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Comment by incomethax | Hacker News Reader

He hasn't really cost anything to the US government or the mint. There's no real harm to taxpayers here.

The people he's getting his money from is his bank/credit card company. If you want to say "screw you" say it not as a tax payer, but as a consumer of credit cards, who will eventually have to deal with higher rates/restrictions/limitations on rewards.

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It cost the US government approximately $450 for the 3% or so transaction fee that they paid to the credit card company, and another $500 or so that they paid to UPS.

He gained about $200 worth of airline points, and taxpayers are out about $1000. Sounds like a good deal to me. Or not.

First, I don't pay 3% interchange rates and I'm not nearly as large as the US Mint so that's surely an inflated number.

Second, if he only got $200 out of the deal, his fault. I personally make $20 per $1000 in cashback.

That's the US government's fault, not his. They're the ones who decided to make the offer to sell currency at a loss to the taxpayer.

The credit card companies pass on these perks to the merchants. Transaction fees for card purchases are actually higher for cards with rewards.

I hadn't realized this before. How is this type of thing structured in the merchant's agreement with the card processor?

Could they in theory issue a 100% cash back card that the merchant gets charged 100% on? How is the merchant supposed to know what they are getting charged when the swipe a given piece of plastic?

The fees depend on what merchant provider a company is going through. Braintree is what I use, and they charge a flat, albeit higher, percentage for all swipes, rather than have a huge list of the percentages. Here is an example of their breakdown of Costco's fee structure (yeah, you can get a costco merchant services account).

http://www.braintreepaymentsolutions.com/blog/Costco-your-ma...

I have no idea if what you proposed is possible, but my guess is that no one would accept that card :) I don't accept amex because I think it represents a fraction of actual users, and those users have other cards because they are used to getting told "nope, sorry don't accept amex".

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