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Comment by oasisbob | Hacker News Reader

They do, but different cards on different networks have vastly different fees.

The consumer using Visa SuperRewardsPlatinum probably doesn't know that it's costing the retailer more than other cards when they use it.

The originating bank does though, which is exactly why they chose that network in the first place. The market is opaque and doesn't lead towards lower fees and greater efficiency.

It reminds me of super-expensive "we'll pay your insurance deductible" auto glass places which used to advertise on TV all the time. Inflate the cost, and give the consumer a kickback.

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> The consumer using Visa SuperRewardsPlatinum probably doesn't know that it's costing the retailer more than other cards when they use it.

You mean the merchant pays a higher fee when you use one Visa card vs. another Visa card? Or you mean compared to Mastercard etc.?

Correct. The fee will vary within a network based on all sorts of things. There are low-rate carve outs for low-margin products (eg gasoline), discounts for "card-in-hand" transactions, and higher fees for premium cards.

https://www.helcim.com/us/visa-interchange-rates/

https://usa.visa.com/dam/VCOM/global/support-legal/documents...

Ohh.. so it's saying Visa CPS Retail vs. Visa Rewards Traditional vs. Visa Rewards Signature vs. etc. are different. Interesting, thanks, I didn't know that. But if I'm buying two of the same product (obviously -- I'm not talking about two gas vs. groceries here) with two different cards, both of which are from the same network and the same "kind" (by which I mean the categorizations listed above, like two that are both "Visa Rewards Signature"), then the merchant will pay the same fee, right? i.e. it's not like the mere fact that one pays 1% cash back and one pays 2% cash back could possibly result in a different charge to the merchant by itself if they're both (say) lumped together as Rewards Traditional?

Not always, even the exact same card can run on different networks. For example:

1) You buy a product with your Visa debit card and enter your pin

2) You buy the same product, same card, but don't enter your pin

3) You buy the same product, same card, but your card won't swipe so the cashier manually enters your card number

Each of these scenarios will likely result in different fees to the merchant.

This is avoiding and completely missing the point of my question. I was not asking whether card fees can vary based on how the card is processed. I was asking to precisely what extent they can vary based on the card itself. Please re-read my entire question above.

Variable interchange fees range from 0.05% for Visa Debit Cards(Big Banks) to 2.4% for VISA Infinite for most merchant categories. Fees vary by card type and also merchant type.

This is frustrating. Again, you guys are avoiding the question. I don't understand why you guys are doing this. Not only does it waste your own time and mine to be answering a different question than the one asked, you're also repeating a point others have gotten across already [1] [2]. Could you please, please actually read the question? I had very clearly and specifically asked about the same kind of card (which, lest you found the word "kind" unclear, I explicitly gave an example of: assume both cards are "Visa Rewards Signature"), for the same product, with the same merchant, processed in the same manner, etc. The only difference I am focusing on is the card perks (which, again, I gave an example of lest it was unclear: 1% vs. 2% cash back... or 5x points vs. 3% cash back, or whatever you can imagine) or perhaps the issuer (Citi vs. Chase vs. whatever). Somehow you guys are ignoring everything I've asked and repeating to me how merchant fees are different based on the card type (debit vs. credit), card kind (signature vs. regular), merchant (big vs. small), product (groceries vs. gas), etc... yes, thank you, I understood that part already [2], and I was very, very explicitly not asking about those:

> if I'm buying two of the same product (obviously -- I'm not talking about two gas vs. groceries here) with two different cards, both of which are from the same network and the same "kind" (by which I mean the categorizations listed above, like two that are both "Visa Rewards Signature"), then the merchant will pay the same fee, right? i.e. it's not like the mere fact that one pays 1% cash back and one pays 2% cash back could possibly result in a different charge to the merchant by itself if they're both (say) lumped together as Rewards Traditional?

[1] https://news.ycombinator.com/item?id=17658575

[2] https://news.ycombinator.com/item?id=17658479

> the same kind of card...where the only difference was the card perks

The same card means the same perks. You're describing two different cards. They may be similarly branded. But they're different cards to the interchange and different cards (from a rewards perspective) to the consumer.

If you think someone is "avoiding the question," it might be you're miscommunicating.

No, you're not reading what I wrote. I said the "same kind of card", not the "same card". I clearly said by "kind" I was referring to regular/Signature/whatever. We have two cards that might come from different issuers (maybe Citi vs. Chase), and/or have different points or cash back or other such perks for the cardholder (maybe 2% cash back vs. 5x points), but we assume both are Visa Signature credit cards, processed by the same merchant, in the same manner, for the same product, at the same (approximate) time, in the same location, by the same person, for the same person, for the same price, etc... and I'm asking if they the merchant can be charged different fees for these cards. These are, clearly, not the "same card". Is this clear?

>No, you're not reading what I wrote

At what point should you start to suspect that the issue is not on the client side, but the server?

> At what point should you start to suspect that the issue is not on the client side, but the server?

After I see myself being at least quoted accurately? I repeatedly wrote "same kind of card", and I was quoted as asking about the "same card". That is my fault?

> different points or cash back or other such perks for the cardholder (maybe 2% cash back vs. 5x points), but we assume both are Visa Signature credit cards

Visa Signature card with 2% cash back ("A") is a different card from Visa Signature with 5x ("B"). They're just similarly branded. The text or design on the card is independent from the card itself, which is defined with an alphanumeric code within the interchange system.

In short, a merchant swiping A may be charged differently from the same merchant swiping B.

Thank you, this finally addresses what I'm asking about. It's definitely surprising. Do you happen to know of any merchants are charged fees differently in this respect, or do you just mean it's possible from a technical standpoint?

Oooh boy. I think I might return some confusion to you. I don't think the fees would vary between two Visa Signature cards, if the issuing banks decided to deliver different perks. To the merchant, and the processor, they're both Visa Signature cards, and will be priced according to the fee schedule agreed upon.

Haha, yeah that's what I always expected, and that's why some of us found the claim surprising (and hence why I'm trying to drill down into it). I can see it being technically possible, but from a practical standpoint, it would be very surprising for me if it actually happens.

> To the merchant, and the processor, they're both Visa Signature cards

"Visa Signature" is a marketing term. In fact, two cards with the same perks and branding could have different fees. There are something like 300 kinds of interchange fees that are always being negotiated between lots and lots of parties.

The one example I know is tied to the WaMu-Wells Fargo merger. WaMu's cards were rebranded as Wells Fargo products. But old interchange agreements remained. So two identical-looking cards, with identical perks, would swipe differently for a merchant. The only clue to the customer would be the different bank identification numbers (the first few digits of a card).

"Visa Signature" is used in the interchange fee schedule [1] to set the price. It's not just a marketing term (though obviously that, too).

If you look at the four columns in section C, there are four rates. Signature Preferred, Signature, Traditional, and "All Other".

If I sign up for merchant card processing, and select a plan that varies the rate I pay based on card, then I'm given a fee schedule like this [2]. The holographic logo on the card matters. If it says "Visa Signature", then I pay that rate. Regardless of how the customer's issuing bank decides to perk their cardholder.

[1] https://usa.visa.com/dam/VCOM/global/support-legal/documents...

[2] https://i.imgur.com/J4nvi7v.jpg

This is one example. I gave a counterexample. Usually, branding matches to card type. But not always. The question was can they be charged differently, and the answer is yes.

I’m admittedly not an expert, but everything I’m reading is clear that, for example, “Visa Signature” means something with respect to the interchange fee. Do you have any links that show how the fees would vary between two cards with the same “Visa Signature” logo on them?

This is a interesting discussion -- and I'm seeing a subtle point here that's getting lost. If I understand your merger example correctly, you're suggesting that a card that is now marketed as Visa Rewards Traditional, for example, may still truly be a Visa Rewards Signature card underneath from before the merger (or whatever the prior classification was).

However, what I find important here is that the card still is, in fact, categorized by those classes, and that categorization is merely misreported to the consumer. As far as the merchant is concerned, though, it really is a Signature card that was swiped(/inserted), and that Traditional vs. Signature classification still really is the only thing determining the rate -- i.e., what the card's perks or issuer are still cannot affect the fees once the merchant knows whether the card is truly a Signature or a Traditional card. See what I mean?

This is an object versus pointer debate.

A card is “really” a collection of contracts. A bunch of cards are collectively referred to as a “card type,” for merchant billing purposes. It’s nice when that aligns with the card’s marketing, but nothing requires it. Each payment network has its own conventions, which have changed over the years, and are constantly interacting with hundreds of layers and parties. Nobody prioritises keeping brand and type name correlated.

Banks regularly change perks and rates, and when they do, they tend to renegotiate payment fees. Remember, there are like 300 fees. So in these renegotiations, some cards may end up one way and some may another. These are classified as whatever and life goes on. The “real” thing to the merchant is the mapping from card to type. The “real” thing to the bank is the fee flow. The “real” thing to the customer are the branding and perks.

> The “real” thing to the merchant is the mapping from card to type.

This is exactly what I'm trying to understand: how specific/granular the "card types" can be. Maybe another way to ask it is the following: is there a pre-set list of "card types" with pre-set merchant fees provided by Visa/MC/etc. that issuers must choose from (whether Rewards Traditional vs. Signature, or something else) and that merchants can expect, or do issuers get to come up with their own distinct "card types" that result in different fees for the merchant?

> is there a pre-set list of "card types" with pre-set merchant fees provided by Visa/MC/etc. that issuers must choose from (whether Rewards Traditional vs. Signature, or something else) and that merchants can expect, or do issuers get to come up with their own distinct "card types" that result in different fees for the merchant?

The latter. There are presets for smaller institutions. But these fees and labels are negotiated and renegotiated between big banks and payment networks.

If JPMorgan wants to call their cards with a prime last two numbers KOOPA and pay Visa 1¢ extra for all KOOPA swipes, that would be valid. Nobody does this. Because marketing terms--at least initially--tend to correlate to the perks the issuer is giving cardholders, and thus tend to correlate with the issuer's costs. But that's all.

I see, interesting. Thank you!

dataflow, have you considered that just possibly the reason people kept "avoiding the question" and "giving you irrelevant answers" is maybe - just maybe - not out of some inexplicable desire to intentionally waste your time, but is actually because they misunderstood your question, because it was in fact very unclearly worded?

I seriously doubt the retailer pays different fees depending on th card. That sounds bizarre.

The merchant absolutely pays different fees depending on the card. A Visa platinum card will cost more for the merchant than a basic, non-rewards card. Regardless of scale, different types of merchants also pay different fees.

It's going to depend on how the retailer's contract with their merchant account works. Your mom and pop store may just pay a higher rate, and a high txn fee and call it a day. Simple contract.

For a large retailer like Kroger, there's no way in hell they're leaving all the interchange discounts on the table.

They do.

https://www.helcim.com/us/visa-interchange-rates/

Those are the rates paid by the processor to the bank. They're not the rates paid by the business to the processor.

Per VISA's website:

"Merchants do not pay interchange reimbursement fees—merchants negotiate and pay a “merchant discount” to their financial institution that is typically calculated as a percentage per transaction."

https://usa.visa.com/support/small-business/regulations-fees...

It seems logical that VISA doesn't want merchants to be able to determine per-card costs, since this keeps merchants from trying to optimize their fees.

Visa might not want that, but the merchant provider I linked to offers it as "Interchange+ Pricing"

> Our cost-plus pricing helps you save.

Thet's Helcim's model. They charge whatever their own cost is, plus a margin.

And you can bet that any merchant as large as Kroger won't accept a flat rate or fee for their transactions. They want to pay as little as possible.

See the sibling reply, the statement led me (probably like you) into thinking that merchants can be charged differently based on every minor aspect of the card, where they seem to say it's only different depending on the broad classification of the card in that interchange (regular "Visa" vs. "Visa Rewards Signature" for example).

Yes! Visa/Signature/Infinite have different fee schedules, by a large margin.

I was once at a smaller restaurant and they didn't want to take my Amex for fear of fees, little did they know my Visa Infinite had an even higher swipe fee.

Are you sure it was "fear of fees" rather than "not having a contract with AmEx"? I would assume Visa's agreements wouldn't let them just refuse your Infinite, since it would defeat the point of the card if they could just refuse the high-fee ones. (Just a guess; I don't know how it works.)

Merchants do discriminate against card types. Some merchants will take Visa debit and not any other visa cards. Some will charge extra like Venmo and Verizon if you use anything but a Visa Debit. Some subscription merchants won't let you use non-reloadable prepaid card especially if they offer a low amount trial and its also against the merchant agreement to charge a non-reloadable prepaid card with the recurring flag which subscription merchants set to get better success rate on auths.

Debit cards and credit cards are obviously different beasts though. You might as well be comparing cash against credit cards. Nobody expects them to be treated equally. The question was, can/do merchants discriminate against different types of credit cards from the same network (such as regular vs. Signature Rewards)?

There is debit, prepaid, prepaid non-reloadable, business credit, business debit, government/purchasing, payroll, credit cards(gold, signature,infinite) in the US. Add international and there's a lot more like Electron(travel debit). It even gets more complicated because debit can be broken down to durbin and non durbin. You can actually get debit cards that give you rewards that charge at credit card level interchange rates.

If you're talking credit cards, I don't know anyone that discriminates against the different types but it is very possible because you can get that info from the PAN.

> If you're talking credit cards

Yes

> I don't know anyone that discriminates against the different types but it is very possible because you can get that info from the PAN.

Yes, this was my question, i.e. I'm wondering if merchants can be charged different rates for the same kind of card (e.g. for Visa signature credit cards coming from different issuers or having different perks) consistent with contracts/laws/other practicalities, not just from a strictly technical standpoint. (Any what the relevant reasons might be.)

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