
Retailers Don’t Like Paying the Fees for Apple Card - hourislate
https://www.bloomberg.com/news/articles/2019-12-10/retailers-pay-the-fees-for-your-apple-card
======
kstrauser
I don't like retailers storing my credit card info in dodgy databases that end
up on the dark web. I understand that stores don't want to lose all their
profit to interchange fees. That's reasonable. At the same time, I personally
wouldn't be so dogmatic about using Apple Pay or an Apple Card if I hadn't had
my debit card ganked five times in the last seven years. In other words,
they've brought this on themselves, and any store that supports chipless
transactions is part of the problem. (I can't wait until Apple Pay or an
equivalent is widely accepted online, and then I'll be preferential about
that, too.)

~~~
snypox
When I was in the US (Nevada and Cali) I was so surprised how many places
don’t accept contactless payment. Here in Hungary, even the smallest
convenience stores accept it.

~~~
moftz
I remember commercials like 15 years ago advertising the contactless cards but
never have actually seen anyone use them in the US except for things like
Apple/Android Pay. Lots of CC terminals have the symbol but it's never used. I
remember a waiter in Europe trying to tap my card on the CC terminal multiple
times before I mentioned that it's just a chip.

~~~
pwinnski
Two of my three cards can be used that way, but I use my watch/phone instead
when I have a chance.

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supernova87a
This system is completely convoluted, with the incentives all over the place
between merchant, bank, CC processor, consumer. It's the kind of thing that
will never change until you go to a different country or start an alternative
payment system that is 10x better, because no one has the power or will to
displace the existing infrastructure.

Consumers don't care because they don't (directly) pay the bill for these
benefits, and only see the kickback rewards as a positive.

Banks don't care, actually they like it, because rewards help them attract
customers who don't care who pays.

Merchants can't put up too big a fight because they can't leave unless they're
big enough to stomach the loss in revenue, or can make customers shift payment
method (like Costco, say).

CC processors love it because regardless, they get payment traffic and
commissions.

Whereas in other countries, this system would be crazy.

~~~
ChrisLomont
What do other countries do?

~~~
tick_tock_tick
The same stuff

~~~
Ninn
No, in the EU the user and retailer directly pay all fees, and the size of the
fees and transparency is regulated.

~~~
supernova87a
Also, in most other countries, merchants are allowed to explicitly charge
extra for paying by credit card.

~~~
pkaye
Merchants are allowed to charge a surcharge for credit card usage in the US.

~~~
oasisbob
IIRC, even now they're still not allowed under the network rules.

A cash discount IS allowed. So, a $.10/gal cash discount for gas is OK. The
register having a sign that says "we charge $.75 for card transactions under
$30" is not. Not that you don't see that all the time...

(It's been a while since I've drank the regulatory alphabet soup on this,
could be mistaken. )

~~~
pkaye
> Businesses are allowed to impose a surcharge on credit card purchases made
> on Visa and Mastercard, under a court settlement that took effect in January
> 2013.

[https://www.creditcards.com/credit-card-news/what-are-my-
rig...](https://www.creditcards.com/credit-card-news/what-are-my-rights-avoid-
surcharges.php)

------
tedunangst
So do retailers like paying the fees for other cards, or is the headline just
apple bait?

~~~
slg
The article states that the fees are higher because it is designated an
"elite" card. American Express cards also have a higher fee than the standard
Visa or Mastercard and plenty of retailers complain about that or refuse to
accept Amex.

~~~
dwild
> American Express cards also have a higher fee than the standard Visa or
> Mastercard and plenty of retailers complain about that or refuse to accept
> Amex.

American Express isn't Visa or Mastercard, they are all on different payment
network. I have no issue with them having different fees because they are
different.

The Apple Card is a Mastercard. Does Mastercard have different fees based on
the type of card? I would certainly hate Mastercard more if that was the case.

~~~
ceejayoz
> Does Mastercard have different fees based on the type of card?

Visa and Mastercard both do. "Premium" cards with more rewards have higher
interchange rates.

------
ceejayoz
> “It’s almost like an arms race of who can offer the most rewards,” says
> Chris Ligan, vice president for acquisitions at Auric, which has seen use of
> premium cards climb 7% this year. “The person stuck with the bill is the
> merchant.”

And they pass it on to us.

~~~
Dirlewanger
Maybe smaller places that can't absorb the merchant fees as easily, but big
retail places don't usually charge more for using certain credit cards. It'd
probably cost them a chunk of business if they did.

~~~
exhilaration
I think what the parent commenter was trying to say is that merchants raise
prices on _everything_ , whether you pay with card or cash, to offset credit
card fees. What ends up happening is that customers that pay cash are paying
for the rewards I get by using a credit card.

------
lopmotr
The whole existence of credit card rewards seems like a failure of the system.
Since merchants agree not to charge more to high fee credit card customers,
all the other customers end up paying the fees for those rewards. So everyone
has to use a credit card with rewards to compensate for that loss and the
ultimate losers are the suckers who pay with cash or whatever else.

I refuse to play those games and it surely costs me, but at least I don't have
to deal with any of the stupid paperwork and multiple cards in my wallet and
keep track of how much pocket money some pointless company is going to give
me.

~~~
ceejayoz
I think you're overestimating the complexity of all this. I pay most things
via a 2% cash back card. Just the monthly statement to manage, no need for
multiple cards, and no keeping track.

I get $500/year back on health insurance premiums alone from that, let alone
all the other spending. Everything except my mortgage can be run through it.

~~~
lopmotr
Perhaps it's easy enough in America. Where I am, there are multiple rewards
programs separate from credit cards. Some shops have their own special card,
and some are part of a bigger scheme with a common card. It's all a mess. I
hadn't thought of using it to pay for big things like a house or health
insurance!

~~~
ceejayoz
Ah, here we'd call that a "loyalty program".

There are certain credit cards with higher rewards at certain companies - if
you buy a lot at Amazon, for example, it makes sense to get their 5% cash back
card. Target has one as well.

------
brahweh
In addition to merchants, the group which really ends up losing are customers
paying with cash/debit, as they don't harvest any CC rewards from their
groceries but still pay the inflated price that merchants have to charge to
keep up with swipe fees. I'd argue these high fees are a "tax" on those with
poor creditworthiness/financial knowhow

------
Someone1234
I'm incredibly naive but I don't understand why card networks would ever WANT
to raise their percentage rates... Hear me out:

\- It is perfect rent collecting: minimal costs, benefits hugely from scale,
high barrier for competitor entry. You're an "invisible" profit center, if
done right.

\- It is percentage of transaction: So increases naturally with inflation and
your client's success. Loses little on your client's failures.

But instead of just sitting on their hands and raking in their 6% basically
forever, they're inflating the percentage which is causing disgruntled clients
to look elsewhere and to give a gap where competition can enter.

This is one industry where "boring is king." But it seems like greed may
result in legislative or competitive market correction if they keep engaging
in these practices.

~~~
tedunangst
Taking in 6% and returning 7% rewards doesn't seem profitable, even in volume.

~~~
ceejayoz
If it attracts enough people who'll carry an interest-bearing balance, the
math works out fine. Many of the higher-end rewards cards have annual fees,
too - Chase's Sapphire Reserve card is $450/year. Amex's Platinum is $550.

------
twobat
Do the retailers actually pay the fees? I always assumed that this is pushed
into the price to the consumer.

~~~
toper-centage
The price is the same for cash, card and elite card customers. They can of
course raise the price for all 3, but its a fine balance to do that without
hurting sales.

~~~
vagab0nd
I know in some restaurants they give you a discount if you pay cash. Not sure
if it's legal or not.

------
ksec
Despite the limit on processing fee in EU, Australia and China, Visa is a 400B
Company while Master is 300B.

Collecting ~1.5% on Global average spending turns out to be very lucrative
business. ( Or they have other means of revenue I am not aware of )

------
nojvek
I love what ARCO does. Pay with cash it’s cheaper. That’s what most businesses
should do. Cash is 5% cheaper for businesses than card.

Give that 5% discount. Customers love discounts.

~~~
ceejayoz
> Cash is 5% cheaper for businesses than card.

Do you have a source for this?

[https://squareup.com/us/en/townsquare/myths-about-
cash](https://squareup.com/us/en/townsquare/myths-about-cash) (full
disclosure: clearly a potentially biased source)

> Research shows that cash-handling costs range from 4.7 to 15.3 percent of
> revenues for businesses that accept cash. The majority of those costs are
> associated with starting and closing drawers at the start and end of the
> day.

> Said another way, for every $100 a business makes in cash, it’s spending
> $4.70–$15.30 to handle all the costs associated with managing the drawer,
> preparing deposits, making change orders, dealing with possible theft or
> fraud, and auditing. Fewer cash transactions means less time counting money,
> less time making change, and a lower likelihood of mistakes or theft.

------
dddddaviddddd
All credit card 'rewards' seem to work like this.

------
r00fus
This was news to me - I thought all cards had similar processing fees for
vendors.

Do any banks or CUs offer rewards programs for debit cards?

~~~
copperx
> Do any banks or CUs offer rewards programs for debit cards?

Yes, Discover, for one. But percentage is lower, because I assume the fees are
lower for debit.

------
wmf
If the card issuer can decide the fee, why don't all cards charge the max fee?

~~~
Someone1234
A lot of the additional fee goes to Visa/Mastercard instead of the issuer.
Issuers want to focus on their own benefits, so they skip card network's
premium tier cards and instead try to sell their own benefits (with or without
a yearly fee).

------
brenden2
This isn't really about Apple Card, it's just about high reward cards in
general. The heading is clickbaity to generate more traffic.

The tl;dr is: high reward cards (like Apple Card, or any other "premium" card)
incur a high transaction fee for the credit card processor, thus they eat into
the retailer's profits.

~~~
distances
That's why, say, Diners Club is accepted in so few places (on Europe). Germany
even goes further and often doesn't accept cards to begin with.

------
crankylinuxuser
Note that back in November, @DHH from Basecamp had strong words about the
Apple Card with regards to sexism. I know there's active investigations going
on with it, but I know of no results. Then again, it's just been 1 month,
which is pretty much 'yesterday' in bank time.

[https://twitter.com/dhh/status/1192540900393705474](https://twitter.com/dhh/status/1192540900393705474)

~~~
kstrauser
I have no opinions about DHH in general, but he's just wrong here. He tweets:

> Hilarious how much mansplaining is flowing in this thread. Every single
> poster questioning my wife’s credit score, a man. Every single defense of
> Apple blaming GS, a man. Almost like men are over represented in the
> defense/justification of discrimination that doesn’t affect them?

which immediately costs him all credibility in this specific case. Factually,
it _is_ GS making the decision. It's Apple's problem to address because
they're contracting to GS, but it was GS's algorithms (oh no, he calls that
out too!) that rendered the credit decision. And he glosses over that credit
score pretty issue quickly, which is kind of sexist and bullshitty in itself.
Without saying whether her score is decent, he says she should get the same
credit he does because she's married to him, as though her creditworthiness
derives from their relationship. What the...? Does the have income of her own?
A credit history of her own? If DHH isn't co-signing, his existence even
involved in the decision.

There are plenty of things to protest in the credit score game. You can fairly
criticize it in many, many ways. But I saw nothing in his complaint that was
unique to Apple or GS, and DHH's complaint seems to come down a non sequitur
complaint against Apple and GS for their use of industry-standard credit
ratings.

Edit: he does say her credit score was higher than his. My bad. He still
doesn't mention their relative income.

~~~
pkaye
A 2013 federal law allows one to include any income to which they have a
reasonable expectation of access including income from spouse, partner or
other member of household.

I seem to recall that he mentioned his wife doesn't work so she stated her
income at $0 instead of the household income.

~~~
panarky
Source for this?

~~~
pkaye
[https://www.consumerfinance.gov/about-us/newsroom/the-
cfpb-a...](https://www.consumerfinance.gov/about-us/newsroom/the-cfpb-amends-
card-act-rule-to-make-it-easier-for-stay-at-home-spouses-and-partners-to-get-
credit-cards/)

~~~
panarky
Where does DHH say his wife reported $0 income on her application for the
Apple Card?

