r/Damnthatsinteresting • u/Getatbay • 10d ago

Video EU has created a system that bypasses payment processing services like visa or mastercard

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u/ACoderGirl 10d ago

Yeah, my credit card gets me 2% cash back, extra insurance, the ability to do charge backs if I get scammed, pretty much optimal rates for currency exchange if I'm traveling, and a bunch of other free things. Debit, cash, or e-transfer doesn't really offer me anything. The interest rates of credit cards don't matter to me, as I always pay the balance off in full every single month.

I know the credit card companies can be pretty shitty and have a worrying amount of control, but at the same time, they're offering a lot of benefits.

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u/Timely_Camp3478 10d ago

In Belgium, credit card benefits aren’t really a thing. There is no such thing as cashback or saving airline miles. So most people (at least in Belgium) won’t have a problem with missing those things since we never got them in the first place.

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u/Outrageous_Cap6782 10d ago

Not sure if those are available in Belgium, but Amex and Revolut are really the one cards that I’ve seen provide a lot of rewards and both of those are tied to monthly subscriptions. Chase is entering Germany if I recall correctly.

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u/Timely_Camp3478 9d ago edited 9d ago

Alex is sort of available just not wildly adopted. Revolut is now the 1st company who actually is offering rewards. But depends on the tier you pay for for if it’s actually worth it. revolut is also only debit and cashback is also really limited.

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u/JDFS404 8d ago

I have AmEx Platinum in the Netherlands and the only true benefit is for our airport (Schiphol) that provides priority security checks and some lounge access.

Paying with my AmEx in supermarkets etc? Not widely accepted unfortunately.

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u/[deleted] 10d ago edited 9d ago

[removed] — view removed comment

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u/Facktat 10d ago

Because credit card processing costs in the US are about 3 times more expensive for the seller than in the EU. In there EU there are cash back systems but the maximum you get is 0.5% which checks out when you consider that processing costs depending on the terminal provider you use are between  0.5% and 1.5%. If it was more you could basically generate money by just making transactions with your own credit card on your own terminal.

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u/ycnq 10d ago

trade republic visa card u get 1%

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u/Facktat 9d ago

Ok, yeah but only up to 15€ and it‘s invested on their platform.

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u/Timely_Camp3478 10d ago

I have read that there is a eu law that sets a limit for interchange fees. That limit is 0.3%. In the us this can go as high as 3.5% so the limits in the eu are so much more limited because they are just way less lucrative for card distributors like visa or Mastercard.

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u/margirtakk 10d ago

No, the benefits are the cocaine in the cola. Most people focus on the "rewards" and ignore the interest charged every month that completely negates those rewards.

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u/IAmPandaKerman 10d ago

Never paid a cent on interest on credit cards. always boggles my mind that more of the population doesn't come out net positive on them.

I guess it's(interest) gotta be more common than I imagine because if they weren't making money from the masses they wouldn't dangle and support these benefits

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u/Mysterious_Floor_868 10d ago

The businesses you're buying from are getting stung with much higher fees.

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u/brobotbee 10d ago

I pay my card of in full every month..
I get 5% cash back on groceries and restaurants
3% on gas and some other things
1% on everything else

I get between $800-$1200 cash back per year.

Cocaine in the cola this guy says… I buy my cocaine with all the cash back I get.

Want my referral code for my Amex Cobalt card?

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u/margirtakk 10d ago

The majority of credit card customers carry a balance each month. It's their own doing, to be sure, but card companies also engage in predatory tactics. The rewards draw people in, then most people inevitably charge more than they can pay in a given month. The CC companies know this, which is why they use the promotional tactics they do.

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u/henrik_se 10d ago

I find it hilarious that so many Americans are convinced that credit card rewards are some kind of secret hack where they're beating the system.

Merchant fees are paying for your rewards. Everything you buy is ~3% more expensive at the store, and if you don't carry a balance, you get all of your own money back.

But you think you're winning.

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u/schrodingers_bra 10d ago

>Everything you buy is ~3% more expensive at the store

Maybe, but if I paid in cash I'd pay the same price. The only places that offer a price differential between cash and credit sometimes are gas stations.

And if everyone suddenly switched to cash or debit, you better believe the prices wouldn't all decrease by 3%.

So why not take advantage of it. My amazon prime visa pays for my amazon prime membership easily - which also covers my streaming.

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u/henrik_se 10d ago

So why not take advantage of it.

There's no advantage! You are merely getting your own money back. The whole fucking system is rigged against you while using psychology to make you feel AS IF you're winning. There is no such thing as a free lunch. Every single fucking American is super quick to point out that free healthcare isn't free in those discussions, while at the same time being convinced that credit card cashbacks and perks are magical unicorn-made free money.

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u/schrodingers_bra 10d ago

The advantage is that the prices would be the same anyway, and I get money back.

What you're not getting is that the prices would not be lower if I used cash.

And I would still be paying for amazon prime at the same price whether or not I used the credit card.

Furthermore, I don't pay any interest so the poor saps that pay interest every month are funding me too.

It isn't magical free money. But utilizing the benefit is the way you break even (or have the smallest loss) when purchasing items, because otherwise you are subsidizing people who do use them.

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u/marhaus1 10d ago

Over here we have lower retail prices instead...

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u/Dubacik 9d ago

We have 2 years warranty on everything by default. That also helps. 

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u/TryingMyWiFi 9d ago

Revolut has Cashback, mileage programs, gym memberships, and also free subscription for a lot of services like perplexity and some newspapers.

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u/Timely_Camp3478 9d ago

yes, but revolut does not offer credit cards only debit cards. Aside from that, you need a subcription for revolut ( like plus or higher) to enjoy most of those benifits. The cashback is only for revolut pro wich is meant for freelancers and is only meant for business purposses connected to freelancing.

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u/SweatyNomad 10d ago

I'm. Guessing your American. Basically you're getting a slice back from the charges your card charge the retailer. Can't say I'm an expert, but basically visa/MasterCard are not allowed to charge the kind of fees they can in the US, so there is no protection fee to sling from.

Local systems often feel more secure, or maybe offered more security that Visa/MC did until they were legally mandated.

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u/Noirloona 10d ago

They said e-transfer, so they're Canadian

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u/ParakeetsAreLOUDLOL 10d ago

I'm English and on my English credit card get 3% on petrol or eating out/takeaways. That card is 0.25% back on everything else.

I also have a credit card with 1% on EVERYTHING.

Both cards have cashback offers. In Tesco i get 5% and the normal 1% for example, so 6% there. I actually have to check my credit cards now before shopping to make sure i don't miss out on extra cashback lol

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u/Selpmis 9d ago

Is there a monthly fee?

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u/r2k-in-the-vortex 10d ago

Your 2% cashback only exists because in the first place the credit card company adds a 4% merchant fee to your purchase. Basically take your money and give some back deal. What are you so happy about? You are getting fleeced.

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u/TryingMyWiFi 9d ago

You pay for those 4% even if you don't have a credit card, because businesses can't discriminate payment methods, so they bury this cost I to their pricing. So if you're not getting Cashback, you get the bad part of the deal only.

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u/Thekilldevilhill 8d ago

Are you sure? Because I still often see an extra charge if you opt to use something other than wero/ideal.

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u/ACoderGirl 8d ago

I don't see that here in Canada (I've only seen it in the states). I always assumed there must have been a law against it. But it is super common to just not take credit cards. Or to have a min transaction cost to take cards at all (often transaction fees are a percentage + a flat fee, and interac debit is just a flat fee).

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u/theansweris37 6d ago

In what country is it a law that businesses can't discriminate against payment methods? In the States, I drive past multiple merchants every day that charge an extra fee if you pay with a credit card. It's not even hidden, it's printed on a giant LED sign in their parking lots

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u/Artephank 6d ago

In EU. But then the charges are capped at 0.3% so it's not a big deal really.

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u/theansweris37 5d ago

I'm really exhausted by American hyper-capitalism.

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u/Artephank 6d ago

That's why sometimes some business practices need to be regulated - because Visa and MasterCard are de facto monopolies taxing every business.

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u/STEM-Travel 9d ago

>  What are you so happy about? You are getting fleeced.

And it’s still MUCH BETTER than the old system.

Credit cards are extremely convenient, however you feel you are getting fleeced through interchange fees or higher prices is worth it compared to cash/cheques.

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u/JordanMaze 9d ago

rakeback

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u/tejanaqkilica 9d ago

Because people are happy when they don't understand something, but they get a small benefit from it.

In the digital world for example, a large number of users love Steam, a popular storefront for video games, some of the reasons, include the extremely popular "Summer/Winter Sales". They give money away because they are a selfless company, it's users would wrongfully say.

The actual deal is much simpler; they get 20% of each transaction that happens on their platform. Twice a year, they give something back to you, so that you can keep paying them 20% for handling the transaction the rest of the year. Crazy.

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u/Conscious-Mirror7004 8d ago

There's a reason the game publishers pay the 20% to Steam: they get far more customers than they would by not publishing on Steam and requiring customers to work directly with them.

It's the same for merchants accepting credit cards. If they only accepted cash, a lot of customers would walk away. And managing and handling cash is risky and subject to theft (including from employees), which credit card payments mostly avoid.

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u/tejanaqkilica 8d ago

For sure. And Steam and CC companies know this, so they bully their way in and force you to either play by their rules or drop dead. Remember, both of them have it written in their terms and conditions that you are not allowed to pass their commission as "savings" to people who don't use their services, which is wild.

For the businesses, credit cards are usually a net positive. For consumers, well, they're the ones footing the bill, but they get something in return from time to time.

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u/Artephank 6d ago

Yes, it's called monopoly. In both cases actually. In free market there is no way any one is taking 30% margin on anything really. If you could just take your games and move to another digital vendor or buy some game somwhere else and move it to steam it wouldn't be that high.

And - most importantly - if Steam wasn't able to force all developers to give them the lowest possible prices. Developers who want to sell on steam cannot sell anywhere else cheaper. So any other store cannot for instance provide lower cut and make games cheaper. This is pure monopoly. But it's digital, so it's ok for regulators...

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u/poop_report 9d ago

As a merchant I pay under 2%.

And yes, I’m not allowed to just sit and charge myself transactions all day. You can be dang sure I pay my taxes using a service that is 1.75% tho.

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u/ACoderGirl 8d ago

It's not nearly as high as 4%, at least not here in Canada. Like, Stripe will charge 2.9% for someone with no deals and with their overhead included. All the big retailers have deals on lower rates.

But really, if it wasn't worth offering, stores just wouldn't accept credit. And many smaller ones don't. Some don't even accept debit even though its fees are super low (flat fee of a couple of cents -- sometimes merchants set minimum transactions to allow debit here). Clearly credit cards are driving enough spending for merchants to accept them.

Honestly, I get the impression that most of the cash back offers are not profitable at all, but just ways that third party companies drive something else. Like, my current card is with wealth simple (investment company). It's normally got a hefty annual fee. I switched to it because I decided to move all my investments to them (and they waived the fee if you kept a lot of money with them) and that's really where they're making their money. Before that, my main card was with Rogers (telecom company). They would offer extra benefits when paired with their other services, like extra cashback when paying your Internet bill. It's very common here in Canada for credit cards to be with these random companies, not directly with visa or MasterCard.

The cashback is just a way to get you to switch and sometimes you have to switch often to get the best rewards. Kinda like switching ISPs. At some point, I'm sure my current card will stop offering 2% cashback because that's a bonkers amount (1% is way more typical here) and then I'll shop around again. I'm making my money off companies like Rogers and WS.

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u/PrplPistol 10d ago

Well, the merchant fee applies to the business selling, not the person using the card.

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u/Background-Main-7691 10d ago

You think the business isn't passing the cost of that fee on to you? 

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u/Traditional-Heart351 10d ago

You think the fee didnt exist before cash back existed?

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u/yunus89115 10d ago

The interchange fees have risen with the popularity of rewards cards. Those who can access rewards cards tend to benefit more than those who can’t, it’s become a regressive tax.

https://www.library.hbs.edu/working-knowledge/how-credit-card-rewards-became-multibillion-dollar-wealth-transfer

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u/skippyalpha 9d ago

It would be there no matter what payment method was used, even cash.

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u/Background-Main-7691 9d ago

Again, look at what's been happening in Australia. This is not always the case and businesses are having a real sook about the recent changes. 

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u/Conscious-Mirror7004 8d ago

The business is saving money by not having to deal with employees skimming cash for themselves.

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u/Thekilldevilhill 8d ago

Debit/wero also solves that, so that's just a very bad argument

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u/muddermanden 10d ago

Who is paying the 2% cash back. Genuine question. Where does the money come from.

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u/Vennomite 10d ago

You are. Cc comoany charges the merchant like 3.5% of the transaction then graciously gives you 2% back. Merchant just raises prices.

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u/ThinkAboutThatFor1Se 10d ago

Not in the EU, the transaction fees are limited and they can’t be passed on directly.

For example, Visa interchange fees for merchants in the EU are capped at 0.2% for debit cards and 0.3% for credit cards

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u/Vennomite 10d ago

Sure. But is anyone offering 2% cash back in the eu?

They asked how it works and that's how companies make it work.

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u/S14Ryan 10d ago

Yes, people aren’t directly charged the transaction fees, all of the products prices are increased for all customers by at least 4% to allow for the use of credit card payment processing charges. So you’re still paying the “fee” indirectly even if you pay with cash 

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u/star_trek_wook_life 10d ago

Bingo, the cash and debit people end up paying for the rewards of CC users. Its a regressive tax when you look at the whole system. 

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u/ThinkAboutThatFor1Se 10d ago

Some parts of the world they do add the fee.

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u/yunus89115 10d ago

They are passed on indirectly meaning a blanket cost for all consumers instead of charging just those who cause the merchant to incur the fees.

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u/istasan 9d ago

So Americans using their cards in Europe is a loss for those card providers?

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u/muddermanden 9d ago

Okay, but where does the chargebacks come from in EU then?

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u/SeaSharpModHer 10d ago

Americans having random ass passive effects on their cc is fucking sending me, you people really can't live if everything you own/do isn't full on in your face capitalistic.

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u/AlpacaCavalry 10d ago

> random ass passive effects on their cc

I'm wheezing at the wording

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u/Pickrzz 6d ago

Man's enchanted his credit card

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u/Reddituser183 10d ago

It is a dystopian nightmare and it’s only getting worse.

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u/SoylentGrunt 10d ago

Well yeah but new iPhones!

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u/zaftpunk 10d ago

It’s that not the norm everywhere? I live in east Asia and I get lots of similar benefits like that too?

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u/MeesKees321 9d ago

No it is not.

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u/Dull-Treat-2524 9d ago

Does your creditcard usage dictate if you can buy a house in east asia?

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u/zaftpunk 9d ago

No we don’t have a credit system like the US.

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u/Dull-Treat-2524 9d ago

Exactly, the US is the only country I know of that basically forces you to use a creditcard if you ever want to buy a home. It forces you on short-term loans (credit) 

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u/istasan 9d ago

Not the norm in Denmark. It exists but it is very small and kind of rare.

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u/Zanian19 9d ago

The one credit card I had in Denmark had various benefits as well, like travel insurance and rewards cards

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u/istasan 9d ago

Travel insurance is true. But even that is not norm on visas

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u/DaWizz_NL 9d ago

That travel insurance is definitely not all-encompassing. I would not trust that it covers medical costs for instance, unless you have a very expensive premium card.

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u/Zanian19 8d ago

It covered everything. I had a platinum MasterCard, which wasn't that expensive. I did a lot of travelling back then, for work, and the benefits more than made up for the costs.

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u/Frequent_Opportunist 10d ago

You mean like getting theft protection for jewelry and extended manufacturer warranties on electronics? Why wouldn't you want that? 

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u/chrlatan 9d ago

Not that many risks left here. On its way from store to consumer the seller is responsible. Once in, consumer warranties are in place and functioning. When on the road, travel assurance already covers most of the issues like lost and stolen items. CC benefits is overkill most of the time.

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u/Rawd_Tawd_Cawd 9d ago

In the UK section 75 of the consumer credit act has saved me a few times.

Yes, you can quote the law to unscrupulous retialers (or giant corpos like Amazon) who just flout the law giving you an endless series of hoops to prove you didn't receive a delivery.

Vs a message to the credit card company and having a refund within 10 minutes.

Had I used a debit card, it may have came out in my favour. With a credit card under uk law it's guarenteed.

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u/Technical_Winner7446 10d ago

We don't do that in GERMANY

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u/Goonalips 9d ago

Americans in stores: "Ok, so I use my American express and play 1% Instant Cashback, I then take the balance and put it on my BofUSA card and that applies a crit of 0.5%, which increases my Air Miles by 2%. I then draw a new card, which activates my 5% New Subscriber Bonus, and put all balances on that card. You have 98 hitpoints left, and I gain $4.58 on that $698 purchase."

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u/BloodyStupid_johnson 9d ago

It poisons everything. The French were right to give us a copper statue. 

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u/AyeBraine 9d ago

I'm not from America, and both my credit and debit card has these things.

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u/PaintsLilGuys 9d ago

Pretending like Europe or Asia doesn't have the same issue is exactly how the EU got where it is. It's happening on your home turf right as you fucking speak yet all you can do is point at America and pretend it's only happening there

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u/Whoisthehypocrite 5d ago

What the fuck did you actually say. You seem to have vomited words out into a comment

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u/SuperCruisePanther 10d ago

Yet you typed that entire comment in American English (improper British English).

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u/psychoPiper 10d ago

This is such a nothing burger reply

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u/chrlatan 9d ago

Most Europeans are more influenced by non-British English. Deal with it.

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u/Pleasant_Curve_9024 10d ago

Incredible mental gymnastics at work here to find a way to hate on literal free benefits that companies use to gain customers. What is the purpose of this comment aside from spite and jealousy that you don’t get any benefit from whatever payment system you use?

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u/marhaus1 10d ago

"Free" 🤭

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u/Mysterious_Floor_868 10d ago

Nothing in life is free. 

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u/Marseille074 10d ago

Those benefits are free for those who pay their bills on time & in full.

The CC companies exploit those who don't pay their bills on time & in full, but that's their problem not ours.

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u/csboros 10d ago

That is not true at all. You are paying for those benefits - they charge retail 2,5 -3% , and you get a fraction of that back in incentives. In comparison, their rates are strictly limited in Europe to 0,2-0,3% - less "free" stuff.

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u/MyhraBooboo 10d ago

Retail prices don't change for cash interactions compared to card transactions for pretty much 99% of stuff I buy.

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u/Marseille074 10d ago

I am not paying for those benefits; retail does. I said the benefits are free for those responsible consumers who pay their CC statement in full & on time. I didn't say the benefits are universally free.

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u/KotR56 9d ago

No, you do.

"Retail" has the credit card cost as an entry in the cost calculation.

If you pay cash, they pocket the difference.

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u/Marseille074 9d ago

So retail pays, not you, right? I don’t know why this is so difficult to understand.

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u/vladedivac12 8d ago

It's baked in the goods&services prices most likely

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u/skippyalpha 9d ago

I'm sure they've baked in a certain markup to cover transaction fees, but the prices wouldn't change no matter what payment method was used, even cash.

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u/KotR56 9d ago

If you pay cash, retail pockets the "whatever" per cent credit card companies charge.

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u/Plink-plink 9d ago

Such humane, compassionate view of the world.

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u/vladedivac12 8d ago

Merchants pay the fees but we all know these are passed on to the customer.

If you pay cash or debit, you're probably paying the merchant CC fees without the benefits.

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u/snozzberrypatch 10d ago

Who do you think is paying for the benefits that you get from your credit card? Do you think they're giving you 2% cash back as a form of charity?

You are paying for those benefits. They're paid for by the interest that you pay the credit card companies, the annual fees that you pay the credit card companies, and the transaction fees that the businesses pay to the credit card companies for every transaction. Businesses factor those transaction fees into the price of their goods, so in effect you are paying an extra couple percent on everything you buy because of these transaction fees.

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u/Dense_Purchase4087 10d ago edited 10d ago

I am a BofA PRE holder. I get 2.5% cash back on everyday spend and 4% cash back on dining and travel. Then if I use the cashback points to buy airline tickets I get a 20% discount. Then there's lifestyle credit of $150, airline credit of $300, and priority pass. Even though the AF is $550, I more than easily get than back.

The benefits I get are partially due to my annual fees, but also from other people not paying off their credit card balances in time and getting interest. So because I'm disciplined with my spending, I get to reap the rewards of other's poor management

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u/NZObiwan 10d ago

This is one of the fundamental differences between Europe and the US. In Europe people believe financial institutions shouldn't be able to take advantage of anybody, but in the US there's much more acceptance of it because you "get to reap the rewards of other's poor management".

I'm not trying to say you personally are immoral, but I do find the system itself pretty distasteful.

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u/ParakeetsAreLOUDLOL 10d ago

This is ridiculous the UK has the same thing but not quite as high cashback amounts.

Idiots who carry a balance statement to statement and pay fees fund the sensible peoples cashback.

There probably are cashback credit cards in the EU that work the same wayz Americans just get better deals than us.

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u/NZObiwan 10d ago

I think the rediculous benefits being talked about are the things like insurance, store discounts, etc

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u/ParakeetsAreLOUDLOL 9d ago

No it's not i get 1% on ALL spending.

Then 3% on takeaways and petrol.

Even chase does a debit card that gives 2% on all groceries, fuel & eating out.

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u/JjigaeBudae 9d ago

There's nothing like that available in Ireland, best you get is 1 avios per 4 euro you spend if you have an Aer lingus card

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u/After_Network_6401 8d ago

Cash backs and similar benefits do exist in the EU, but they’re relatively uncommon, because the EU (with a few exceptions) capped credit card fees.

And it’s credit card fees paid by merchants and customers, not interest payments, which make up the bulk of the credit card companies’ income.

So for example in the US those fees are usually about 1.5-3% of transaction costs. In the EU, they’re 0.2-0.3%. That’s money paid by vendors for using the credit or debit card system, and it’s added onto the prices that consumers pay.

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u/Gingercatgonebad 5d ago

Actually interest on balance from such idiots is not what funds sensible people’s cash back. That’s a myth. It’s the 2-5% vendor transaction fee that vendors pay the card companies for every single transaction that funds the bulk of cashbacks and benefits.

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u/Artephank 6d ago

No, it's vendors who pay for it. They pay almost 3% of the total amount. And in eu it is capped at 0.3%, so no "cash backs"

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u/ParakeetsAreLOUDLOL 6d ago

Wrong.

In the UK you don't pay extra as a business for if a company pays cashback.

You pay a single rate per visa credit mastercard credit amex and the same with debit cards, regardless of what cashback is offered.

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u/Gingercatgonebad 1d ago

Maybe that’s how it is in the UK but in Taiwan and I assume other Asian countries the transaction fees vendors pay card companies vary by card type. These details were in the contract we as a vendor signed as a payment by credit card provider. Certain cards which were known for offering rewards or cashbacks, guess what? Those we had to pay at least 1-2% more in fees per transaction over standard cards. These costs of course are passed on the consumer as higher prices.

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u/Misfiring 9d ago

Insurance is reaping the rewards of other's paranoia.

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u/Spoonshape 5d ago

If the poor dont want to subsidize the rich, they should just stop being poor. Says so in the bible.....

>Deuteronomy 15:11: “For there will never cease to be poor in the land

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u/Waiting4Reccession 10d ago

Its just dumb fucks that cant understand they are paying a higher price on all goods sold. Even if you pay cash you are paying for credit cards cuz there isnt a cash price for places.

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u/Gingercatgonebad 10d ago

The benefits are mostly from transaction fees merchants have to pay the payment platform, not from interest payments from late payers. These 2-5% fees are passed in into higher costs for every one (unless the local law lets it be passed back on to the cardholder for that particular transaction). Also merchant fees are higher for benefit-providing cards ( can be a few more percent), which are generally not passed on in the transaction specifically in my experience but do again get passed on to the consumer in higher overall prices for everyone

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u/Equivalent-Resort-63 9d ago

Transaction fees are starting to be passed on to the consumer by the vendors. Gas stations offer cash/credit pricing. Other merchants add a “card fee” 2-3%+ to cover card transactions charges.

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u/Gingercatgonebad 5d ago

True but depends on the country. It is a fairer system, in my opinion. In New Zealand you can, Thailand you can, but Taiwan where my business is, you can’t. In the US I think some states you can, some you can’t. It takes govt intervention to allow this, as of course card companies don’t want vendors to pass these costs on to the card holder and will try to force this issue in their vendor agreements.

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u/Spoonshape 5d ago

Even if laws prevent vendors from passing on card fees to customers - it's still happening - just not specifically. They just add a cost to every transaction to make up the expense.

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u/snozzberrypatch 10d ago

You are the product, my man.

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u/Dense_Purchase4087 10d ago

Fair enough. If 20% discount on airline tickets and priority pass access means I'm the product, then sure, I'm the product.

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u/KotR56 9d ago

The benefits I get are partially due to my annual fees, but also from other people

Sounds like how healthcare insurance works.

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u/PranaSC2 9d ago

Well guess they made a lifelong customer out of you, yikes..

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u/TELCO_man 6d ago

The businesses taking your card pay for this with exceptional high merchant services charges. MSC

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u/Dense_Purchase4087 6d ago

OK and?

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u/TELCO_man 6d ago

So nothing is free. You don’t get cash back. Small businesses are paying for your cash back. It’s unsustainable

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u/Dense_Purchase4087 5d ago

Small businesses are contributing to my cash back via the extra business earned because they offer credit card / tap to pay. I don't eat at restaurants or shop at places that are cash only. Am I losing out? Maybe. But those businesses lose out on people like me as a customer too.

You and many people need to think bigger than the meager 2% credit card fee and about profit margins as a whole. Small businesses have MUCH more to gain from offering credit card payment systems than not.

But the majority of my credit card benefits come from fools that don't pay off their credit card statement and keep a running interest. I really appreciate that.

1

u/Substantial-Score307 5d ago

Nope. You’re paying per transaction. But the cost is invisible as the selling party is absorbing these costs. 

Cost absorption meaning your product price includes this markup. Markup at the cost of doing business with a monopoly. Just check the insane amount of money Visa / Mastercard makes.

So. This is an initiative to either break the monopoly. Or eat a piece of the rather fat overhead pie. 

1

u/areyoualocal 10d ago

Who do you think is paying for the benefits that you get from your credit card? Do you think they're giving you 2% cash back as a form of charity?

Like people who think their airline miles/frequent flyer points are being given to them for nothing...

1

u/star_trek_wook_life 10d ago

Most people don't understand how credit card rewards are funded. Prices are increased on all goods and the people that pay cash and debit end up paying for the rewards of those that use cards. The store owners pass the fees onto the customers in the form of higher prices. 

The interest on cards is not what pays for rewards. There was a paper on this years ago. It ends up being a regressive tax on cash and debit users. 

1

u/Snazzy21 9d ago

Most places charge the same amount whether you use a credit card or not, which means even if you pay in cash you're subsidizing for the people that use a card.

So unless you see separate prices for credit card, you dont get a choice.

1

u/Pristine-Custard-548 9d ago

They are actually paid by the merchant mostly.

1

u/snozzberrypatch 9d ago

Do you think the merchant just pays those fees out of the kindness of their heart, and doesn't pass them along to the customer in the form of higher prices?

1

u/PomegranateIcy1937 9d ago

I dont pay no interest on my credit card ( I never pay with interest even for 36 payments) and refuse to pay monthly fee (need to call them every now and then to renew the benefit).

1

u/zzzzebraaaa 9d ago

I completely agree.

1

u/Whoisthehypocrite 5d ago

Given you have such an opinion on how much the credit card companies charge tell me what Visa or MasterCard makes per transaction.

1

u/snozzberrypatch 5d ago

Heywood Jablome

1

u/Snowscoran 4d ago

Good credit cards have no transaction fees and either no annual fees or commensurate benefits to their cost.

If you pay the card bill every month, there's no interest.

Business transaction fees are definitely an issue, and yes businesses adjust pricing accordingly. However for the customer the price is typically the same regardless of whether you pay by debit or credit- so if you're using debit you're in effect subsidizing other customers' use of credit cards instead. I know it's common in certain countries to offer discounts for cash/debit but that is not the norm.

Anyway the point here is that if you use your card intelligently, your perks and bonuses are paid for by other people.

1

u/Chester_roaster 3d ago

Who do you think is paying for the benefits that you get from your credit card? 

Dumb people 

6

u/stabledisastermaster 10d ago

The 2 % are paid by the merchants, that will put it on top of the prices indirectly. also there are no such programs in EU, because we have limited the surcharge. Best you can get is 1/2 airline mile per euro spent.
The other things are relevant, but the European system Wero is still starting, maybe soon there will be credit cards based on the technology. Though today it’s more a replacement of PayPal than Mastercard or visa.

2

u/Ok_Potential359 10d ago

Yup. Plus it protects my cash if I’m ever billed wrong or my CC is hacked. Not my money affected.

5

u/TScottFitzgerald 10d ago

SEPA (The EU system) has protections against that as well, though, often ever better than the existing credit card ones.

1

u/cowboi 10d ago

This mainly I had a debit card skimed once never again... Don't mess with my money...

1

u/grumpher05 10d ago

My debit card also gives me fraud protection and charge back, only obvious downside is the money is still out of your account while it processes

1

u/TScottFitzgerald 10d ago

There's extensive scam protections in this system as well though, it's not like they didn't think of that.

1

u/ALLIRIX 10d ago

Visa and Mastercard are transaction companies aren't they? The credit & benefits comes from other companies

1

u/Soepkip43 10d ago

They are both. Other companies can give out cards and tack on bonuses but under the hood they use the visa or Mastercard infra. A bit like virtual mobile operators that use one of the big networks.

The EU wanrs their own infra next to it, so when the US pits sanctions on ... Lets say an icc judge, that person can still use EU payment methods unless the EU also sanctions them and cuts them off.

1

u/SoylentGrunt 10d ago

Those benefits and perks are expected to dry up as things get worse. Paying off the card on time and not making the card company any money is one of the reasons why.

1

u/Maothesiamesecat 10d ago

None of that shit is free. NONE of it.

1

u/OpenSwing4746 9d ago

I think you can dispute debit card transactions as well. At least in Europe you can for sure

1

u/SuperUranus 9d ago

This is laying the ground works for an EU payment system that bypasses VISA and MasterCard as payment processors all together.

Debit has already been implemented and can be used today.

The next step of this is system is to introduce credit, whereafter any financial institution that wants to provide a “credit card” can use this system instead of VISA and MasterCard as payment processors. 

1

u/electric-sad 9d ago

You and everyone else is paying higher prices due to it.

1

u/StijnDP 9d ago

It's not free ...

Each payment has a high extra charge on the vendor.
The vendor increases the product price to account for the fee.
You pay the product price.

How can anyone manage to grow up but not think this little bit ahead.

1

u/Prudent_Order_3361 9d ago

Yes, i also use my cc responsibly

1

u/MathTutorAndCook 9d ago

They offer benefits to the more fortunate and gouge those who can't control themselves, either from lack of education, or many times from actual need

1

u/skablast 9d ago

well, that two percent come off the price of the goods. Thus, reseller have to increase the price. So at the end you are paying for whatever they charge. If this system is cheaper as it seem we will see it at the shop level.

1

u/10denier 8d ago

The US credit card networks make that money back by increasing the prices of everything you buy in the US. That tariff is estimated to be around 2-4%.

It's a classic distraction tactic - make people that benefits are not costing them anything by hiding them in normal prices.

1

u/Equivalent-Resort-63 5d ago

Sounds like a sales pitch.

BTW This an exact copy of an answer on a similar thread i read…. some weeks ago.

1

u/wareagle2009-20013 10d ago

It is a cost to the business. That 2% you get back comes from the business you bought something from. Visa may charge the business 3-4% and you get half back.

Debit carries much lower fees but still has a cost to the business.

If businesses feel this helps them they will adopt quickly and potentially stop accepting visa or Mastercard similar to how you see small businesses today decline to accept Amex

1

u/ConnectionWild3381 10d ago

you are a good customer!. ads for the win!

1

u/pls_send_stick_pics 10d ago

All those benefits are getting made up somewhere, vendor fees can be pretty brutal so it may be turn into more of a "do you take discover?" Situation

1

u/Hutcho12 10d ago

Europeans don’t have benefits like this because they don’t live in debt, so the market is much less lucrative than in America. You often have to pay for a real credit card here and get no benefits.