Shit that annoys you

[Mustonen]

So the payment processors == the credit card companies? Those guys provide merchant services…. They aren’t the credit card companies. And none of them make money off of balances.

Who is the bogeyman?

[skiskiskiskiski]

But the retailer has to take all of the cards or none, right? Like, they can’t say we’ll only accept basic cards but not rewards cards.

Just because a bad system was able to flourish because of bad incentives and has now become so ingrained that’s it’s impossible to operate a business without it, doesn’t mean it’s a good system.

How much of the ‘processing fee’ that card companies charge is covering their actual costs of the transaction, and how much is profit? If debit transactions can happen for 15 cents, then it must be overwhelmingly profit, right? That’s not a good system.

Winco does not accept credit cards. They do pretty well, it seems. Debit card or cash. Im not sure if they take checks. People just know.

[skiskiskiskiski]

I get that credit cards in general can help reduce transaction friction and could be a benefit to both the consumer and business. But when card companies then start offering high fee rewards cards, and offloading the cost onto the business not the consumer in a very non-transparent way, how is that the sign of a competitive market?

Some retailers use the rewards points for advertising. I sometimes get emails saying double rewards points at certain places. Seems like they can use it to their benefit...

[Name Redacted]

The CC processing fees are also based on their risk assessment of different methods of entering the card number and the risk of error or fraud. For instance, retailers are charged more for keying in the card number than they are for a swipe. Online payments fall somewhere in the middle. But yes, on the CC side, American Express has a higher charge rate than other cards and that rate is passed on to their customers in the form of higher cash-back and points, as well as better benefits and a more generous refund policy among other things.

Now at the end of the day, while it does suck to pay thousands of dollars to the CC companies each year, it also provides quite a bit of convenience to both the customer and the business, which could be argued increases revenue and reduces overhead.

[tellybele]

If you use a sky miles card, who pays for those miles you get?

[Mustonen]

If you use a sky miles card, who pays for those miles you get?

The issuer does.

I’m still waiting on somebody to identify these mysterious “credit card companies.”

[old goat]

Who are the credit card companies? What are their names?

The CC companies are my shorthand for the issuing banks, the gateways (which I just learned about on this page) and Visa, Mastercard etc.
I use shorthand because a) it's shorter and b) I have no idea which of these entities takes how big a piece of the pie. My understanding is that the bank makes the profit on interest and takes the hit on defaults. How the fees the merchant pays are divvied up I have no idea. And I would say that my knowledge of the subject is at least as good as the medical advice on this forum, so there.

[Supermoon]

This whole convo is annoying. Must be almost summer around here

[krp8128]

Citrus. Been on a huge kick for some reason lately, at least a bag a week. Been buying some sort of red orange, absolutely delicious and juicy.

Bought a bag of naval oranges yesterday. Dry, bitter, pithy. wtf, guess the kick is over.

Couple years back I was crushing clementine, until I got one with a worm.

[Mustonen]

The CC companies are my shorthand for the issuing banks, the gateways (which I just learned about on this page) and Visa, Mastercard etc.

But that is literally thousands and thousands of different entities. And you guys are over here taking about monopolies….

I use shorthand because a) it's shorter and b) I have no idea which of these entities takes how big a piece of the pie. My understanding is that the bank makes the profit on interest and takes the hit on defaults. How the fees the merchant pays are divvied up I have no idea. And I would say that my knowledge of the subject is at least as good as the medical advice on this forum, so there.

Everybody should become expert at something. Anything. Not so they are expert at something, but so that they can then listen to the media or influencers that they admire or respect cover that topic and learn how poorly any topic is actually communicated by the media. They can then filter reporting or opinions on other topics similarly.

[zion zig zag]

Couple years back I was crushing clementine, until I got one with a worm.

I have a sweet cherry tree in the yard that always has loads of awesome cherries. But every single one has a worm in it. I always just eat them without looking, but every year, at some point in the season, I’ll bite one in half just to take a look. And sure enough there’s a worm in there and I’m done with them again…till the next year.

[J. Barron DeJong]

But that is literally thousands and thousands of different entities. And you guys are over here taking about monopolies….



Everybody should become expert at something. Anything. Not so they are expert at something, but so that they can then listen to the media or influencers that they admire or respect cover that topic and learn how poorly any topic is actually understood by the media or a layperson, so they can filter reporting or opinions on other topics similarly.

Here’s a not-atypical, and informed (I believe) opinion on the credit card market:

https://www.creditslips.org/creditsl...ge-theory.html

And as they say:

”The issue is not whether consumers or merchants benefit from cards; of course they do, or they wouldn't use them. Instead, the question is whether they are paying supracompetitive prices.”


Is everyone making similar argument - that the nature of this particular market allows profit maximizing corporations to charge higher prices than they would in a more competitive market - just flat out incorrect? Because there sure seem to be some significant deviations here from what would be considered an ideal ‘perfectly competitive’ economic market. And note that this author does link to someone arguing otherwise, but I’ve always found the arguments that the credit card industry (is that a better term?) is able to charge as he’s terming them ‘supracompetitive prices’ to be more convincing.

If the card industry are charging excess prices, I think it would be great for consumers and businesses to be able to keep those excess margins for themselves instead. If having more price transparency by having a visible surcharge for high fee credit cards, or alternatively a visible discount for using a lower fee method of payment, then I support that.

On the other hand, this has been ‘shit that annoys me’ for 20+ years, so if I could be convinced that it’s not actually happening, that would be nice. Do you happen to have a reference that would make that case?

[JongDoe]

I have a sweet cherry tree in the yard that always has loads of awesome cherries. But every single one has a worm in it. I always just eat them without looking, but every year, at some point in the season, I’ll bite one in half just to take a look. And sure enough there’s a worm in there and I’m done with them again…till the next year.

You're serious? Does the worm give it some texture?

Also, the fing credit card discussion is annoying. 3 pages of discussion about one annoying thing. yawn,

[Mustonen]

Shifting to “credit card industry” makes sense, but it erodes the contention that there is a “quasi-monopoly” at play. You still haven’t articulated who it is we’re even talking about.

Part of the problem is that we’re continuing to oversimplify, even for a ski message board. The system looks, loosely, like this:

Issuers (banks): Have agreements with card networks and also have agreements with payment processors who support issuers. Those aren’t all the relationships, but that’s enough for here. Consumers get their cards from issuers, who range from one branch community credit unions in Pleasantville, MO to the Wells Fargos and Capital Ones of the world.

Card Networks: This is MasterCard and VISA. It’s also STAR and Pulse and NYCE and Allpoint and dozens of others (mostly on the debit side). The networks set interchange rates, which are paid to issuers. The networks earn income by collecting transaction fees (not interchange) from issuers. Different networks pay different interchange and charge different fees. Fees are broadly negotiable. Interchange really isn’t.

Issuer payment processors: These guys route transactions from the networks to the issuers. They’re not always the same companies that sell acquiring processor services to merchants. They charge transaction fees (not interchange) to support their business. Some issuers are big enough to do their own transaction processing, but most don’t.

Acquirers (merchants): Have agreements with both payment processors and networks. Sometimes those will look like single agreements, but they really aren’t. One way or another every network that a merchant acquires on is supported by a principle or secondary relationship.

Acquiring payment processors: These are the ones who process transactions for merchants, that Conundrum listed upthread. They earn their income by charging transaction fees and other fees (not interchange) to merchants. They also collect interchange on behalf of the networks. Different networks charge different rates and these guys work for the merchants, so they will route transactions over the lowest interchange network shared by both the issuer and the acquirer.

Issuers can maximize income by limiting the number of network relationships they have to those that pay the best interchange with the lowest transaction fees - but of course that only works if those networks support the needs of their customers. Acquirers can do the same thing, with the same considerations. Some specialty networks include priority routing clauses that acquirers and issuers have to sign that forces transactions across their network, regardless of interchange.

Credit cards are two different things: (1) a loan and (2) an access device. You can separate them and make sense, but when you conflate them things get confusing. The access/transaction part of the operation is what we’re truly talking about here, and it typically - but not always - pays for itself (including rewards costs, fraud losses, fees, compliance, and admin) through interchange, but not by as much as you’d think, and issuers bear the vast majority of the risk in the system. 5% cash back is way under water. So are many travel rewards. For a credit card portfolio, the margin is on the loan side.

What’s my point with all of that? Just that you’re missing the competitive landscape by a mile when you oversimplify to merchants vs. “the credit card companies.” We’re saying some stuff about who is allowed to make money, and that’s where it doesn’t line up for me. Issuers are competing with thousands of other issuers. Networks are competing with dozens of other networks. Acquiring and Issuing processors are competing with scores of other processors.

ETA: American Express and Discover own (most of) the whole stack. They have relatively small pieces of the pie, but their business model is a little different than that above.

[Core Shot]

Mondays. Mondays annoy me

Tell me why? I don’t like Mondays. Tell me why.

Some one has a case of the Mondays.
Actually. Five employees have a case of the Mondays today. Fuck.

[::: :::]

Visa & Mastercard have 75% of the market share of spending by volume

Visa has 50% of issued cards in the US

[Mustonen]

VISA doesn’t have any cards, period.

[zion zig zag]

You're serious? Does the worm give it some texture?

Also, the fing credit card discussion is annoying. 3 pages of discussion about one annoying thing. yawn,

Can't taste them or feel them and I'm sure they're harmless.

[::: :::]

VISA doesn’t have any cards, period.

Your pedantic point is moot

[Mustonen]

Moot actually means that it’s uncertain or arguable… Common usage of moot is that a topic or point is so debatable that it isn’t even worth discussing. Which isn’t really the case here; quite the opposite.

/pedantry

[::: :::]

It’s irrelevant because the Visa card network isn’t just a marketing logo that rides on the card. It provides the network infrastructure for your local bank to give you a “visa card”. So Visa does in fact play in 50% of issued cards whether they hold the account or not.

The effective meaning is invisible to the paying public.

And the pedantry about “actuallly, visa doesn’t issue cards….” is exactly that.

Vibes

[Mustonen]

It’s irrelevant because the Visa card network isn’t just a marketing logo that rides on the card. It provides the network infrastructure for your local bank to give you a “visa card”. So Visa does in fact play in 50% of issued cards whether they hold the account or not.

The effective meaning is invisible to the paying public.

And the pedantry about “actuallly, visa doesn’t issue cards….” is exactly that.

Vibes

I’ll buy irrelevant. But moot it is not.

And of course I’m being pedantic.

Did you have a point, generally? I thought maybe we were just throwing random factoids around.

[old goat]

But that is literally thousands and thousands of different entities. And you guys are over here taking about monopolies….



Everybody should become expert at something. Anything. Not so they are expert at something, but so that they can then listen to the media or influencers that they admire or respect cover that topic and learn how poorly any topic is actually understood by the media or a layperson, so they can filter reporting or opinions on other topics similarly.

I'm an expert in English (OK, I was an English major for a year and I won the school spelling bee in the 6th grade but I bonked in the district bee) and that's a run-on sentence.

For anyone who finds Mustonen's explanation of the credit card industry too short--
https://paymentdepot.com/blog/averag...20your%20rates.
https://fortunly.com/articles/credit...et-share/#gref

Given that the credit card industry is dominated by 2 networks and a handful of banks, I'd say it's quasi monopolistic. And so is the banking industry btw.

[::: :::]

I’ll buy irrelevant. But moot it is not.

And of course I’m being pedantic.

Did you have a point, generally? I thought maybe we were just throwing random factoids around.

Yeah, and your use of moot is only one of its meanings, but you knew that…


My point is just to offer some resistance to the pedantry over whether “credit card companies” are reasonably discussed as a monolith.
Again visa & mc deal with 3/4 of the spending volume…that is a huge share of the market

[teleee]

Condescending bankers annoy me.