Why are payments costing more? Isn't technology lowering costs more and more for these companies? Is this just execs needing another summer home so they raise the prices to whatever they like?
A card can attract USERS by increasing the rewards it offers -> and charging MERCHANTS for the reward.
So visa infinite cards might charge a much higher swipe fee to a merchant, and then make available cash back + first party car insurance + lots of bennies to the holders of these "elite" cards.
They justify this to merchants by claiming that these "elite" users spend big bucks.
The reality - if users of cards were charged the actual swipe fee their card incurred -> they would push for SUPER low fees or switch to debit cards.
Many lucrative business depend on the person picking the service not being the one paying for it or the kickback going to someone other than one paying.
So in this case it’s better for the user but worse for the person paying.
Just the opposite of enterprise software sells.
Kroger stopped supporting Visa cards for a minute and I realized that's literally all I carry.
but what with the fees from card a vs card b.
Suddenly all "reward cards" lost most of their rewards...
In the US, this was the subject of a recent class-action suit! https://www.paymentcardsettlement.com/en
So seems like $0.35 is allowable on any transaction of $8.75 or more.
[1] https://www.thebalance.com/credit-card-surcharges-315423
https://www.ncsl.org/research/financial-services-and-commerc...
I mean, I get somewhere between 2% and 5% back on virtually everything I buy. On top of signup bonuses.
Whereas when I think back to 10 or 15 years ago, it seems like I usually got 1% back, and I still had cards that didn't offer any rewards back at all -- which is unthinkable to me today.
Just my anecdote, and I don't know if it's the main driver, but it certianly seems like rewards have become a much bigger thing.
This is more a function of the extreme power that VISA etc. have over the transactions. They are locked into their fees and make it impossible to do things like 'pay this other way and save 2% etc.' i.e. trying to do anything to obfuscate to the consumer that they are in fact responsible for 3% of every purchase you make.
So various entities find ways around those controls by giving you money back in another direction.
Basically, there's immense 'market pressure' on those 3% fees, but the oligarchy has control over it, so those fees will nature be eaten away by any and all other angles.
If there was no oligarchy, those '2% back' programs would be less likely to happen and what we would see is material margin erosion for such fees.