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> The issuing bank keeps 2% Is this why the best cash back credit cards give 2%?
by 3pm 9d ago
> The issuing bank keeps 2%
Is this why the best cash back credit cards give 2%?
- dmoy 9d agoUS Bank for a brief period opened up a 4% card, but then closed it so quick that obviously the numbers didn't work out there. 2% seems to be a local maximum of cashback cards. There's a lot of 2% cards, and only a handful above that. Makes sense?
- pverheggen 9d ago2% is just an example figure, the actual rate varies
- nonethewiser 9d agoIn the US. Not in Europe because interchange fees for consumer cards are capped at 0.3%
- fallingbananna 9d agoI've seen cards with 1% chargeback in the EU though. How does that work? And it wasn't just a temporary marketing promotion. I've used such a card for many years. (It was issues by a big bank that had almost no presence in my country... so maybe they were eating the cost just to build up a bigger presence and potentially enter the country?)
- w3ll_w3ll_w3ll 9d agoYes usually it's promotional.
- will_occam 9d agoYes that intuition is correct, though the reality is much more complicated. The actual share to the bank is roughly proportional to the risk of the transaction/ tied to the type of credit card https://usa.visa.com/dam/VCOM/download/merchants/visa-usa-interchange-reimbursement-fees.pdf https://usa.visa.com/dam/VCOM/download/merchants/visa-usa-in...