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Comment by chiph | Hacker News Reader

I like my rewards Visa more than I like Kroger. Good luck with that ban, guys.

I like my rewards Visa...

That's why Kroger is willing to turn you away -- they don't want to pay for your rewards.

In a business where profit margins can be a thin 1 - 2%, losing some customers that cost a 3% transaction fee while driving others to cheaper transactions can be a net win despite losing business.

Though I suspect that Visa will blink first before other retailers decide to do the same.

I wish credit card fees would come down, they're ridiculously high and increase the price of doing business, which increases the prices you pay for items.

Most people that care get a substantial portion of those fees back (either as cash or rewards). So in reality, those fees are a tax on the poor, the un-creditworthy, and the financially illiterate.

I assume they meant merchant fees.

Probably so. That's where the money for the cash-back comes from, after all...

Merchants raise prices to compensate. That is why it is "the poor, the un-creditworthy, and the financially illiterate" who ultimately pay.

Sure but I think the argument is that because those merchant fees are unknowable no one can make intelligent choices around them. The disadvantaged are obviously more impacted but it’s possible that all of us not in credit card employ or shareholder are taxed. A prisoners dilemma sort of thing.

But we are well past my economics understanding.

We know generally what the rates are and the statement above is accurate: "Most people that care get a substantial portion of those fees back (either as cash or rewards)"

Unknowable?

Visa: https://www.visa.ca/en_CAsupport/small-business/interchange....

Mastercard: https://www.mastercard.ca/content/dam/mccom/en-ca/Documents/... (PDF)

AMEX is a bit harder to find, reseller is https://www.helcim.com/ca/american-express/

Its unknowable what merchants are marking their prices up as.

Do you really? Maybe it's country-specific, but in Australia there are no programs which give you that many benefits. Likely the best are the airline points, and even then they don't cover close to the payment processing fee total.

Besides the various more complicated rewards systems, you can get 2% cash back on a few cards, although 1 or 1.5% is more common. 2% is most of the transaction fee, in some cases more.

ING in Australia used to give you 5% back on their credit card, they stopped it earlier this year.

There's been a recent change in Australia, the Reserve Bank put a cap on the maximum interchange fee credit card companies can charge in Australia (capped at 0.8%). As a result, many of the cards that earned the best rewards have been scrapped. I had an AmEx card that was good for earning airline points, the bank cancelled the card after the Reserve Bank ruling.

https://www.smh.com.au/business/banking-and-finance/rba-chan...

Most places that the poor (at least in rural areas) shop at offer substantial discounts for paying with cash. There is typically the "cash" price and the "card" price. At a liquor store, a 44 dollar bottle paid with card is 39 dollars cash. A haircut at the local barber is 13 dollars cash or 15 dollars card.

My barber doesn't take cards at all. Cash or check only.

Do you mean one of those things they write on paper slips when you say check? Which country are you from?

The American spelling of cheque is check, and they're still very common there. That's exactly what they mean.

>At a liquor store, a 44 dollar bottle paid with card is 39 dollars cash

The credit card fee is not 12.8% to 15%, that isn’t even a convinence fee. That’s your liquor store not reporting sales and not paying taxes. That’s a big reason why some businesses won’t take cards.

> not reporting sales and not paying taxes

I don't ever assume malice when there is a simpler answer, besides this store is prominent and at the border so they wouldn't be that dumb. The simpler answer is they give a small discount on cash, and a small markup on card purchases to really encourage cash. They are a deregulated liquor state (so they don't have a state ran "Liquor board") which means they can offer much lower prices than just across the border. And I am sure the owner just prefers to go down the street to his or her local branch and say hi to the teller and just deposit cash. Some people just like to do things the old fashioned way. My barber is the exact same way -- he doesn't take card at all, only cash.

> tax on the poor, the un-creditworthy, and the financially illiterate.

Taxation is glorified theft, but in this case I don't care because these are acceptable targets.

If you continue to post uncivil/unsubstantive comments and use HN for ideological battle, we will ban you. We've already warned you more than once.

https://news.ycombinator.com/newsguidelines.html

The comment I was replying-to was also putting forth an ideological argument. (Or at least attempting to, via connotations.)

Visa likes their 3% which is auto deducted from your purchase, so I guess many “real people” will be cheering for Visa.

Seriously, dealing with cash is a hassle, especially on a self-checkout. Arco has tried the same nonsense and I avoid them at every turn, because it requires me to a) have cash and b) stand in line to pay , rather than it taking a moment to swipe a card.

Why do you need to stand in line to pay with cash? Maybe the self-checkout machine in particular only accepts cards, but it could look like this: https://www.ecrs.com/wp-content/uploads/2018/03/fujitsu-gene... - I see these all the time.

Arco is a gas station - the pumps don't accept cash so the only way to pay cash is to wait inside to speak with the cashier.

Kroger has most likely done the math with their Kroger rewards program (which has historical payment data), and has determined most people won't care and will switch to debit or a non-Visa CC network instead.

Wal-Mart has had success with forcing debit transactions to withhold merchant fees.

They’re also trying to push Walmart Pay as well. At their scale, it’s worth it.

Despite the pain, I still think Walmart should’ve acquired and rebranded a bank, and offered financial products. Would do wonders for the unbanked, while keeping their transaction fees down.

I seem to recall from a previous discussion about the possibility of Amazon buying a bank that such an arrangement would be extremely illegal.

IIRC, there's a law expressly prohibiting any company from both acting as a bank and a retail business.

edit: Yep, there is. The Bank Holding Company Act prevents companies in commerce from engaging in banking activities.

Laws can be changed. An entity like Amazon can lobby for a change. Donate money to politicians likely to vote for a change. Call for a change on the editorial page of the Washington Post. Remember, once upon a time, there was but one phone company. Then the law changed... Interstate/branch banking was illegal. Then the law changed. Amazon could probably set up a members-(i.e., customers) only credit union without too much difficulty.

>Despite the pain, I still think Walmart should’ve acquired and rebranded a bank, and offered financial products.

I just wanted to point out that this was actually significantly more difficult than the parent comment may have realized.

How did Sears do it with Discover, or is this a recent thing?

I was able to find the law I was thinking of, and it was passed in 1956, so not terribly recent, no.

Apparently it's because the BHCA defines banks as entities marketing both checking accounts and commercial loans, and Discover Bank makes no commercial loans and is thus not, under the terms of that law, technically an actual bank.

(Also, apparently the BHCA restricts banks from operating across state lines, too.)

So Walmart could offer checking accounts as long as they don’t lend.

Yep. I thought the law was more restrictive than it was.

That was deregulated by the Gramm–Leach–Bliley Act in 1999 and likely led to the subprime mortgage crisis. It permitted the creation of the "too big to fail" superbanks.

> They’re also trying to push Walmart Pay as well.

I wonder whatever happened to that digital pay system pushed by WalMart that was supposed to be on the level of ApplePay? There was a lot of chatter about it around the time of the release of ApplePay, but I haven't seen much about it since. It was some weird transaction process, open the app, present QR code, do something else on app, re-present QR code or something along those lines.

It was probably based on their membership in the Merchant Customer Exchange (MCX), https://en.wikipedia.org/wiki/Merchant_Customer_Exchange

> Despite the pain, I still think Walmart should’ve acquired and rebranded a bank, and offered financial products.

They do, outside the US. They operate Walmart Canada Bank (and issue Walmart Mastercards), although they've recently sold it.

Tesco and Sainsbury's both have banks in the UK.

They tried. IIRC they were going to buy Green Dot outright, but they were rebuffed by regulators.

So instead they took a small ownership position <5%, in order to avoid the reporting and regulatory hassles while still getting sweetheart deals.

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