Visa and Mastercard Near Deal With Merchants That Would Change Rewards Landscape (msn.com)
- Reference: 0180025578
- News link: https://slashdot.org/story/25/11/10/1328225/visa-and-mastercard-near-deal-with-merchants-that-would-change-rewards-landscape
- Source link: https://www.msn.com/en-us/money/companies/visa-and-mastercard-near-deal-with-merchants-that-would-change-rewards-landscape/ar-AA1Q4sHU
> Under terms being discussed, Visa and Mastercard would lower credit-card interchange fees, which are often between 2% and 2.5%, by an average of around 0.1 percentage point over several years, the people said. They would also loosen rules that require merchants that accept one of a network's credit cards to accept all of them.
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> A deal could be announced soon, the people said, and would require court approval to take effect. If an agreement is finalized, consumers could see big changes at the register. Merchants that accept one kind of Visa credit card wouldn't have to accept all Visa credit cards, for example. Under the current talks, credit-card acceptance would be divided into several categories including rewards credit cards, credit cards with no rewards programs, and commercial cards, the people familiar with the matter said.
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> Some stores might turn away rewards cards, which charge them higher fees and in recent years have become very popular with consumers. But stores that reject those cards would face the risk of declining sales.
[1] https://www.msn.com/en-us/money/companies/visa-and-mastercard-near-deal-with-merchants-that-would-change-rewards-landscape/ar-AA1Q4sHU
That dog won't bring home Huntsman's Rewards (tm)! (Score:4, Insightful)
"Merchants that accept one kind of Visa credit card wouldn't have to accept all Visa credit cards"
And if a vendor decides to starts picking and choosing cards that they'll accept, then rationally they're gonna pick the card that's the best deal for them. Which, by simple thermodynamics, is going to be the card that's the worst deal for the customer (or the card company, in theory, but they'll swiftly make sure THAT doesn't happen).
Pretty soon everything but a bog-standard Visa is going to be the same as a Discover card in the 1990s. Accepted next to nowhere.
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Seems like this could be a win for amex and discover really. I'm not going to want to carry a visa that risk being rejected because its the wrong type
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Then Amex is a poor choice, since it's already not accepted anywhere near as many places as Visa/MC or even Discover. Largely due to their fees to the merchants being a lot higher.
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> Then Amex is a poor choice, since it's already not accepted anywhere near as many places as Visa/MC or even Discover.
In my 23+ years of carrying an Amex card, the only place in the United States that didn't accept my card was a small town grocery, and I love my Amex. Now, in Europe, they don't accept Amex anywhere and you need Visa for sure.
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Do you only eat at chain restaurants? Because in my 2 years of having an Amex, I have encountered three coffee shops, four restaurants, and a comic book shop that all won't take Amex. All local, independent establishments.
Won't Search for VISA Premium or MC Advantage (Score:2)
> Then Amex is a poor choice, since it's already not accepted anywhere near as many places as Visa/MC or even Discover.
Amex is likely to be the primary card choice for me if merely checking for its logo is still all I have do, but the VISA/MC logos suddenly lose this important, decades-old trait.
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Hold on I thought there were only to kinds of visa card debit or credit, what am I missing?
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> including rewards credit cards, credit cards with no rewards programs, and commercial cards,
It's right there in the summary, that merchant's would start being able to decline the credit cards with 'points' and 'cash back'. I presume this would come with some rebranding to be phased in, like 'Visa+' and 'Visa Business', with a lot of merchants refusing 'Visa+' just like they reject other high-fee cards.
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That sounds like a good thing for consumers. I currently use a rewards card but I damn well know that everything (whether I use that card or not) is more expensive as a result of rewards cards existing.
Rewards cards are a type of prisoner's game ripoff. If you defect (use a rewards card) you profit at the expense of everyone who doesn't also defect and use a card like that, but if everybody got the kickback then obviously the total amount of kickbacks will always be less than or equal to the total amount t
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Still i think it'd be more in their interests to just keep lowering the merchant fees and then the rewards card issuers would have to keep whittling down their offerings Creating a bunch of different visa card types is going to be a mess
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They won't be creating different types of cards. Those already exist. This will just make it less invisible to the consumer.
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it will also hopefully change the whole "Business Class" airline travel landscape
currently, Business has become exorbitantly expensive. Recently United wanted $10K for a ticket from Buenos Aires to Tokyo. It's ridiculous, but this keeps happening due to rewards cards. I know very well that most people in those flights have NOT paid 10K out of pocket. Most are just upper-middle class with thousands of miles in CC rewards, or a company is paying for it.
I expect once those seats keep going empty, airlines will
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Most airlines aren't even setup to make a profit from ticket sales anymore. They at best break even there, and then make their profit off of agreements with credit card companies for CC miles/points.
Its a very weird system that we've gotten ourselves into.
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I agree with GP, it's a big kickback scheme for employees that have discretion over business expenses. Most types of card rewards are not reportable as income, which sweetens the deal even further. Score one for the upper-middle-class little guy, I guess...
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You're a fool if merchants are going to lower prices as a result of rejecting some Visa cards.
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As a direct result, no, but as a net result, yes, they will. Large companies like Walmart have razor thin profit margins. They just make insane profits because of the volume of product that they move. Those margins will always be just a small amount above whatever their net costs require, and credit card fees are part of those net costs.
You might not like them as companies, but there's a reason why Wal-mart and Amazon are almost always the cheapest place to buy something.
Re: That dog won't bring home Huntsman's Rewards ( (Score:2)
They will have to accept lower revenue when I don't show up to buy anything.
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Then I'm a fool. It's my foolish belief that whenever you remove an expense and thereby increase a margin, you create a competitive pressure to undercut that margin.
I've been this brand of fool for about 250 years, and I'm not about to wise up now!
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I use a 2% cash back card for every purchase. I pay off my card at the end of the month so I carry no balance. This in effect makes everything I buy 2% cheaper. So the only way this is a win for me is if prices globally reduce 2% after this change.
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The summary says merchant fees will reduce "by an average of 0.1% over several years" so I'd say the chances of this making anything cheaper at point of sale is on par with the sun going supernova in the next several minutes.
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You crack me up. Keep going.
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Yes, it's a double edged sword. By exuding rewards cards they will reduce their expenses, and at the same time exclude individuals with high credit scores. Businesses will need to think carefully about what is best for them. However, I fear most will do the simplest thing, and cut costs.
Most likely businesses that want to be viewed as upscale will continue to accept those cards. Businesses that want to be low cost (Aldi is the most extreme case, as they don't accept cards currently) will not.
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I don't know where you shop, the Aldis around here takes credit cards. We wouldn't shop there if they didn't.
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Maybe they're in another country? Here in the US a guy selling tomatoes beside the road is likely to whip out a Square reader attached to a phone and take credit cards.
I live in a small town and I can't think of a single business that DOESN'T accept cards. The last holdout (an old diner thats been there for decades) gave in about 7 or 8 years ago and got a reader.
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I live in a county of about 500k and have a few spots that I go to that don't take cards. These places stay in business because they're cheap, likely passing on their savings to the customer. I know the pricing is why I keep going back.
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I have not held cash in my hands in at least 5 years. I don't even have a wallet that could carry it.
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Plenty of businesses here don't take cards, but not major ones like Aldi.
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> I don't know where you shop, the Aldis around here takes credit cards. We wouldn't shop there if they didn't.
[1]Apparently Aldi started accepting credit cards around 2017 [supermarketnews.com]
[1] https://www.supermarketnews.com/new-stores/aldi-will-accept-credit-cards-at-stores-nationwide
American Express (Score:3)
If you want a credit card with great rewards but a chance at not being carried, don't they already call that American Express? Or Discover.
Diluting your own standard seems like a great way to endanger your core business. But, I guess arrogance, greed and incompetence is the current business trend.
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There is quite a difference between Visa and MasterCard (one type), and Amex and Discover (other type). Both Amex and Discover are essentially one-issuer-cards, either backed by American Express or by Discover Financial Services. Visa and MasterCard can be issued by any institution which has a contract with Visa or MasterCard. Visa and MasterCard are Clearing Houses, companies tasked with processing inter-bank-transfers.
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Not correct. Some Amex cards are issued by banks. For example, mine is issued by USAA.
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Yeah, the last thing you need after spending an hour in the store getting groceries for a couple of weeks is to be refused the ability to pay at the checkout.
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On the other hand, if your card got refused at that grocery line - would you go back? Likely not.
I doubt many such businesses would risk the customer ire by refusing some cards.
What I DO forsee as happening is some businesses that aren't time sensitive but routinely deal in high $$$ transactions not accepting some such cards. IE, (ironically) - airlines. If you're buying several thousand dollars worth of airline tickets the rewards (and in turn, the merchant fees) can add up quite a bit.
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I'm trying to look for a high cost card with lots of rewards, actually. I plan on using them at those establishments that refuse to take cash - either ones that are deliberately cashless, or ones that limit cash transactions.
Several times I go to buy something, I present a 20 and they refuse it asking if I have a card. A super-high-fee card would work well in this instance. You want me to use my card and not cash? Then you'll have to make it worth my while.
(I have more "normal" credit cards for regular tran
Re: Rejecting my card... (Score:2)
Stores do all the time. You want food? Go to the ATM and pull out cash with that Amex card. The store I work in already rejects them for their fees being way higher for us. What's actually coming is many places just bounce all the transaction fees back onto the customer.
In theory not a bad idea (Score:4, Insightful)
Reward cards have become a coupon book and maximizing the benefits involves a fair bit of planning. Ultimately, I think it ends up encouraging spend that is of questionable value.
In theory eliminating reward cards would result in lower cost growth, but in reality merchants will pocket the money and not pass savings onto the consumer.
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The merchants need to consider that if their competitor down the street still accepts rewards cards, the customers might just switch, and then they've just lost the whole sale. All this over a 1% extra cost to the merchant.
In the meantime, they think nothing of offering things like buy-one-get-one-free deals to lure in a few more customers.
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No; it's absolutely a terrible idea. It may be great for the businesses; but, it's absolutely fucking terrible for the consumer.
This is absolutely fucking insanity. Imagine having to carry 6 different cards and wondering which one a particular store is going to take.
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Or you just carry a couple of cards, one with no rewards that people will actually take, and maybe one or two with rewards that some merchants will still take.
The biggest thing to get right is some simple 'branding' so consumers actually know at a glance what cards might work or might not.
It's just bonkers that the credit card companies have basically made the merchants pay for the credit card companies to motivate cardholders to use the cards that merchants don't want them using in the first place. Those
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A coupon book is a marketing opportunity to attract new business with a limited production, a rewards card increases the cost of every product and service while directing a portion of the cost back to the consumer and a big profit to the card companies.
Dusaster (Score:3)
Well, that's a disaster. Am I to carry a bunch of different Visa cards, hoping that one of them will be accepted at whatever merchant I am at?
Suppose I am at a restaurant, and there is no prior discussion about WHICH Visa cards they accept, I eat my meal, and then they tell me they don't take the Visa card I have. Now what will the merchant do? Take an IOU?
I suppose they could take my "rejected" card for an additional fee. A great way to ensure I never go there again, but up to them I suppose.
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I fully anticipate there will be branding changes, like adding a '+' for rewards and consumers will learn fairly quickly that merchants frequently don't want to deal with the more expensive 'plus' transactions.
Can't blame them, your rewards points/cash back is just being charged to the merchant.
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> I fully anticipate there will be branding changes, like adding a '+' for rewards and consumers will learn fairly quickly that merchants frequently don't want to deal with the more expensive 'plus' transactions.
[1]They already exist for Visa. [nerdwallet.com] There is Traditional, Signature, and Infinite.
[1] https://www.nerdwallet.com/credit-cards/learn/visa-credit-card-benefits-levels-traditional-signature-infinite
Better to just charge the fees to the user (Score:3)
Back when I ran a business, we accepted Visa and MasterCard, but not Amex because of the ridiculously-high fees to accept Amex. It didn't hurt our business.
I would much rather see businesses charge the excess fees to customers than outright reject cards. Use a bog-standard VISA or MasterCard? You pay list price. Use a rewards card whose merchant fee is 1% higher than normal? You pay a 1% surcharge.
This eliminates market distortion and makes people rationally choose the tradeoff between a regular card and a rewards card.
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yes. This is fair, to some extent. (as long as the customer can pay with an option that doesn't allow fees) In the UK the did this, you are no longer allowed to be charged the fees, at least they can't be described as such and or must be hidden in the price of the goods.
It used to be... (Score:4, Informative)
Visa and Mastercard used to charge less than 1.5% when every part of the transaction was manual. Now that everything is automated we have fees surpassing 5%.
The only reason that this is possible is because there is very little choice. As a merchant, you either don't accept any cards or you apply the fees on all sales. Some here will say that this is not a monopoly but the industry acts as one.
In order to accept Visa and Mastercard you only deal with one representative which offers almost identical contracts with most cases the only difference is the name of the credit card. They even dictate the terms of every payment method that you may accept. The only reason they can do this is because there are no other options. In effect a monopoly.
With that said this will do little to change the situation since it puts the merchant in conflict with the client where the cause of the problem is the impositions of an oligopoly's terms on all payment methods.
The sad part is that people believe that they are not paying a 5% premium for that 3% reward.
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> The only reason that this is possible is because there is very little choice. As a merchant, you either don't accept any cards or you apply the fees on all sales.
Point of pedantry: some merchants offer a "cash discount", i.e. they forward the cost of processing only to those with credit cards.
> Some here will say that this is not a monopoly but the industry acts as one.
> In order to accept Visa and Mastercard you only deal with one representative which offers almost identical contracts with most cases the only difference is the name of the credit card. They even dictate the terms of every payment method that you may accept. The only reason they can do this is because there are no other options. In effect a monopoly.
This is partially true, granted...but not entirely. Target may be big enough to interact with Visa directly, but most vendors instead work through payment processors like FirstData or Clover, who work as a middleman to ensure that businesses who *want* to be able to accept Visa/Mastercard/Discover/AmEx can do so seamlessly. There may be rules, but the outcome is that the busine
Self-destruction (Score:2)
> Merchants that accept one kind of Visa credit card wouldn't have to accept all Visa credit cards, for example. Under the current talks, credit-card acceptance would be divided into several categories including rewards credit cards, credit cards with no rewards programs, and commercial cards
If it's not clear which cards will be taken where based on the logo, then those logos will be devalued. Whichever processor STOPS doing this first will win.
The other businesses that lose my business. (Score:2)
There are small businesses, like doughnut shops, that charge extra for using cards. I realise that it is only a dollar (or 10%, whichever is more), but it annoies me. Seeing as it is a purely discretionary purchase, I just don't get doughnuts very often any more.
Here is the thing: I doubt they keep good enough data to see if the charge is helping or hurting their business.
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I love places like what you mention because it usually means cheaper prices. Now instead of having the credit card fee baked into the cost of everything I can spend cash (which I always have on me) and get a cheaper price then I would have gotten at a place with the fees baked in. This is in fact why these stores do this, so they can offer cheaper prices to their customers who are willing to pay in cash.
Time for a new payment system (Score:2)
Payment systems in the US are gamed to force everyone to put as many transactions on their account as possible in order to drive more transaction fees, and put more people into debt when they are unable or unwilling to pay off the balance in full.
Sort if reminds me of that unfortunate fly in Beetlejuice: https://www.youtube.com/watch?v=IwV90NvsmAI
Regrettably, a lot of American banks use the "fly lure" model as a way to lure those with little financial literacy into traps which they find hard to dig out of.
C
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In Canada, we have the Interac e-payment system that uses your debit card, and has [1]extremely low merchant fees [interac.ca] (between $0.02 and $0.06 per transaction.)
You can also send [2]Interac e-payments [interac.ca] from your bank account for free with no charge to the recipient either. They are fantastic!
[1] https://www.interac.ca/en/payments/business/understanding-fees/#contactless-payment-interchange-structure
[2] https://www.interac.ca/en/payments/personal/send-receive-money-with-interac-e-transfer/
Disgusted (Score:2)
I'm sick and tired of the notion that banks can collect a cut of nearly all retail transactions on the planet. We're switching to all cash for most things we buy. There are places that give discounts for cash, so I'm all in. You should be, too.
Charge extra fees for high percentage cards (Score:2)
Seems that years ago the courts ruled that CC companies' demands that retailers hide CC fees in their prices to all customers were illegal, and retailers can and should charge a separate fee depending on the credit card's fee level. In my opinion prices should reflect the cash price and then at the till, the buyer pays the entire CC fee. I'm sure the CC companies don't make it easy for a retailer to find out what the fee is before the transaction is run, though, which needs to change.
I use a credit card t
A whopping 0.1% (Score:2)
They really had to compromise there.
Reducing merchant fees by 0.1 percentage points? (Score:2)
Really? These cards are charging more than 2.5%, so all this over reducing that fee to 2.4%? That would seem to reward Visa and Mastercard, which wouldn't have to pass along so much of the fee to pay for rewards, which can easily be 2%.
Re: anti-consumer (Score:1, Insightful)
What "monopoly"? Walmart and Amazon have competitors, as do the major credit card companies.
Re: anti-consumer (Score:2)
Between Visa Inc and Mastercard Inc, there isn't much competition for payment processing regardless of who holds the debt. It's no coincidence that these companies have faced numerous antitrust lawsuits over the years (won some, lost some, settled many)
Re:anti-consumer (Score:5, Interesting)
> Imagine Wal mart and Amazon setting card precedence.
Or Costco.
Re:anti-consumer (Score:4)
Well ebem if us retail were only wallmart and Amazon that would be a duopoly nor a monopoly Y
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That's a good point, the 'little guys' will have to go along with whatever deals the larger conglomerates approve