On: Airlines are a lot like central banks (2020)

[A_Duck]

>> Unfortunately, in the EU, rules concerning credit card payments and fees make co-branded credit cards unattractive to airlines and banks

In the EU card fees are capped and this is a good thing. AMEX extracting excess fees from my local coffee shop and then giving (some) of it back to me as air miles is the dysfunction.

[indus → A_Duck]

I was shocked to find out that there is a 3-legged marketplace between acquirers, issuers, and merchants that funds a trillion dollar business model where neither the merchant nor the customer gets benefited.

Large merchants like Walmart and Amazon pay 50% less fees for every dollar compared to smaller merchants—-Smaller merchants is the channel where the most cashback accrues to cardholders.

[tracker1 → indus]

Costco play pretty hardball with them as well. Only supporting one payment processor for CC payments. No idea where their fees/margins are, but guessing they're lower than just about anyone else as a merchant.

Winco, as a contrast doesn't even play the game at all.

[gaoshan → tracker1]

Many small merchants just refuse as well. Try to use Amex at the local Chinese food marts around me and they will not take them (and I don't blame them).

[r00fus → indus]

A tax by any other name... is still a tax. That it's levied by our financial elite and not by the government is the more concerning part.

[thedaly → r00fus]

It isn't a tax if you can opt out of paying it. The part I find most concerning is the shift away from accepting cash at various retailers.

[r00fus → thedaly]

It's still a tax even if you don't incur it by avoiding the activity.

[throw10920 → r00fus]

No, it's absolutely not. That's an insane definition that treats every platform or distributor's cut as a tax. Visa is taking a fee for the use of their service, which you are not compelled to use.

[r00fus → throw10920]

Merchants sure as hell have very little choice to participate in the Visa/Mastercard payment networks since so many of their paying customers are cash-free these days.

It’s not a tax on the end consumer. It’s a tax on businesses.

[xnx → r00fus]

Consumer ultimately pays all costs.

[refurb → r00fus]

I mean “free delivery” that you don’t use is baked into the price.

“Buy now pay later”, “park and pick up”, etc, etc are all things you pay for even if you don’t use it.

Those aren’t taxes.

[chii → r00fus]

which is why i prefer not to call it a tax, but a toll, or a levy.

Or extortion money, if less charitable.

I also always wonder what stops competition from encroaching on these credit card fees and reduce it.

[lotsofpulp → chii]

Because the sellers benefit from people using credit to purchase goods and services, because more people are willing to pay more when they use credit.

If that were not true, then sellers have long had the option of refusing payment via credit card, or at least offering discounts for debit card.

But they do not, because overall, they earn more money from the higher prices that their customers are willing to pay with credit cards than the cost of the credit card processing fees.