Comment by nwiswell | Hacker News Reader

Comment by nwiswell | Hacker News Reader

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This is strange, apparently they're selling at a significant loss?

Current online price, $1930. Spot gold, $1872.59. So a little less than a $58 premium.

My credit card gives me 2% back, and my Costco membership 2% on top of that, for a total of 4%. I assume that Costco probably pays a bit more than 2% for card processing, and of course they're the ones actually paying me the 2% back from the membership.

So that's at least 4%, not including the minter's profits, shipping and security costs, warehouse worker wages and overhead, insurance, shrinkage, etc, which are surely at least a few percent more of the sales price.

But just 4% of $1930 is $77, meaning I would recognize a hypothetical profit in an immediate spot sale of $77 - $58 = $19 per bar. Costco's actual loss is certainly more than that, realistically probably more like $50+ per bar, or most likely $100+ per member.

Weird. The article mentions preppers, I guess they really want them as members.

"Costco's credit card policy is all about saving money. It negotiates a partnership agreement with a single payment network in exchange for much lower processing fees. As part of its current deal with Visa, it pays transaction fees of only 0.4%. By saving on fees, Costco is able to keep prices low."

https://www.fool.com/the-ascent/credit-cards/articles/why-do...

They actually secure a very nice low rate via their credit card policy

By not demanding better legislation, you're still being ripped off. What you describe as a "very nice low rate" is higher than the legislated EU wide limit.

https://eur-lex.europa.eu/EN/legal-content/summary/fees-for-...

But I get minimum 2% cash back when I use my card. Prices are 0.4% higher because of the fee, but I still come out way ahead. You can easily get 5% back on gas, groceries, Amazon purchases, etc. American credit cards are awesome if you know how to use them.

> I get minimum 2% cash back when I use my card. Prices are 0.4% higher because of the fee, but I still come out way ahead.

You, and people who use such cards, do. But everyone else is having to pay for your cash back.

Funny thing is I'm still getting between 3% and 5% cashback on my US cards that I use in the EU. Those interchange fee limits are probably EU issued cards only.

That is probably your card issuer loosing money because US cards used in Europe is a small enough segment to not demand any policy changes.

In particular the articles talks about exemptions:

> provides for a limited number of exemptions, such as business cards used only for business expenses being charged directly to the account of the company;

In EU, credit card processing is way more than 0.3%.

Fascinating. Visa-subsidized gold I guess.

Don't worry, Visa isn't subsidizing anything. At 0.4% they're most likely still making money, at a low margin, but still taking home a profit.

Credit card transaction fees in Europe are capped at 0.30%[1] and visa operates here.

[1] https://eur-lex.europa.eu/EN/legal-content/summary/fees-for-...

Visa never takes on any risk, the card issuing bank would be subsidizing, if that.

The cashback from cards isn't pad by the retailers, it paid by the issuing bank and consequently by the poor sods who carry a balance at rates up to 36%.

Costco's cashback is probably some variation of the same scheme, or a similar loyalty scheme.

So ultimately Costco only pays the processing fee of 0.4% or whatever.

I was wondering why these were selling out like that… I see gold for sale occasionally @ spot price but I’m not personally interested.

But with the 4% you mention it makes a lot more sense.

Other than what the others have said about credit card fees, I thought in general the whole business plan of Costco was to basically sell things at nearly no profit, and make most of their money from the members fee.

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