Author Topic: V - Visa  (Read 70281 times)

chesko182

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Re: V - Visa
« Reply #270 on: December 03, 2019, 01:21:46 PM »
https://theweek.com/articles/850232/why-are-all-paying-tax-credit-card-companies

no opinions on this, but thought I would share to get some of yours (who follow this closer than I do)
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Liberty

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Re: V - Visa
« Reply #271 on: December 03, 2019, 01:48:47 PM »
https://theweek.com/articles/850232/why-are-all-paying-tax-credit-card-companies

no opinions on this, but thought I would share to get some of yours (who follow this closer than I do)

Don't have time to read all that right now, but after a bit of skimming, sounds like anti-capitalist/zero-sum fallacy to me.

Quote
There is no reason whatsoever why credit cards should not be regulated like debit cards their obscene profit margins are evidence enough of that. Perhaps the Fed might grant them a slightly higher rate on account of larger and more complicated networks. Whatever the case, simply studying their books and mandating fee schedules that would cut card company profits by 95 percent, and bring card-issuing bank returns in line with regular banks, could be done easily, with an enormous net benefit. Some big spenders would lose out on cheap vacation flights, but the entire population (aside from a few investors and executives) would enjoy a substantial bump in their real income.

Or, the networks could simply be nationalized. The Fed already has its hands deep in every aspect of American payments systems, or is running them outright. It would be a trivial matter for it to take on credit card operations, setting the fees at whatever it takes to cover the system's operational costs and no more.

Basically you can apply that argument to Microsoft or Facebook or Google or Apple or whatever successful company out there, right?

Why do they have these "obscene" margins? Must be because they're doing something bad, must be by taking something away from customers.. let's regulate them to hell and everybody will be better off, right? Or nationalize them, because government-run things are great.

Meanwhile, Visa and Mastercard provide near-instant, secure ways to pay and move money around the world for trillions of dollars while fighting a deluge of fraud, and for their trouble they take in the 0.x% range, often a lower cost than cash (security costs, theft, employee time to count and store it, etc). Clearly a win-win proposition. And they keep improving their rails, allowing new businesses to be built on top and new capabilities to make life better for their customers (contactless, 2-way, APIs, tokens, NFC, etc). I'm sure a nationalized network would do that just as well... ugh.
« Last Edit: December 03, 2019, 01:57:23 PM by Liberty »
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Jurgis

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Re: V - Visa
« Reply #272 on: December 04, 2019, 06:00:06 AM »
Removing most of the politics from article and Liberty's post, it is quite possible IMO that CC fees might be capped the same way debit card fees were. V/MA did not exit debit card business when fees were capped and they won't exit CC business if governments cap CC fees. V/MA and banks will definitely lobby like crazy against the cap.

I just did money transfer to Lithuania using Western Union. Using debit card the transfer costs 0.23%. Using credit card it costs ~3.7%. Yeah, (big) part of that is bank fees, so maybe that's what might be capped first. (And I am aware of all the benefits of V/MA rails ;) )
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Liberty

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Re: V - Visa
« Reply #273 on: December 04, 2019, 06:40:01 AM »
If something gets haircut, it's going to be the bank's cut. Capping V/MA take rate would be barely noticeable to consumers. They take very little, it just happens to be very high margin because it's mostly a fixed cost network.

But if you regulate what banks can take, there's going to be a lot of complaints from people who like their rewards and such... There's no free lunch.
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