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1-2% cashback is highly appealing from here in the UK but shame to see is US only. Anyone shed any light on why getting cashback cards in the UK is rare compar

1-2% cashback is highly appealing from here in the UK but shame to see is US only. Anyone shed any light on why getting cashback cards in the UK is rare compared to elswehre? Personally I found Tandem which gives 0.5% cashback which is nice but not much. Business wise we decided to use Amex as the rewards are OKish (comes out to like ~0.5% again I think?) and being able to pay for US services on our USD card is nice and does save money. Benefits overall not great though, probably save ~£1k per year compared to just using a bank issued debit/credit card.

gringoDan 7y ago
Credit card transaction fees are way higher in the US than in the UK. This allows the companies budget for much higher cashback earning, mileage programs, etc. Here is a great post that explains the economics of credit card rewards: https://www.reddit.com/r/churning/comments/5oucdq/the_economics_of_churning_who_pays_for_the_rewards/ https://www.reddit.com/r/churning/comments/5oucdq/the_econom...
snaily 7y ago
Interchange fees are capped to 0.2-0.3% in the EU by regulation. Merchants pay less (to the issuer, ultimately) for the benefit of accepting credit cards, so there is less fees to hand out as cash back (from the issuer to the card owner).
jackweirdy 7y ago
European interchange fees are capped at 0.3%, so unless you are making money hand over fist from other means, giving back more than 0.5% cashback rarely makes financial sense. Amex own-branded cards are excluded from this as they avoid the three-party relationship that falls under these rules, but some (e.g. airline amex cards) are capped at 0.3% interchange fees. See this article for more info https://www.headforpoints.com/2018/02/08/american-express-european-court-of-justice-interchange-fees/ https://www.headforpoints.com/2018/02/08/american-express-eu...
tialaramex 7y ago
As I understand it usual US de-regulation means card issuers get to charge the merchant more or less whatever they want. So if they charge your grocery store $4 for the transaction when a rival does it for $1 then giving you $2 "cash back" is very affordable for them.
- ceejayoz 7y ago
  The end result is a regressive wealth transfer from lower income people who can't qualify for rewards cards to high credit score, high income folks.
- mikepurvis 7y ago
  This is obviously horrible for merchants, but what's really gross is how regressive it is when it comes to poor people and small businesses. Unlike national chains, local outfits don't have the ability to negotiate favourable fee arrangements, so accepting CC payment puts them at another built-in disadvantage relative to well-heeled competitors. And of course, those fees end up baked into the price of everything, and are then carried by anyone who doesn't have a big-spender cashback/rewards card, but especially by people paying cash (whether by choice or because they are unbanked). Hilarious to have this state of affairs going on while there's simultaneously a right wing panic about how carbon pricing will make everything a few percentage points more expensive. But I guess making everything a few percentage points more expensive so that executive credit card holders can get thousands per year in cashback and travel rewards is no biggie.
  - Scirra_Tom 7y ago
    "The Payment Card Interchange Fee and Merchant Discount Antitrust Litigation is a United States class-action lawsuit filed in 2005 by merchants and trade associations against Visa, MasterCard, and numerous financial institutions that issue payment cards. The suit was filed due to price fixing and other allegedly anti-competitive trade practices in the credit card industry." Another area where giving freedom to these businesses ends up screwing the average person. This is why I like the EU, they are strong on consumer rights. The naive would assume these businesses would naturally want to compete on these fees.
collision 7y ago
[Stripe co-founder] As multiple commenters note, UK and EU interchange is significantly lower than that in the US. So the rewards market tends to be different as a result. That said, launching this in the UK would still be attractive to us. We don't think rewards are the primary thing businesses are looking for. As we talked to founders, it seems like they all want a corporate card early on for their business spending (to get it off personal cards). As the business adds employees, they need a sensible way to keep tabs on spending without the expensing process being really painful. I think that's just as relevant in the UK, with the added detail of multi-currency spending being more relevant.
- Scirra_Tom 7y ago
  Thanks for reply! From our point of view, a card where we could use our USD and EUR balance to make USD/EUR payments would be one of the biggest pulls if possible. I think recurring USD charges for UK based businesses are probably quite prevalent. I don't think many UK startups realise how much they lose out on being charged in GBP on these transactions (especially with debit cards). There's likely an opportunity here to educate UK businesses and use that to promote this sort of card. > all want a corporate card early on for their business spending (to get it off personal cards) I'm surprised by this, been a while since we were an early business but didn't have any issue getting a corporate debit card which is more than adequate early on.
  - porker 7y ago
    > From our point of view, a card where we could use our USD and EUR balance to make USD/EUR payments would be one of the biggest pulls if possible. I think recurring USD charges for UK based businesses are probably quite prevalent. > I don't think many UK startups realise how much they lose out on being charged in GBP on these transactions (especially with debit cards). There's likely an opportunity here to educate UK businesses and use that to promote this sort of card. That's what we use Transferwise and their Borderless Account for. The challenger banks have similar offerings, with multi-currency accounts behind them. We don't have enough in other currencies to need that (yet, it's on my TODO list) . Not being stung for foreign currency transaction fees is why we put all non-GBP expenditure through Transferwise

gringoDan 7y ago

Credit card transaction fees are way higher in the US than in the UK. This allows the companies budget for much higher cashback earning, mileage programs, etc. Here is a great post that explains the economics of credit card rewards: https://www.reddit.com/r/churning/comments/5oucdq/the_economics_of_churning_who_pays_for_the_rewards/ https://www.reddit.com/r/churning/comments/5oucdq/the_econom...

snaily 7y ago

Interchange fees are capped to 0.2-0.3% in the EU by regulation. Merchants pay less (to the issuer, ultimately) for the benefit of accepting credit cards, so there is less fees to hand out as cash back (from the issuer to the card owner).

jackweirdy 7y ago

European interchange fees are capped at 0.3%, so unless you are making money hand over fist from other means, giving back more than 0.5% cashback rarely makes financial sense. Amex own-branded cards are excluded from this as they avoid the three-party relationship that falls under these rules, but some (e.g. airline amex cards) are capped at 0.3% interchange fees. See this article for more info https://www.headforpoints.com/2018/02/08/american-express-european-court-of-justice-interchange-fees/ https://www.headforpoints.com/2018/02/08/american-express-eu...

tialaramex 7y ago

As I understand it usual US de-regulation means card issuers get to charge the merchant more or less whatever they want. So if they charge your grocery store $4 for the transaction when a rival does it for $1 then giving you $2 "cash back" is very affordable for them.

ceejayoz 7y ago
The end result is a regressive wealth transfer from lower income people who can't qualify for rewards cards to high credit score, high income folks.
mikepurvis 7y ago
This is obviously horrible for merchants, but what's really gross is how regressive it is when it comes to poor people and small businesses. Unlike national chains, local outfits don't have the ability to negotiate favourable fee arrangements, so accepting CC payment puts them at another built-in disadvantage relative to well-heeled competitors. And of course, those fees end up baked into the price of everything, and are then carried by anyone who doesn't have a big-spender cashback/rewards card, but especially by people paying cash (whether by choice or because they are unbanked). Hilarious to have this state of affairs going on while there's simultaneously a right wing panic about how carbon pricing will make everything a few percentage points more expensive. But I guess making everything a few percentage points more expensive so that executive credit card holders can get thousands per year in cashback and travel rewards is no biggie.
- Scirra_Tom 7y ago
  "The Payment Card Interchange Fee and Merchant Discount Antitrust Litigation is a United States class-action lawsuit filed in 2005 by merchants and trade associations against Visa, MasterCard, and numerous financial institutions that issue payment cards. The suit was filed due to price fixing and other allegedly anti-competitive trade practices in the credit card industry." Another area where giving freedom to these businesses ends up screwing the average person. This is why I like the EU, they are strong on consumer rights. The naive would assume these businesses would naturally want to compete on these fees.

collision 7y ago

[Stripe co-founder] As multiple commenters note, UK and EU interchange is significantly lower than that in the US. So the rewards market tends to be different as a result. That said, launching this in the UK would still be attractive to us. We don't think rewards are the primary thing businesses are looking for. As we talked to founders, it seems like they all want a corporate card early on for their business spending (to get it off personal cards). As the business adds employees, they need a sensible way to keep tabs on spending without the expensing process being really painful. I think that's just as relevant in the UK, with the added detail of multi-currency spending being more relevant.

Scirra_Tom 7y ago
Thanks for reply! From our point of view, a card where we could use our USD and EUR balance to make USD/EUR payments would be one of the biggest pulls if possible. I think recurring USD charges for UK based businesses are probably quite prevalent. I don't think many UK startups realise how much they lose out on being charged in GBP on these transactions (especially with debit cards). There's likely an opportunity here to educate UK businesses and use that to promote this sort of card. > all want a corporate card early on for their business spending (to get it off personal cards) I'm surprised by this, been a while since we were an early business but didn't have any issue getting a corporate debit card which is more than adequate early on.
- porker 7y ago
  > From our point of view, a card where we could use our USD and EUR balance to make USD/EUR payments would be one of the biggest pulls if possible. I think recurring USD charges for UK based businesses are probably quite prevalent. > I don't think many UK startups realise how much they lose out on being charged in GBP on these transactions (especially with debit cards). There's likely an opportunity here to educate UK businesses and use that to promote this sort of card. That's what we use Transferwise and their Borderless Account for. The challenger banks have similar offerings, with multi-currency accounts behind them. We don't have enough in other currencies to need that (yet, it's on my TODO list) . Not being stung for foreign currency transaction fees is why we put all non-GBP expenditure through Transferwise