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I play the credit card "game" because I hate feeling like I'm leaving money on the table, but I really wish I didn't have to. Some degrees of fees make sense, t

I play the credit card "game" because I hate feeling like I'm leaving money on the table, but I really wish I didn't have to. Some degrees of fees make sense, to run the network, and handle fraud, but it's ridiculous that people have this sense that shopping should somehow fund your vacation. Where I am it's increasingly common to see credit card fees when checking out. I get it, because merchants are being charged 3-5% of their total revenue. I wish there was a low fee credit card network that merchants didn't charge a fee for, so I could continue the simplicity of digital payments but opt out of this crazy Visa Infinite rewards accounting boondoggle.

socalgal2 8d ago
They wouldn't be charged 3-5% if Visa and Mastercard weren't a duopoly. In countries where they aren't there are 10-20 competitors that charge way way less.
ianhawes 9d ago
There is, it's called debit cards, but Stripe et al. "simplified" pricing by charging a percentage regardless of card type instead of the traditional interchange-plus pricing. Merchant banks "used to" make money by tacking on fixed fees, i.e. a set-up fee, terminal fee, monthly fee, etc, but then Stripe came along and provided (1) a better dev experience, (2) better onboarding, and (3) simplified pricing.
- jimbob45 9d ago
  You have to wait for the investigation to complete to receive compensation if you’re hit by fraud on a debit card. Credit cards don’t share that issue. If you’re poor or living paycheck-to-paycheck, debit cards are potentially a risk to your livelihood.
  - seabre 9d ago
    As someone who has been hit with fraud on a debit card and a credit card, the process to recover money from fraud on a credit card is so much easier and more hassle-free than a debit card. The big difference is that with a debit card, it's your money that is hit by fraud. The debit card is basically just a proxy. You have to go file a police report. You have to hope the bank will give you the money back. When the credit card gets hit, it's the credit card company's money and they will seemingly chase the fraud to the ends of the earth to recover it.
    - avianlyric 9d ago
      This depends heavily on the country you’re in. In the UK banks are required to refund you within a single business day if they don’t have any evidence that the customer isn’t trying to defraud the bank themselves. They try to squirm out of that of course. But in general getting your money back isn’t too tricky even with a debit card.
      - seabre 9d ago
        Oh yeah. I should definitely caveat: I am in the US. I think banks here are required to cap your loss to $50 USD if you report unauthorized fraud within two business days. But still, the onus is on you. Meanwhile, virtually all credit cards in the US offer $0 liability protection. Which means at most you pay nothing.
        arjvik 9d ago
        2 business days is a lot more strict than credit cards, which at the very least would not blink an eye at 2 weeks.
        labcomputer 9d ago
        Er what? You don’t even pay for the fraudulent credit card transactions in the first place! There’s no money for them to return!
    - thechao 9d ago
      > The big difference is that with a debit card, it's your money that is hit by fraud. I kind of disagree. I think what's happened is the bank would prefer you to believe that. Imagine I kept my money at the bank, and deposited $10000 with the teller. Immediately afterward a robber follows in and steals that $10000 from the teller. Does the bank say "oh no Mr. TheChao! A robber stole your $10000!". I mean, no? The bank got robbed. Just because the bank's digital security is more tied one-to-one to dollars and its easier for a robber to steal from "my till" doesn't mean it was me who was robbed. It's the bank's job to stop that.
  - kevin_thibedeau 9d ago
    I've always had fraudulent debit charges automatically reverted. Typically the bank's fraud detection disables the card and you clear up the matter on the phone. Or they call you to verify if a suspicious charge outside your profile was actually yours. The banks aren't required to do this but they can choose to provide this level of service.
    - bijowo1676 9d ago
      the cc fraud (and fraud protection) is THE main selling point of Visa/MC credit cards. it is that different treatment of debit/cc fraud that pushes people towards high fee cc. it is cc fraud protection that justifies high cc processing fees. without cc fraud there is no need in visa/mc duopoly.
      - pocksuppet 9d ago
        I thought the main selling point was that they work almost anywhere. Whereas my EFTPOS card only works in Australia, my Girocard only works in Germany and my Pix account only works in Brazil.
  - ryall 9d ago
    Weird take, credit card debt is much more of a risk to that demographic than debit cards ever will be
  - abdullahkhalids 9d ago
    The underlying problem is that the whole concept of cards is insane. Basically, you go around telling every shopkeeper the code for your safe, and ask them to take however much cash you owe them out of the safe. Sane ways to organize payments: - Merchant gives you a bill-id. You input it into your bank website - where you see the bill amount being charged. You accept, and bank pays merchant. - You give merchant your card number (that's the only information - no expiry, no ccv, no name). A notification pops up on your bank website asking if you want to pay what the merchant is requesting. You accept. - You go to your bank website and obtain a random number, either allowing a single transaction or a recurring transaction. You give the merchant the number. After merchant charges it, no other merchant can charge the same number.
    - KptMarchewa 9d ago
      > You go to your bank website and obtain a random number, either allowing a single transaction or a recurring transaction. You give the merchant the number. After merchant charges it, no other merchant can charge the same number. That's basically how Blik works in Poland. With the exception being that the number is random 6 digits randomly generated when you open the app, that is active for ~2 minutes. So you don't deal with the issue of very long and error prone numbers to copy. Much better way to pay online. https://en.wikipedia.org/wiki/Blik https://en.wikipedia.org/wiki/Blik
    - lxgr 9d ago
      Cards have supported strong, positive cardholder authentication at the POS (chip and PIN) and online (3DS) since the 90s. It’s entirely the US credit card industry and its regulating bodies’ fault that it has made neither mandatory in the way that e.g. the EU did, and is in fact fighting any attempt to do so tooth and nail (please think of the conversion rate!!)
      - dizhn 9d ago
        Can you guys still write a check at the supermarket checkout? No pin credit cards are small potatoes next to personal checks in terms of weirdness. But I wish we had that trust culture everywhere.
  - pyreko 9d ago
    Eh... I guess YMMV, at least for a low amount it took me literally an afternoon, I just froze my card, walked to the bank, explained the issue, and they refunded me on the spot (also switched out the card for a new one). They said technically it could be clawed back after investigation but they never did.
- milesskorpen 9d ago
  Also debit cards run by smaller credit unions charge credit-card like fees (and then are used by fintechs to earn fees while making it harder to pass those fees on to end users).
  - ianhawes 9d ago
    Hah! Good to know, makes total sense.
- karlosvomacka 9d ago
  For US readers - in my country in europe I'd say that 95% of people have only debit card, not credit card. it's very not common to have a credit card here. Card payments are extremely common, but everyone uses debit card.
  - avianlyric 9d ago
    The EU caps all card interchange fees at 0.3% for credit cards and 0.2% for debit, which is an order of magnitude lower than some of the fees in the US. That’s why you don’t see the same kinds of credit card deals in the EU compared to the US.
    - adrian_b 9d ago
      I think that there was a recent HN thread that linked to an article which argued that the credit card system of USA has the purpose of taking money from the poor and giving them to the rich, and the estimated amount of the money transferred in this way was huge. The EU limits for card fees prevent this in Europe, which is very good.
      - derektank 9d ago
        Wouldn’t it be simpler for European countries to simply raise the VAT and redistribute the proceeds to poor people, rather than regulate the interchange fees if the concern is inequality
        post-it 9d ago
        Your solution sounds significantly more complicated actually.
        derektank 9d ago
        In what way? There are many sources of inequality. Trying to play whack a mole with each one seems much more laborious than simply deciding how much inequality you want in society, and then setting it with the tax code
- losvedir 9d ago
  Debit cards aren't that, in practice, because as you say they typically get the same 3% fee whenever I've asked. Toast and other point of sale networks just charge it based on the network and not the card type. But even so, I still prefer the credit card instrument, used as a "charge card". For those that don't know, a "charge card" is common with businesses and is expected to be paid off every month. But it helps with managing your cashflow - e.g. you can keep your money in a savings account all month and make one transaction at the end - and it keeps your actual money from being at risk of fraud. Most Europeans seem confused with how Americans use credit cards for everything, but about half of us use them as charge cards, paying them off every month. That is a benefit, so I can see paying a small percentage for it, but I don't think that benefit alone justifies the 3-5% of a transaction that credit cards charge now.
  - LeBit 9d ago
    As a Canadian , I thought that was the expected de facto way of using credit cards: you pay everything with it so you get rewards (ie money) at the end of the year as a function of how much you used the card during the year. At the end of the month, you pay whatever the outstanding balance is, otherwise you pay high interests.
    - zaphirplane 9d ago
      There are fees thou and i cant imagine they are losing out as a business
    - rootusrootus 9d ago
      Many of us use it exactly that way, though the rewards (in my personal experience) are immediate as soon as a transaction clears and not yearly. Carrying a revolving balance is a quick way to spiral into bankruptcy because the rates are so high (and the minimum payment is typically 1% of the balance).
    - the_af 9d ago
      I thought this was how credit cards were used the world over. It's certainly how I use them. How do Americans use them that differs from this? Color me confused. (Also: installments. They are often the norm in my country, but I understand they are less common for Americans).
- numpad0 9d ago
  Debit cards still go through the same credit card infrastructure. The practical difference at this point is whether the card company backend defer payment until collection date for the benefit of customers, or don't wait and just call APIs on the spot. There's a whole "internet" of credit card infra that lets you pay using those numbers on the card like they are phone numbers. Stripe don't do handle their own payment, they just wrap someone else's API, and pay them in percentages and dollars per API calls(idk about the ones behind Stripe, but I think I saw somewhere that those middlemen often charge both? Egregious, but they're literally old boys money men and they have lots of leverages against you). What are truly different to credit/debit card systems are things like PayPal, Apple/Google and such gift cards with scratch areas, and Chinese QR payment apps. Those are the ones that don't (always) go through the CC ecosystem.
  - cobbzilla 9d ago
    Stripe connects directly to Visa/MC, there’s nothing “behind them” in terms of some other card processor API they’re wrapping. Stripe is a credit and debit card processor (and also a card issuer). They are NOT a bank, but do control some BINs (notably 4242 which is used for the famous test card 4242x4)
  - ghosty141 9d ago
    PayPal and Apple Pay use my debit card so they somewhat do use it.
  - masom 8d ago
    Not necessarily, in Canada there's a separate network/infrastucture named [Interact](https://www.interac.ca/en/ https://www.interac.ca/en/). All the banks are on it and most merchants have terminals that supports it. It had chip and pin ahead of credit cards, and has lower fees. That's what powers our e-transfers, no need for venmo or other systems.
- titanomachy 9d ago
  Most stripe transactions do use cost-plus pricing. The flat pricing is popular with smaller businesses, but larger companies graduate from it pretty quickly.
- DANmode 9d ago
  Fun fact: Visa owns some of Stripe.
- fragmede 8d ago
  why is simplified in quotes? Knowing you'll get $x - 2.9% and 30 cents is simplified compared to having to find out what kind of card was used, what their interchange rate is, What your rate on that is. Debit cards have a low interchange rate, but it's offset by the cards with rates higher than 2.9%. Stripe is taking on a risk that your customers aren't all going to use a chase sapphire reserve and thus cost stripe 4.5% when stripe is only charging 2.9%. If you're large enough, Stripe offers IC+, interchange plus, where you get complexified pricing, if desired.
sillysaurusx 9d ago
Agreed. The pool hall nearby has a game of pool for $2. But if you use a credit card the minimum purchase is $6 (three games) due to fees. It works, but I thought it was a gimmick to trap people into playing more pool until I saw your comment here and realized it was from fees.
JimsonYang 9d ago
Why do you play the points game? I felt like if I didnt spend $1 on something that was the equivalent of me spending $50 to get those same credit card points
- toast0 9d ago
  I don't play the points game, I use a cashback card. I use a cashback card, because most merchants will charge me the same regardless of payment method, and getting a 4% discount (+ time value of money) is the lowest cost to me. If I use some other payment method, the merchant may keep more of the transaction amount, and that's great for them, but it doesn't improve my customer experience. If interchange fees are strictly capped and cashback cards disappear, I wouldn't be upset; but while they're here, I'm incentivized to use them... following economic incentives while doing economic transactions seems like the right thing to do?
asdff 9d ago
Another thing to consider is your credit card rewards cash back etc are really trading your privacy for a little rounding error worth of discount in comparison to using cash. You may also save far more money going cash only. E.g. some local restaurants near me give you like 5% off paying in cash. Gas is generally cheaper cash price vs card price or debit fee. You have a big job with a contractor, tell them you might be interested in paying cash and they might offer you a substantial discount.
- moduspol 9d ago
  Contractors, but also cosmetic health work. Invisalign, veneers, plastic surgery, etc. Probably most big-ticket items or services that you're not buying from a megacorp. Sometimes they'll give even more than 5% because they can keep it off their books completely, but in those cases, they want physical cash--not just a check to avoid credit card fees.
- toast0 9d ago
  > Another thing to consider is your credit card rewards cash back etc are really trading your privacy for a little rounding error worth of discount in comparison to using cash. How much privacy really? If I get mostly $20s from the ATM, and the merchant does daily deposits of most of the $20s they get, why wouldn't banks start scanning and tracking serial numbers (if they don't already), if my purchasing habits are actually valuable?
  - ButlerianJihad 9d ago
    https://www.wheresgeorge.com/ https://www.wheresgeorge.com/ > The site was officially launched on December 23, 1998.
  - asdff 9d ago
    Make change with your local under the table taco stand
  - puzzledobserver 9d ago
    In a theoretical sense, you are right. The life of most currency notes is bank to customer to merchant to bank, and the bank could just track serial numbers to figure out your spending habits. Practically, it would make little sense. The actual life of most currency notes is bank1 to customer to merchant to bank2, and there is a large probability that bank1 and bank2 are different entities. And then, so many more people use the credit card system, and it is so much easier to track people there, that the ROI on tracking people using cash would be low. I would be very surprised if any bank tried to scan currency note serial numbers.
mrguyorama 9d ago
>I wish there was a low fee credit card network that merchants didn't charge a fee for, so I could continue the simplicity of digital payments but opt out of this crazy Visa Infinite rewards accounting boondoggle. This is called "Regulate the max fees" like Europe did, where they still have functioning credit card networks, including good fraud coverage, but you aren't expected to dance for the credit card company for peanuts of kickback.
bigbuppo 9d ago
What's really fun is when you're reselling something like Microsoft 365 and both the credit card companies and the state (through sales tax) make more than you do on each sale.
qurren 9d ago
I used to think "I should be nice to merchants" and pay everything in cash. That was 15 years ago. Now, living costs have gone up, I'm getting taxed to death by not just governments but increasingly more by businesses themselves ("benefits fees", "installation fee", "convenience fee", guilt-tip screens, sneaky price increases, etc.) so now I feel no guilt in playing the system to get at least some of my money back. Now I just churn 1-2 credit cards a year to pay my taxes and get some of it back in the massive sign up bonuses, which more than cover the transaction costs, fees, and then get me another few thousand back. If merchants across the world make a deal with me to charge exactly the listed/advertised number exactly, no more, no less, then I'll pay in cash again. Deal? No? Okay, you continue paying your merchant fees and I'll continue reaping the credit card bonuses to the maximum possible.
- zahlman 9d ago
  > If merchants across the world make a deal with me to charge exactly the listed/advertised number exactly, no more, no less, then I'll pay in cash again. This seems to still be pretty reliable for most things in brick-and-mortar stores, FWIW.
- kazinator 9d ago
  > If merchants across the world make a deal with me to charge exactly the listed/advertised number exactly, no more, no less, then I'll pay in cash again. Where are you not getting this? You mean taxes on top of the retail price? You would pay cash, if the merchants colluded with you in evading taxes?
  - deleted 9d ago
    [deleted]
  - avianlyric 9d ago
    You could just do what all of Europe does and just include the tax in the listed retail price, rather than only tacking it on at the end.
    - 8d ago
riazrizvi 9d ago
I don't get this. Use cash like me and a bunch of us if you don't want to play the game. Or a debit card. Otherwise it's just an extra game. Extra games are choice. Choice is good.
- kazinator 9d ago
  I would only use cash in situations where I'm able to obtain a discount compared to using a credit card. Even then, you have to think twice. If you get scammed of cash, it's gone. If you get scammed in a credit card transaction, there is a fighting chance you can dispute the charge and have it reversed in their face. You know that credit card feature of providing some insurance coverage on things like vehicle rentals? It may look like small print, but I actually used that. By some amazing fluke, I damaged the bumper of a rental car; the credit card coverage took care of it. I filled out minor paperwork and never heard about the issue. Speaking of rentals, in many rental situations (even simple power tools at your Home Depot or whatever) you get charged a deposit on the card which comes back when you return the thing. It's just a number in database. With cash, you'd have to fork that up over the counter; very unappealing.
braiamp 9d ago
That's what systems like Pix fixes. It's managed by the state, it's low cost and it's universal... which is why the US is against it so hard.
asdfasvea 9d ago
It boggles my mind that the government has privatized currency to these people. Crazy-person-but-actually-really practical-idea: Nationalize one if these networks. Maybe Discover. The US government should provide us digital currency. The simplest way is to force the current systems to do that. All that rent they collect in terms of transactions fees shouldn't be profit for a private business but fees of the government.
- Navarr 9d ago
  Discover was JUST purchased by Capital One, so I think they'd hate for it to be nationalized
- CGMthrowaway 9d ago
  >It boggles my mind that the government has privatized currency to these people. That's the banks (lenders), not the payment networks. >Crazy-person-but-actually-really practical-idea: Nationalize one if these networks. Maybe Discover. The central planners want to. It's called FedNow.
  - ZeWaka 9d ago
    FedNow is the backend behind the "instant" transfers you see between some banks these days.
- Aspos 9d ago
  Each of those networks carry a lot, a lot of ancient stuff. Gov is better off building a brand new network from scratch and promote it as a standard for banks to join. There are plenty of great examples from this century all over the world. Even Iran has a better payment infra than the US.
  - rootusrootus 9d ago
    > Even Iran has a better payment infra than the US. That is a big claim. What would prevent someone from setting up something equally as good in the US, aside from the network effect and users unwilling to try something new for uncertain gain?
quickthrowman 9d ago
> but it's ridiculous that people have this sense that shopping should somehow fund your vacation. Some people are dumb and think tax refunds are free money when in reality they’re an interest-free loan to the IRS. Money is fungible and instantly redeeming rewards for a statement credit is almost always the optimal way to use credit card rewards. A person who wants to fund a vacation with rewards can simply redeem the rewards for a statement credit while simultaneously transferring that amount of cash to a HYSA or similar.
- JamesSwift 9d ago
  > Money is fungible and instantly redeeming rewards for a statement credit is almost always the optimal way to use credit card rewards. Uhh I have no credit cards where redeeming for credit is the optimal play. Every single one has 'offers' that give a further multiplier on the dollar amount of the points. Eg redeem $80 of points for a $100 home depot gift card.
  - ThunderSizzle 9d ago
    If you use it, that's great. If you don't use the gift card, then cash is obviously better
tombert 9d ago
Agreed. I will admit that sometimes I do have fun playing the game (certainly a lot more when I was younger), but not often anymore. I feel like I "have" to do it, because there's no such thing as a free lunch, and as such stores price in the fees and so I might as well get it back in the form of traveling, but it is very weird that we just expect credit cards to do that.
spauldo 9d ago
In my case, it's literally free money. I travel a lot for work. I pay for everything with my card, and I'm reimbursed by the company. I rack up points, and whenever I travel for pleasure or as an independent contractor, hotels are free. I'd get free airfare like my coworkers do if I didn't avoid flying and drive everywhere. The system is broken. No one with the power to fix it has any incentive to do so. Might as well get what you can.
holgerschurig 9d ago
If we look at this in a non US-centric view, then many other areas have solved this, partially since decades. For example, in Germany we used to have a bank card, "EC Karte", it is now called "Girocard". So, if you are a shop and accept Girocard, you pay 0.2% of the transaction plus a fix 0.05 - 0.10 €. And in Germany virtually everyone has a Girocard, it's part of getting a bank account. The cards are free to the customers. So assume you're a small Café with 8000€ per months, 70% via Girocard and 30% via credit cards. Then you'd pay ~ 17€ per month for Girocard, but 95€ if you use "blended sum" - a contract with a payment provider to accept all cards. But you don't have bureaucracy. With you do an extra contract with a credit card only provider it's still 41€ for just the 30% of your monthly business. That creates the effect that in Germany lots of shops don't accept credit cards. The market speaks. I know that other countries also have payment methods, e.g. Netherland or China. It's just the US banking system that is decades behind what is possible.
- carlosjobim 8d ago
  Many small business owners are idiots and obsess over tiny sums while being blind to large costs. And they loose far more customers by not accepting payment methods than they save in fees. In your own example it's only €41 per month that they save by turning away who knows how many customers. Another example is small B&Bs who happily pay 15% or more to third parties like booking.com, but think it's outrageous to pay 2-3% in card fees to accept bookings on their own website.
timothytavarez 9d ago
The real shittiness begins when having to deal with them as a business. If you’re classified as high risk, which could be whatever the fuck, you’re deplatformed or need to deal with Byzantine merchants.
porridgeraisin 9d ago
In india we use UPI. But people still use cards enough to be in decent enough terms with them for when you want to make a risky purchase and chargeback. In a sense, it's simply insurance. You pay extra 2% everywhere so you can dispute a txn at any point later. Personally I make very few risky + expensive purchases, so my CC usage is non existent. I am comfortable enough to not really care if a random shady hobby electronics website fleeces me 500rs. Another use is that sometimes you get CC offers on Amazon: "use $BANK $TIER CC to get extra 7k off" which are useful enough to justify paying extra everywhere else if you do your big shopping though Amazon festival deals. E.g you can get a 55k iphone for 45k.
amenghra 9d ago
There’s a startup in Switzerland (https://www.pimpay.ch/ https://www.pimpay.ch/) trying to offer no per-transaction payments (at the Swiss-level). I wish them good luck but it’s not going to be easy to disrupt the existing players in this field. This is something governments could fix by running the payments rails.
BatteryMountain 9d ago
In my country on my specific credit card, I get back about 1.5% of my spend through the card. Over the last five years I've banked for free, but not just that: I get back about 5x to 8x my bank fees alone. That doesn't count all sorts of promo's/discounts through their partners. As an example, my bank has a deal the past year with one of our major pharmacy chains and I get a ton of discounts when I use my card there (they ask at tills if I'm paying with the card), that is on top of normal in-store promos. So the "game" is very much worth it to play in my situation. Funny enough, they charge a flat fee for international transactions and 0% currency conversions, and they use MasterCard, which means free travel insurance. Its an amazing bank. Typically the bank is known to target rural/informal to middle class customers, but they have quite a few wealthier clients which feels like the best kept secret.

socalgal2 8d ago

They wouldn't be charged 3-5% if Visa and Mastercard weren't a duopoly. In countries where they aren't there are 10-20 competitors that charge way way less.

ianhawes 9d ago

There is, it's called debit cards, but Stripe et al. "simplified" pricing by charging a percentage regardless of card type instead of the traditional interchange-plus pricing. Merchant banks "used to" make money by tacking on fixed fees, i.e. a set-up fee, terminal fee, monthly fee, etc, but then Stripe came along and provided (1) a better dev experience, (2) better onboarding, and (3) simplified pricing.

jimbob45 9d ago
You have to wait for the investigation to complete to receive compensation if you’re hit by fraud on a debit card. Credit cards don’t share that issue. If you’re poor or living paycheck-to-paycheck, debit cards are potentially a risk to your livelihood.
- seabre 9d ago
  As someone who has been hit with fraud on a debit card and a credit card, the process to recover money from fraud on a credit card is so much easier and more hassle-free than a debit card. The big difference is that with a debit card, it's your money that is hit by fraud. The debit card is basically just a proxy. You have to go file a police report. You have to hope the bank will give you the money back. When the credit card gets hit, it's the credit card company's money and they will seemingly chase the fraud to the ends of the earth to recover it.
  - avianlyric 9d ago
    This depends heavily on the country you’re in. In the UK banks are required to refund you within a single business day if they don’t have any evidence that the customer isn’t trying to defraud the bank themselves. They try to squirm out of that of course. But in general getting your money back isn’t too tricky even with a debit card.
    - seabre 9d ago
      Oh yeah. I should definitely caveat: I am in the US. I think banks here are required to cap your loss to $50 USD if you report unauthorized fraud within two business days. But still, the onus is on you. Meanwhile, virtually all credit cards in the US offer $0 liability protection. Which means at most you pay nothing.
      - arjvik 9d ago
        2 business days is a lot more strict than credit cards, which at the very least would not blink an eye at 2 weeks.
        labcomputer 9d ago
        Er what? You don’t even pay for the fraudulent credit card transactions in the first place! There’s no money for them to return!
  - thechao 9d ago
    > The big difference is that with a debit card, it's your money that is hit by fraud. I kind of disagree. I think what's happened is the bank would prefer you to believe that. Imagine I kept my money at the bank, and deposited $10000 with the teller. Immediately afterward a robber follows in and steals that $10000 from the teller. Does the bank say "oh no Mr. TheChao! A robber stole your $10000!". I mean, no? The bank got robbed. Just because the bank's digital security is more tied one-to-one to dollars and its easier for a robber to steal from "my till" doesn't mean it was me who was robbed. It's the bank's job to stop that.
- kevin_thibedeau 9d ago
  I've always had fraudulent debit charges automatically reverted. Typically the bank's fraud detection disables the card and you clear up the matter on the phone. Or they call you to verify if a suspicious charge outside your profile was actually yours. The banks aren't required to do this but they can choose to provide this level of service.
  - bijowo1676 9d ago
    the cc fraud (and fraud protection) is THE main selling point of Visa/MC credit cards. it is that different treatment of debit/cc fraud that pushes people towards high fee cc. it is cc fraud protection that justifies high cc processing fees. without cc fraud there is no need in visa/mc duopoly.
    - pocksuppet 9d ago
      I thought the main selling point was that they work almost anywhere. Whereas my EFTPOS card only works in Australia, my Girocard only works in Germany and my Pix account only works in Brazil.
- ryall 9d ago
  Weird take, credit card debt is much more of a risk to that demographic than debit cards ever will be
- abdullahkhalids 9d ago
  The underlying problem is that the whole concept of cards is insane. Basically, you go around telling every shopkeeper the code for your safe, and ask them to take however much cash you owe them out of the safe. Sane ways to organize payments: - Merchant gives you a bill-id. You input it into your bank website - where you see the bill amount being charged. You accept, and bank pays merchant. - You give merchant your card number (that's the only information - no expiry, no ccv, no name). A notification pops up on your bank website asking if you want to pay what the merchant is requesting. You accept. - You go to your bank website and obtain a random number, either allowing a single transaction or a recurring transaction. You give the merchant the number. After merchant charges it, no other merchant can charge the same number.
  - KptMarchewa 9d ago
    > You go to your bank website and obtain a random number, either allowing a single transaction or a recurring transaction. You give the merchant the number. After merchant charges it, no other merchant can charge the same number. That's basically how Blik works in Poland. With the exception being that the number is random 6 digits randomly generated when you open the app, that is active for ~2 minutes. So you don't deal with the issue of very long and error prone numbers to copy. Much better way to pay online. https://en.wikipedia.org/wiki/Blik https://en.wikipedia.org/wiki/Blik
  - lxgr 9d ago
    Cards have supported strong, positive cardholder authentication at the POS (chip and PIN) and online (3DS) since the 90s. It’s entirely the US credit card industry and its regulating bodies’ fault that it has made neither mandatory in the way that e.g. the EU did, and is in fact fighting any attempt to do so tooth and nail (please think of the conversion rate!!)
    - dizhn 9d ago
      Can you guys still write a check at the supermarket checkout? No pin credit cards are small potatoes next to personal checks in terms of weirdness. But I wish we had that trust culture everywhere.
- pyreko 9d ago
  Eh... I guess YMMV, at least for a low amount it took me literally an afternoon, I just froze my card, walked to the bank, explained the issue, and they refunded me on the spot (also switched out the card for a new one). They said technically it could be clawed back after investigation but they never did.
milesskorpen 9d ago
Also debit cards run by smaller credit unions charge credit-card like fees (and then are used by fintechs to earn fees while making it harder to pass those fees on to end users).
- ianhawes 9d ago
  Hah! Good to know, makes total sense.
karlosvomacka 9d ago
For US readers - in my country in europe I'd say that 95% of people have only debit card, not credit card. it's very not common to have a credit card here. Card payments are extremely common, but everyone uses debit card.
- avianlyric 9d ago
  The EU caps all card interchange fees at 0.3% for credit cards and 0.2% for debit, which is an order of magnitude lower than some of the fees in the US. That’s why you don’t see the same kinds of credit card deals in the EU compared to the US.
  - adrian_b 9d ago
    I think that there was a recent HN thread that linked to an article which argued that the credit card system of USA has the purpose of taking money from the poor and giving them to the rich, and the estimated amount of the money transferred in this way was huge. The EU limits for card fees prevent this in Europe, which is very good.
    - derektank 9d ago
      Wouldn’t it be simpler for European countries to simply raise the VAT and redistribute the proceeds to poor people, rather than regulate the interchange fees if the concern is inequality
      - post-it 9d ago
        Your solution sounds significantly more complicated actually.
        derektank 9d ago
        In what way? There are many sources of inequality. Trying to play whack a mole with each one seems much more laborious than simply deciding how much inequality you want in society, and then setting it with the tax code
losvedir 9d ago
Debit cards aren't that, in practice, because as you say they typically get the same 3% fee whenever I've asked. Toast and other point of sale networks just charge it based on the network and not the card type. But even so, I still prefer the credit card instrument, used as a "charge card". For those that don't know, a "charge card" is common with businesses and is expected to be paid off every month. But it helps with managing your cashflow - e.g. you can keep your money in a savings account all month and make one transaction at the end - and it keeps your actual money from being at risk of fraud. Most Europeans seem confused with how Americans use credit cards for everything, but about half of us use them as charge cards, paying them off every month. That is a benefit, so I can see paying a small percentage for it, but I don't think that benefit alone justifies the 3-5% of a transaction that credit cards charge now.
- LeBit 9d ago
  As a Canadian , I thought that was the expected de facto way of using credit cards: you pay everything with it so you get rewards (ie money) at the end of the year as a function of how much you used the card during the year. At the end of the month, you pay whatever the outstanding balance is, otherwise you pay high interests.
  - zaphirplane 9d ago
    There are fees thou and i cant imagine they are losing out as a business
  - rootusrootus 9d ago
    Many of us use it exactly that way, though the rewards (in my personal experience) are immediate as soon as a transaction clears and not yearly. Carrying a revolving balance is a quick way to spiral into bankruptcy because the rates are so high (and the minimum payment is typically 1% of the balance).
  - the_af 9d ago
    I thought this was how credit cards were used the world over. It's certainly how I use them. How do Americans use them that differs from this? Color me confused. (Also: installments. They are often the norm in my country, but I understand they are less common for Americans).
numpad0 9d ago
Debit cards still go through the same credit card infrastructure. The practical difference at this point is whether the card company backend defer payment until collection date for the benefit of customers, or don't wait and just call APIs on the spot. There's a whole "internet" of credit card infra that lets you pay using those numbers on the card like they are phone numbers. Stripe don't do handle their own payment, they just wrap someone else's API, and pay them in percentages and dollars per API calls(idk about the ones behind Stripe, but I think I saw somewhere that those middlemen often charge both? Egregious, but they're literally old boys money men and they have lots of leverages against you). What are truly different to credit/debit card systems are things like PayPal, Apple/Google and such gift cards with scratch areas, and Chinese QR payment apps. Those are the ones that don't (always) go through the CC ecosystem.
- cobbzilla 9d ago
  Stripe connects directly to Visa/MC, there’s nothing “behind them” in terms of some other card processor API they’re wrapping. Stripe is a credit and debit card processor (and also a card issuer). They are NOT a bank, but do control some BINs (notably 4242 which is used for the famous test card 4242x4)
- ghosty141 9d ago
  PayPal and Apple Pay use my debit card so they somewhat do use it.
- masom 8d ago
  Not necessarily, in Canada there's a separate network/infrastucture named [Interact](https://www.interac.ca/en/ https://www.interac.ca/en/). All the banks are on it and most merchants have terminals that supports it. It had chip and pin ahead of credit cards, and has lower fees. That's what powers our e-transfers, no need for venmo or other systems.
titanomachy 9d ago
Most stripe transactions do use cost-plus pricing. The flat pricing is popular with smaller businesses, but larger companies graduate from it pretty quickly.
DANmode 9d ago
Fun fact: Visa owns some of Stripe.
fragmede 8d ago
why is simplified in quotes? Knowing you'll get $x - 2.9% and 30 cents is simplified compared to having to find out what kind of card was used, what their interchange rate is, What your rate on that is. Debit cards have a low interchange rate, but it's offset by the cards with rates higher than 2.9%. Stripe is taking on a risk that your customers aren't all going to use a chase sapphire reserve and thus cost stripe 4.5% when stripe is only charging 2.9%. If you're large enough, Stripe offers IC+, interchange plus, where you get complexified pricing, if desired.

sillysaurusx 9d ago

Agreed. The pool hall nearby has a game of pool for $2. But if you use a credit card the minimum purchase is $6 (three games) due to fees. It works, but I thought it was a gimmick to trap people into playing more pool until I saw your comment here and realized it was from fees.

JimsonYang 9d ago

Why do you play the points game? I felt like if I didnt spend $1 on something that was the equivalent of me spending $50 to get those same credit card points

toast0 9d ago
I don't play the points game, I use a cashback card. I use a cashback card, because most merchants will charge me the same regardless of payment method, and getting a 4% discount (+ time value of money) is the lowest cost to me. If I use some other payment method, the merchant may keep more of the transaction amount, and that's great for them, but it doesn't improve my customer experience. If interchange fees are strictly capped and cashback cards disappear, I wouldn't be upset; but while they're here, I'm incentivized to use them... following economic incentives while doing economic transactions seems like the right thing to do?

asdff 9d ago

Another thing to consider is your credit card rewards cash back etc are really trading your privacy for a little rounding error worth of discount in comparison to using cash. You may also save far more money going cash only. E.g. some local restaurants near me give you like 5% off paying in cash. Gas is generally cheaper cash price vs card price or debit fee. You have a big job with a contractor, tell them you might be interested in paying cash and they might offer you a substantial discount.

moduspol 9d ago
Contractors, but also cosmetic health work. Invisalign, veneers, plastic surgery, etc. Probably most big-ticket items or services that you're not buying from a megacorp. Sometimes they'll give even more than 5% because they can keep it off their books completely, but in those cases, they want physical cash--not just a check to avoid credit card fees.
toast0 9d ago
> Another thing to consider is your credit card rewards cash back etc are really trading your privacy for a little rounding error worth of discount in comparison to using cash. How much privacy really? If I get mostly $20s from the ATM, and the merchant does daily deposits of most of the $20s they get, why wouldn't banks start scanning and tracking serial numbers (if they don't already), if my purchasing habits are actually valuable?
- ButlerianJihad 9d ago
  https://www.wheresgeorge.com/ https://www.wheresgeorge.com/ > The site was officially launched on December 23, 1998.
- asdff 9d ago
  Make change with your local under the table taco stand
- puzzledobserver 9d ago
  In a theoretical sense, you are right. The life of most currency notes is bank to customer to merchant to bank, and the bank could just track serial numbers to figure out your spending habits. Practically, it would make little sense. The actual life of most currency notes is bank1 to customer to merchant to bank2, and there is a large probability that bank1 and bank2 are different entities. And then, so many more people use the credit card system, and it is so much easier to track people there, that the ROI on tracking people using cash would be low. I would be very surprised if any bank tried to scan currency note serial numbers.

mrguyorama 9d ago

>I wish there was a low fee credit card network that merchants didn't charge a fee for, so I could continue the simplicity of digital payments but opt out of this crazy Visa Infinite rewards accounting boondoggle. This is called "Regulate the max fees" like Europe did, where they still have functioning credit card networks, including good fraud coverage, but you aren't expected to dance for the credit card company for peanuts of kickback.

bigbuppo 9d ago

What's really fun is when you're reselling something like Microsoft 365 and both the credit card companies and the state (through sales tax) make more than you do on each sale.

qurren 9d ago

I used to think "I should be nice to merchants" and pay everything in cash. That was 15 years ago. Now, living costs have gone up, I'm getting taxed to death by not just governments but increasingly more by businesses themselves ("benefits fees", "installation fee", "convenience fee", guilt-tip screens, sneaky price increases, etc.) so now I feel no guilt in playing the system to get at least some of my money back. Now I just churn 1-2 credit cards a year to pay my taxes and get some of it back in the massive sign up bonuses, which more than cover the transaction costs, fees, and then get me another few thousand back. If merchants across the world make a deal with me to charge exactly the listed/advertised number exactly, no more, no less, then I'll pay in cash again. Deal? No? Okay, you continue paying your merchant fees and I'll continue reaping the credit card bonuses to the maximum possible.

zahlman 9d ago
> If merchants across the world make a deal with me to charge exactly the listed/advertised number exactly, no more, no less, then I'll pay in cash again. This seems to still be pretty reliable for most things in brick-and-mortar stores, FWIW.
kazinator 9d ago
> If merchants across the world make a deal with me to charge exactly the listed/advertised number exactly, no more, no less, then I'll pay in cash again. Where are you not getting this? You mean taxes on top of the retail price? You would pay cash, if the merchants colluded with you in evading taxes?
- deleted 9d ago
  [deleted]
- avianlyric 9d ago
  You could just do what all of Europe does and just include the tax in the listed retail price, rather than only tacking it on at the end.
  - 8d ago

riazrizvi 9d ago

I don't get this. Use cash like me and a bunch of us if you don't want to play the game. Or a debit card. Otherwise it's just an extra game. Extra games are choice. Choice is good.

kazinator 9d ago
I would only use cash in situations where I'm able to obtain a discount compared to using a credit card. Even then, you have to think twice. If you get scammed of cash, it's gone. If you get scammed in a credit card transaction, there is a fighting chance you can dispute the charge and have it reversed in their face. You know that credit card feature of providing some insurance coverage on things like vehicle rentals? It may look like small print, but I actually used that. By some amazing fluke, I damaged the bumper of a rental car; the credit card coverage took care of it. I filled out minor paperwork and never heard about the issue. Speaking of rentals, in many rental situations (even simple power tools at your Home Depot or whatever) you get charged a deposit on the card which comes back when you return the thing. It's just a number in database. With cash, you'd have to fork that up over the counter; very unappealing.

braiamp 9d ago

That's what systems like Pix fixes. It's managed by the state, it's low cost and it's universal... which is why the US is against it so hard.

asdfasvea 9d ago

It boggles my mind that the government has privatized currency to these people. Crazy-person-but-actually-really practical-idea: Nationalize one if these networks. Maybe Discover. The US government should provide us digital currency. The simplest way is to force the current systems to do that. All that rent they collect in terms of transactions fees shouldn't be profit for a private business but fees of the government.

Navarr 9d ago
Discover was JUST purchased by Capital One, so I think they'd hate for it to be nationalized
CGMthrowaway 9d ago
>It boggles my mind that the government has privatized currency to these people. That's the banks (lenders), not the payment networks. >Crazy-person-but-actually-really practical-idea: Nationalize one if these networks. Maybe Discover. The central planners want to. It's called FedNow.
- ZeWaka 9d ago
  FedNow is the backend behind the "instant" transfers you see between some banks these days.
Aspos 9d ago
Each of those networks carry a lot, a lot of ancient stuff. Gov is better off building a brand new network from scratch and promote it as a standard for banks to join. There are plenty of great examples from this century all over the world. Even Iran has a better payment infra than the US.
- rootusrootus 9d ago
  > Even Iran has a better payment infra than the US. That is a big claim. What would prevent someone from setting up something equally as good in the US, aside from the network effect and users unwilling to try something new for uncertain gain?

quickthrowman 9d ago

> but it's ridiculous that people have this sense that shopping should somehow fund your vacation. Some people are dumb and think tax refunds are free money when in reality they’re an interest-free loan to the IRS. Money is fungible and instantly redeeming rewards for a statement credit is almost always the optimal way to use credit card rewards. A person who wants to fund a vacation with rewards can simply redeem the rewards for a statement credit while simultaneously transferring that amount of cash to a HYSA or similar.

JamesSwift 9d ago
> Money is fungible and instantly redeeming rewards for a statement credit is almost always the optimal way to use credit card rewards. Uhh I have no credit cards where redeeming for credit is the optimal play. Every single one has 'offers' that give a further multiplier on the dollar amount of the points. Eg redeem $80 of points for a $100 home depot gift card.
- ThunderSizzle 9d ago
  If you use it, that's great. If you don't use the gift card, then cash is obviously better

tombert 9d ago

Agreed. I will admit that sometimes I do have fun playing the game (certainly a lot more when I was younger), but not often anymore. I feel like I "have" to do it, because there's no such thing as a free lunch, and as such stores price in the fees and so I might as well get it back in the form of traveling, but it is very weird that we just expect credit cards to do that.

spauldo 9d ago

In my case, it's literally free money. I travel a lot for work. I pay for everything with my card, and I'm reimbursed by the company. I rack up points, and whenever I travel for pleasure or as an independent contractor, hotels are free. I'd get free airfare like my coworkers do if I didn't avoid flying and drive everywhere. The system is broken. No one with the power to fix it has any incentive to do so. Might as well get what you can.

holgerschurig 9d ago

If we look at this in a non US-centric view, then many other areas have solved this, partially since decades. For example, in Germany we used to have a bank card, "EC Karte", it is now called "Girocard". So, if you are a shop and accept Girocard, you pay 0.2% of the transaction plus a fix 0.05 - 0.10 €. And in Germany virtually everyone has a Girocard, it's part of getting a bank account. The cards are free to the customers. So assume you're a small Café with 8000€ per months, 70% via Girocard and 30% via credit cards. Then you'd pay ~ 17€ per month for Girocard, but 95€ if you use "blended sum" - a contract with a payment provider to accept all cards. But you don't have bureaucracy. With you do an extra contract with a credit card only provider it's still 41€ for just the 30% of your monthly business. That creates the effect that in Germany lots of shops don't accept credit cards. The market speaks. I know that other countries also have payment methods, e.g. Netherland or China. It's just the US banking system that is decades behind what is possible.

carlosjobim 8d ago
Many small business owners are idiots and obsess over tiny sums while being blind to large costs. And they loose far more customers by not accepting payment methods than they save in fees. In your own example it's only €41 per month that they save by turning away who knows how many customers. Another example is small B&Bs who happily pay 15% or more to third parties like booking.com, but think it's outrageous to pay 2-3% in card fees to accept bookings on their own website.

timothytavarez 9d ago

The real shittiness begins when having to deal with them as a business. If you’re classified as high risk, which could be whatever the fuck, you’re deplatformed or need to deal with Byzantine merchants.

porridgeraisin 9d ago

In india we use UPI. But people still use cards enough to be in decent enough terms with them for when you want to make a risky purchase and chargeback. In a sense, it's simply insurance. You pay extra 2% everywhere so you can dispute a txn at any point later. Personally I make very few risky + expensive purchases, so my CC usage is non existent. I am comfortable enough to not really care if a random shady hobby electronics website fleeces me 500rs. Another use is that sometimes you get CC offers on Amazon: "use $BANK $TIER CC to get extra 7k off" which are useful enough to justify paying extra everywhere else if you do your big shopping though Amazon festival deals. E.g you can get a 55k iphone for 45k.

amenghra 9d ago

There’s a startup in Switzerland (https://www.pimpay.ch/ https://www.pimpay.ch/) trying to offer no per-transaction payments (at the Swiss-level). I wish them good luck but it’s not going to be easy to disrupt the existing players in this field. This is something governments could fix by running the payments rails.

BatteryMountain 9d ago

In my country on my specific credit card, I get back about 1.5% of my spend through the card. Over the last five years I've banked for free, but not just that: I get back about 5x to 8x my bank fees alone. That doesn't count all sorts of promo's/discounts through their partners. As an example, my bank has a deal the past year with one of our major pharmacy chains and I get a ton of discounts when I use my card there (they ask at tills if I'm paying with the card), that is on top of normal in-store promos. So the "game" is very much worth it to play in my situation. Funny enough, they charge a flat fee for international transactions and 0% currency conversions, and they use MasterCard, which means free travel insurance. Its an amazing bank. Typically the bank is known to target rural/informal to middle class customers, but they have quite a few wealthier clients which feels like the best kept secret.