prohibiting surcharges.
I remember following it closely at the time due to my personal interest while at a mom&pop store. A small bit I recall is Discover getting excused from the class by removing those terms from
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What needs to happen is that merchants start offering anywhere 1-3% discounts for cash or debit card purchases...
Aren't they forbidden to do so by the agreement with credit cards operators?
Yes the fees can be passed on. (Score:2)
Aren't they forbidden to do so by the agreement with credit cards operators?
Not necessarily. It's fairly common to see "convenience fees" charged for the 2-4% that it costs to process a credit card transaction. My company does it and so do a lot of big companies and government institutions. There are some circumstances where the merchant agreement prohibits some actions but these are not universal. And it's not like anyone is really checking anyway most of the time.
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And this is why there are sneaky terms in a lot of the relevant contracts prohibiting price discrimination.
Which in turn is why fees have then been capped by law in some places.
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I already get 4% cash back from gas purchases and 1% from everything with my credit card. I personally haven't seen anyone willing to give me that kind of cash discount and I end up having to wait in a line to order to pay extra.
Re: Consumers will pay for this (Score:2)
But you are actually driving up the cost of goods and services with your behavior, so you're still paying.
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Let me know when gasoline pumps add bank note acceptors to allow payment outside.
Re:Consumers will pay for this (Score:5, Interesting)
They tried to do this in New Zealand, with a few businesses adding surcharges for using a credit card (when laws were changed to stop credit card companies from preventing this in contracts) and basically the card companies ran media campaigns portraying the businesses as greedy. It worked really well, and the businesses had to backtrack.
The reality is that the payment card industry is pure genius. They offer endless freebies to card holders, which makes card holders think these companies are their best friends, and then make the customers pay for it all through payment charges. But when a retailer tries to pass these fees on to the customer, the customer gets annoyed because they want all their 'free' stuff by being able to pay with the card, rather than having to use cash. It sort of relies on a level of collective stupidity that is probably impossible to eradicate from society.
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The reality is that the payment card industry is pure genius. They offer endless freebies to card holders, which makes card holders think these companies are their best friends, and then make the customers pay for it all through payment charges. But when a retailer tries to pass these fees on to the customer, the customer gets annoyed because they want all their 'free' stuff by being able to pay with the card, rather than having to use cash. It sort of relies on a level of collective stupidity that is probably impossible to eradicate from society.
It's not stupid for an individual customer to want to pay the same price as other customers, but get 2% back or whatever random rewards the card company is giving them on top of that. The fact that retailers have no power isn't the customer's fault.
Not so sure (Score:2)
That means there's a lot of leeway in profit margins, and the only real question is who's gonna get all that money. In a down turn people turn to credit cards to get by, and businesses are under more pressure to keep taking them as a result. That's why Visa/MasterCard are looking into this.
EFTPOS (Score:2)
In the USA, a debit card used with a PIN goes through the EFT network [wikipedia.org] (Maestro for MasterCard or Interlink for Visa), not the credit card network. The ACH fee for an EFT payment is close to the 30 cent transaction fee for a credit card payment, but EFT generally imposes no percentage of the total. This is why many brick and mortar merchants automatically select EFT when a debit card is inserted, and some offer cash back because there's no fee to increase the total.
Right (Score:5, Funny)
I'm sure with the state of technology and all, the costs to keep track of these records are rising and the credit card companies are just keeping up.
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Exactly.
And don't forget the rising costs of lobbying to ensure lack of regulatory oversight.
They spent a lot of money to be sure that the Consumer Financial Protection Bureau will stay away from them, so now they have to realize the return on their investment.
can't be a free for all (Score:2)
For example, China is in real danger (maybe already happened) of a private company taking over their national
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Is 'legitimate exercise of public authority' anything like 'legitimate rape" [time.com]
PayPal? (Score:2)
Makes PayPal look more attractive?
In addition to the usual advantages (login with one company, instead of sharing your "secret numbers" with all and sundry), this can only make their processing fees look more competitive.
Surprise, oligopoly! (Score:2)
Encouraged by their own self-interest, many stakeholders (governments, tax authorities, retailers, customers) give a small number of oligopolists huge market power to increase their revenues.
The oligopolists do so and everyone is surprised.
You all went cashless, retailers all went cashless, and now you're surprised that the payment infrastructure operators are taking the opportunity to charge more? Why are you surprised that an under-regulated profit-making entity in a position of great power would choose t
Pay for even Amazon purchases with cash? (Score:2)
Reject cashless business as much as you can.
Except in a lot of cases, you can't. If the local grocery store stops carrying or hides your favorite brand of sandwich cookies [today.com], for instance, you'll probably have to resort to buying them from Amazon. Likewise with unlocked phones or other electronic products that no brick and mortar store within cycling distance carries. Would you find it practical to routinely pay cash for Amazon gift cards?
Because the cost is hidden. (Score:5, Insightful)
The reason they can do this is because the cost is being hidden from the consumer. Do you think someone would sign up for getting "2% cashback" if they were paying 2.1% more per transaction? Nope and yet that is what is happening. The cause of this is that stores are contractually required to eat the cost of the transaction fees and thus increase the price of goods to compensate. The result is that everyone is subsidizing the transaction fees, even if they pay cash which completely eliminates any desire to compete with lower transaction fees. Pass a law legally compelling stores to isolate the cost of the transaction from the goods themselves and the transaction fees will plummet because then credit card companies will have to compete for consumers.
If you are in favor the free market then you cannot be in favor of the actions of credit card companies.
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That's why the credit card companies have been so slow to adopt changes to combat
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The reason they can do this is because the cost is being hidden from the consumer. Do you think someone would sign up for getting "2% cashback" if they were paying 2.1% more per transaction? Nope and yet that is what is happening. The cause of this is that stores are contractually required to eat the cost of the transaction fees and thus increase the price of goods to compensate. The result is that everyone is subsidizing the transaction fees, even if they pay cash which completely eliminates any desire to compete with lower transaction fees.
It's true that nobody would sign up for 2% cashback if they paid 2.1% more per transaction.
But the reality is that only people who are a good risk get the 2% cashback card, but EVERYONE pays more per transaction. If I'm in a position to get 2% cashback at the cost of EVERYONE paying 1.1% more per transaction, yeah, I'll take that deal, why would I pass it up?
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They can't charge extra fees, but they can raise their prices, which is what they do.
Bank Debit cards work ..... (Score:2)
Electronic Funds Transfer Act liability limit (Score:2)
What bank do you use that doesn't offer protection against fraudulent charges to its debit card customers? Last I checked, the Electronic Funds Transfer Act (EFTA) required banks in the United States to limit the cardholder's liability for fraud to $50 or so.
Simple solution (Score:5, Interesting)
This is an obvious case where government intervention is required. To limit the fees the oligopoly can charge.
It has been done in Australia and other places. Visa and Mastercard threatened to leave the country. They didn't.
Back to Vendor Specific Cards (Score:2)
Target already has their Red Card which can be either a credit or debit card tied to your checking account. Either one gives you 5% savings immediately.
Long ago, companies had their own credit / debit cards and people carried around a bunch. Carrying around a single card is a pretty new thing. Now if you have multiple cards it's because of "rewards."
We're going to head back in that direction with more companies implementing the Target model if the generic companies keep raising rates.
So the credit cards companies have realized... (Score:2)
... that enough of their card users have finally wised up and aren't carrying balances--with interest rates that are approaching loan shark and payday loan levels--so they think they'll make up the difference by hitting the stores with higher transaction rates is how they plan on making up the difference in those lost customer interest charges?
Good luck with that. Stores will cut back on what cards they accept. And customers will get pissed off when the cards that are accepted at frequently visited stores
Put this in the context of cashless society. (Score:2)
By all means raise those rates (Score:5, Interesting)
Sooner US market gets pissed off enough at visa/mc duopoly with their in your face brazen market collusion and security nightmare 'take' rather than 'give' models and instead move to something half way rational like SWIFT instant payments the better off we will all be.
eliminate cash... right... (Score:2)
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Kinda hard to pay with it online. I offered to scan or fax it, but oddly most companies refused.
Oblig. (Score:2)
Bitcoin is the answer!
What was the question again?
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ACH processing fee (Score:3)
Last I checked, echecks lacked the 3% take but retained an interchange fee on the order of 30 cents, calling it the automated clearinghouse (ACH) processing fee [firstach.com].
And this processing fee still makes echecks impractical for, say, buying access to 1 article on an ad-free website. Instead, to make up for the cost, websites require readers to buy a whole month or maybe a pack of 100 article views at once, even if 29 days or 97 page views will go unused.
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Kinda hard to pay with it online
Not really, cash-on-delivery still works.
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Most places don't accept personal checks.
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Re:cash is king (Score:4, Interesting)
Trump (Score:2)
No way they will be punished unless they own a real newspaper.
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Probably not. Generally they lease floor space to the company that owns the ATM. So they'll get rent for it, but typically not a cut of the fees.
And why would that bother you anyway? They aren't preventing you from bringing in cash from outside. Just providing you with an easy way of getting it if you didn't previously. For everyone who's using it to grab cash to pay with, there's a dozen using it because they're there and it saves them a trip to the bank.