Credit card fee fight pits payment companies against retailers | Hacker News Reader

Credit card fee fight pits payment companies against retailers

cnbc.com

44 pointspg_123427 comments

I love traveling cheap on card points and have held V & MA stock long enough to double my cost basis, so I probably stand to lose if this passes, but I think it’s a good idea. Since most merchants charge the same rate regardless of means of payment, cash and debit customers essentially subsidize free perks for people who use reward cards. Because reward cards scale roughly with your credit score and ability to pay an annual fee, it’s pretty much a regressive tax on low-income people with middle/upper income people seeing the benefit.

There’s essentially no price pressure for interchange fees to go down, as long as they are absorbed by the merchant.

I think the perks are one aspect, but even if you got rid of them there would still be benefits such as convince and security. I think outlawing credit cards should only be on the table once good infrastructure for payments are in place.

https://news.ycombinator.com/item?id=36801491

Yes, I was thinking of that. Zell is also great. But it's still not a drop in replacement for cards, we're still aways from that.

More on the topic: https://www.axios.com/2023/07/22/fednow-instant-payments-cre...

It has always been obvious that points systems are an arbitrage scam. The payment network pays the customer 1% to use their card for which they charge the merchant 2% or more when there are alternatives with low or no fees.

The customer chooses the payment method but doesn't directly pay the processing fee, so they choose the payment method with the rewards and then indirectly pay the processing fee which is twice as much or more.

Merchants have trouble resisting this because the same system is the one that allows their customers to buy on credit, which is worth more than 2% to them even though that is more than it costs to provide that service in a competitive market. And then the customers who don't need to buy on credit still choose the payment method with high fees for the rewards.

I keep seeing this repeated as if a person with low income can't have a good credit score.

That isn't true. It's possible to curb one's spending of money they don't have, regardless of your income. And then you get an excellent credit score.

Source: my own experiences with credit

I don't mean to say that a low income person absolutely can't have good credit, but that it's likely to be correlated due to how the system works.

For example, a creditor will ask your income before extending credit to you. The more unused credit you have available to you, all else being equal, the better your credit score. So that's at least one reason to expect that they are correlated.

> It's possible to curb one's spending of money they don't have, regardless of your income.

It would cost me +$100 to get a rewards card. At 1% back I'd need to spend $10k per year on a rewards card to break even. So, if you curb your spending, you're subsidizing those wealthier than you that are spending $10k+ per year on their credit card.

Source: I subsidize rich people's rewards cards and don't like it.

Some rewards cards are free, but maybe you need to spend the $100 on something else?

If you have good/decent credit some offer signup bonuses.

I have 3 different rewards cards that pay me cash and are all free.I do pay a fee for one additional card but it provides perks that are worth that fee to me.

There are a ton of rewards cards with no annual fee at all.

Redistribution from those with low FICO scores to those with high FICO scores is a stronger effect than re-distribution from low income to high income people.

https://www.federalreserve.gov/econres/feds/files/2023007pap...

This feels like too little too late to stop what I think will actually solve the issue for retailers, charge more for credit card transactions. Every since businesses have been able to charge more for credit cards (as opposed to having to instead offer a cash discount) I've been slowly running into more and more local businesses that slap on a 2% - 3% for credit cards. So now I need that reward from my credit card to just break even on the transaction.

I'm fine with the added fees, and they usually more than the rewards so I just pay cash/debit.

Dealing with cash has always been a pain in the ass, so I just pay the fee and get most of it back on my rewards card.

T-mobile is about to charge $15 for the privilege to pay my bill by credit card. I’ll just go somewhere else where there is no fee.

I used to pay my T-Mobile plan with ACH from the T-Mobile site, but that is not an option. I can only pay with CC. What you’re describing sounds like a rate increase.

"T-Mobile: FINAL REMINDER of Action Needed by 08/06/2023. We’re changing the payment methods that qualify for AutoPay discounts. To continue receiving your $15.00 AutoPay discount, you must update your payment method to a debit card or a bank account. To keep your discount, please visit t-mo.co/AutoPay25 to change your payment method by 08/06/2023."

My CC gives me cash back and provides cell phone insurance if I pay my cell bill with their card. If T-mobile pulls that on me, I'm gone.

I hope the new fednow system will enable faster, card free transactions.

I can't wait for my bank to implement fednow. Faster transactions and the social credit are huge plusses IMHO. Hopefully, people will start to take climate change and other crises more seriously (eg covid) and think twice before they spout out disinformation about the vaccine, etc. Fednow has massive potential to ensure this happens.

Basically you are in favor of the government manipulating you. Very democratic what you say. All set for a dystopian society

I'm sure you were one of the ones that made covid last a lot longer than it should have. All I'm saying is that when the next crisis happens (most likely a climate crisis because that isn't resolving on it's own) there are going to be people out there saying it is a government conspiracy. The crisis won't get resolved if 50% of the people don't comply to common sense solutions (in the case of covid it was simply to wear a mask and get vaccinated but the climate crisis will likely mean even deeper sacrifices). Doing it through your wallet is the best way to get people to comply.

> Doing it through your wallet is the best way to get people to comply.

Incompatible with free speech and free society. I am horrified that there is no /s tag at the end of this post.

Do you really think shutting someone’s bank account makes them change their view? Or it’s acceptable to you because it’s only used to nudge toward the “right” views of the period? Do you not see how this destroys the rights of the individual?

This is a good start: https://twitter.com/WallStreetSilv/status/168583136958523392...

Reform only happens in washington if two large corps/marketing segments oppose each other.

News at 11.

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