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Actually, it's merchants. EU drastically capped interchange fees a few years ago. The premise was that it will lower costs for merchants and effectively lower

Actually, it's merchants. EU drastically capped interchange fees a few years ago. The premise was that it will lower costs for merchants and effectively lower costs for consumers. However, most of the savings were kept by merchants, especially larger ones. Some EU study confirming that: https://www.europeanpaymentscouncil.eu/news-insights/insight/18-months-impact-interchange-fee-regulation-european-union-cards-market https://www.europeanpaymentscouncil.eu/news-insights/insight...

thefounder 8y ago
How are the merchants paying benefits to credit card owners? Either way you would be fool to believe the merchants pay anything with their own money. It's just like saying that the lottery owner pays the winners.
- jimktrains2 8y ago
  Fees are higher for those cards than cards without rewards.
- tixocloud 8y ago
  Paid through interchange fees. Cards with the most rewards are most likely heavily supported by interchange.
loeg 8y ago
Merchants pass-through the fees to consumers. If they charge the same price to consumers using rewards cards and cash (common in the US), consumers using cash or debit cards subsidize credit cards.
- cronix 8y ago
  I'm pretty sure you're subsidizing the debit card users if using cash, too. They use the same networks as credit cards (visa/mastercard networks). I remember when debit cards first came out in the US. There was actually a 1-2% surcharge that most merchants were charging (especially smaller mom/pop type stores) to use debits - because it cost them to use the payment system just like credit cards. Eventually the merchants just baked the processing fees into the prices of all goods because most transactions are done with cards. Even checks now are converted to an "ACH debit" at the checkstand and the funds come out of your account immediately. You can't float checks anymore, not that that was ever a good idea anyway.
  - loeg 8y ago
    > I'm pretty sure you're subsidizing the debit card users if using cash, too. Correct. > Even checks now are converted to an "ACH debit" at the checkstand and the funds come out of your account immediately. You can't float checks anymore, not that that was ever a good idea anyway. I don't know what checkstands are but I've never seen a check immediately pull from my account. (Just for example, I wrote a check Saturday and I'm sure the vendor deposited it immediately and it still hasn't posted to my account three days later.) In fact, that would be great, IMO. Instead anyone who wants immediate payment without the risk of a check not clearing (landlord first month's rent, or mortgage, or like a car) will demand a cashier's check or money order or wire, all of which are associated with an additional fee of $10-25. (Or will pull your credit to cover the float.)

thefounder 8y ago

How are the merchants paying benefits to credit card owners? Either way you would be fool to believe the merchants pay anything with their own money. It's just like saying that the lottery owner pays the winners.

jimktrains2 8y ago
Fees are higher for those cards than cards without rewards.
tixocloud 8y ago
Paid through interchange fees. Cards with the most rewards are most likely heavily supported by interchange.

loeg 8y ago

Merchants pass-through the fees to consumers. If they charge the same price to consumers using rewards cards and cash (common in the US), consumers using cash or debit cards subsidize credit cards.

cronix 8y ago
I'm pretty sure you're subsidizing the debit card users if using cash, too. They use the same networks as credit cards (visa/mastercard networks). I remember when debit cards first came out in the US. There was actually a 1-2% surcharge that most merchants were charging (especially smaller mom/pop type stores) to use debits - because it cost them to use the payment system just like credit cards. Eventually the merchants just baked the processing fees into the prices of all goods because most transactions are done with cards. Even checks now are converted to an "ACH debit" at the checkstand and the funds come out of your account immediately. You can't float checks anymore, not that that was ever a good idea anyway.
- loeg 8y ago
  > I'm pretty sure you're subsidizing the debit card users if using cash, too. Correct. > Even checks now are converted to an "ACH debit" at the checkstand and the funds come out of your account immediately. You can't float checks anymore, not that that was ever a good idea anyway. I don't know what checkstands are but I've never seen a check immediately pull from my account. (Just for example, I wrote a check Saturday and I'm sure the vendor deposited it immediately and it still hasn't posted to my account three days later.) In fact, that would be great, IMO. Instead anyone who wants immediate payment without the risk of a check not clearing (landlord first month's rent, or mortgage, or like a car) will demand a cashier's check or money order or wire, all of which are associated with an additional fee of $10-25. (Or will pull your credit to cover the float.)