Stripe increases price for business in the European Economic Area(support.stripe.com) |
Stripe increases price for business in the European Economic Area(support.stripe.com) |
PayPal normal: 2.99% + 0.39€
PayPal Microtransactions: 4.99% + 0.09€
So Stripe still has some edge vs PayPal in all but non-EU cards. Not sure if they offer a microtransaction optimized fee schedule, if not, PP is far better there.
That’s very interesting. Stripe is so greedy and dishonest.
GDPR requires that user data is guarded in certain ways, and European courts have ruled that no data can be sufficiently safeguarded if it is under control of a US company.
Google "analytics gdpr safeguards" or see here for example:
https://piwik.pro/blog/is-google-analytics-gdpr-compliant/
Especially the section "Does collecting visitors’ consent solve compliance issues with Google Analytics?".
Fun fact, this very website is not GDPR compliant. I've never ever seen a cookie notice on HN, which is legally required.
Of course, none of this is relevant, because AFAIK HN has no physical presence in the EU, but still, this site is not GDPR compliant, which just outlines how stupid GDPR actually is.
A login cookie that is just for auth is not that. It is specifically requested by the user and implies that the user's data is managed on that site and can be evicted.
Same with analytics. The problem is not that you're doing analytics. It's that the user doesn't know that your doing it and that you're passing on that data to a third party.
Highly doubt that kind of gathering is a problem. If it were you could close 95% of the web.
For clarity: it isn't always required. Only if you have third party (tracking) cookies.
I don't know about HN. But its perfectly possible to have analytics, ads and other functional cookies, without pestering your users with cookie popups.
Again: cookie popups and concent-banners aren't required. They are only required if you have "invasive" tracking in place.
e.g. I've worked on web-apps that were tracked by a selfhosted matomo, by plausible or some other tracking, that did not have any GTM or other tag-managers, that had no ads or only ads which were served from their own domain and without any 3rd party trackers, lacked all the GAFAM-pixels, had their fonts and other assets self-hosted (or on a simple, non-tracking CDN) and so on. Non of these needed any form of banner, popup or wizard.
What for? The GDPR does not require consent for purely functional cookies, and the only data I see stored is my account cookie. So the existing privacy policy should cover them.
Also, the cookie notice is not GDPR it's a separate law. And if you only use functional cookies such as login cookies no notice is required.
Besides that, intent also matters. For example, we had to start logging IPs for every newsletter change, or you can log IPs in your access log for security reasons without consent. Logging the same IP into your analytics tool becomes an issue.
IIUC governments already introduce price caps for certain elements of this market but I think we could be doing more? Like mandating incumbents to implement open standards and subsidising their competitors?
Dunno though I'm not very informed about the topic, just suddenly discovered recently how much of my income is just funding a fairly small number of payment providers.
That’s almost an order-of-magnitude lower than interchange fees in the US, which are usually around the 1%-2% level.
This is big part of the reason you don’t see high value reward cards or cashback program in the EU. There simply isn’t the interchange revenue to fund them, which is good thing, because high interchange + cashback creates a nasty regressive tax that transfers vast amounts on wealth from those with poor credit ratings (usually the least well off society) to those with high credit ratings (usually the most well off in society).
There's an interchange surcharge for rewards cards. Stripe bundles this all together to make the pricing simpler.. but most merchants use traditional merchant accounts, and they are charged based on the type of card used.
Edit: For example, here's visa's interchange fees: https://usa.visa.com/content/dam/VCOM/download/merchants/vis...
As long as you're not a well off person with an AMEX card that regularly makes purchases outside of your AMEX card currency.
AMEX is nuts in that all non-home currency transactions go via USD.
So, for example, if you have a EUR AMEX and you make a GBP purchase, your conversion will go GBP -> USD -> EUR with AMEX taking a cut at each step along the way.
Interestingly my US 1.5%-3% (regular, also 5% special) cashback cards keep paying out on transactions here in the EU. I've always wondered who is losing out in that equation.
this seems like a false statement.
here is an article from 2021 that highlights some of the numerous cashback offers:
https://medium.com/@danminea/best-cashback-cards-with-reward...
and Amex usually has cashback cards as well.
disclaimer: i have used some of these cashback cards both in the EU and outside of it.
For Visa/MC, "running the network" at cost is possible on much less money, but the network involves a lot of elements along the chain that can get transactions reverted. The "insurance" (1-3% of tx) pays for the legal-adjacent issues related to handling those transactions being contested.
Go to a restaurant, use a US terminal? Great, the restaurant owner can modify the transactions after it's been authorized and long after you're gone, "because tip". There's zero checks on this, it's a matter of "it works because most people don't do it". So when it happens, sometimes the payer notices and issues a dispute and the dispute management is part of the network. This is where a lot of costs go.
Anyway, the network is ridiculously bad. The fraud/aml checks are not usually shared among payment providers, because they can just milk each other instead by selling their checks. No wonder it's hard to get the transaction fees down.
And yeah, it's a duopoly. The solution by the way isn't to directly try to build a global visa/mc competitor; with the moat, that's impossible. Rather, it's to build on top of what European countries are doing. EU countries have built their local competitors (Bancontact, EPS, BLIK, iDEAL, Sofort, ...). Those have lower costs, and so would any locally-targeted provider because they each have to deal with less risk and complexity. Any aggregator (like Stripe is, by the way) can take payments for all of them and push people away from card payments. The problem with that very last part is a UX issue, people like paying by card.
It's a difficult problem. What makes it especially difficult IMO is that once you're down this path and become successful, it takes some very specific, very early business choices in order to be able to turn down the mountains of cash that show up to your doorstep in the form of "align your fees with the rest of the industry".
Charging me as the end user more money because I have a "Premium" card would be a very fast way for me to not shop with you.
So it’s more a question of finding the optimal equilibrium rather than viewing fees as “deadweight”.
[1] if you are interested. Particularly the section on the dead weight loss of taxes - in this case, transaction fees operate the same as taxes.
We don't have private corporations operate highways or the federal mail system. They may operate (heavily regulated) airlines, but not the traffic control that manages their interactions.
Imagine having to pay a "takeoff clearance fee" or a toll station at every highway on-ramp.
In Portugal, the mail company is private and 90% of the highways are operated by private companies. And this is a country where the Socialist party has been in power for 20 of the last 30 years.
On a $1 itunes song it would have been an >30% cut, you can forget about selling any small digital thing worth less than that.
This is a very dangerous path to go down. Direct price control by governments usually leads to unforeseen consequences and often to disaster. Mandating open standards is probably a good idea.
My business does most of it's sales in USD and pays out to a US bank account, I don't understand this fee at all. Just because they can I guess? Stripe is really becoming the new PayPal. Will definitely be exploring options to move to Adyen or continue moving more customers over to Paddle as we've found Stripe to be increasingly frustrating to deal with.
Now we're looking at 3.25% + £0.20 for the card payment in the US, 0.5% for Billing to handle subscriptions, 1% to payout, 0.4% if you want invoices, 0.5% if you need to handle sales tax. Already at 5.65% + £0.20 - that's without any of the paid radar tools.
> If you or your users have an account located in an EEA country that has not adopted the Euro, here are the fixed fees of €20 in local currencies: Bulgaria: ЛВ40; Czech Republic: 550Kč; Denmark: 200kr; Hungary: 7,000Ft; Liechtenstein: 20CHF, Poland: 90zł; Romania: 100LEU, Sweden: 200kr.
200 DKK is almost 27 EUR. This seems a bit expensive considering that you don't get refunded if you're in the right anymore.
My European bank (one of the largest in my country) doesn’t accept passwords longer than 8 characters. Imagine how bad the rest of the systems is.
Which leads to funny questions at development time like "how many characters do we reserve in the customer record for the third child of the second wife of customer X, when they're remarried, this third child is not a child of the customer but there does exist an alimentation 'agreement' between the customer and their third wife". You must make this decision knowing that whatever your answer ... it can never be changed again.
>500kb per record. And, of course, mostly it just has first and last name, address, birthdate and balance, nothing else.
Makes the web look efficient.
on edit: actually serious question, have been away from this area for a while but thinking about making a personal project soon.
edit: my experience only applies to UK (which were better and cheaper way before EU) and EU banks, the US is a minefield that actually is better avoided by just paying higher fees to a popular processor rather than deal with banks who think its the 1800s)
My guess is that most commerce will start offloading this cost to customers especially as new payment methods become available (ie: wallets)
Lest government impose cards monopoly and force transactions with them, I think we have reached/are close to the peak of mastercard/visa.
And inflation has given them incentive to start actually doing it - at least two restaurants here have a cash discount now.
Is Stripe testing dispute fees for all chargebacks out in EU before rolling out in the US?
1) This is gonna be bad for NGOs
2) So now people can just DDOS an org with chargebacks to put them in the red?
I agree with 2 — this would be really bad if a business were targeted with chargebacks. There would need to be some defensive mechanism that kicks in and retroactively refunds all these fees in such cases.
I also wonder if this is just a way to pump up their margins in advance of an IPO.
I wonder if everyone will end up with the apple model of only getting 70% and letting some huge conglomerate fight over fees, or just vertically integrate.
I’m not a fan of government regulation but this is an area where it may be worth having some digital cash mediated exchange where the transaction fees are meant to be absurdly low, like 1% or 5 cents whichever is lower. It would provide all the insurances of cash, so none, but would be a strong financial infrastructure that helps consumers and business.
This has been my hope for crypto since 2009, but the fees have always been higher than visa for consumer purchases.
Does anyone know more about that? Why are they more expensive? Is there a different underlying cost structure, or simply price discrimination by some intermediary?
There's more information on "premium cards" here[0], but it doesn't explain the price difference or why a separate category is needed.
0: https://support.stripe.com/questions/what-s-the-difference-b...
Hard to imagine they are still in a cashflow burn despite being around for so long and seemingly capturing a large marketshare of payments. Perhaps its primarily for insiders to take money off the table before an IPO lockup, with a not-so-great 6 month post IPO forecast?
[0] https://techcrunch.com/2023/01/27/fintech-stripe-tried-to-ra...
One thing I think regulators could do is force cc fees to be added to the price instead of hidden. Eg a $10 item costs $10, $10.20, $10.40 depending on which payment method you use.
It already is. While still not many, there are companies that will pass the savings realized from avoiding traditional payment processors fees by giving you discounts if you pay them in crypto (e.g. mullvad).
> One thing I think regulators could do is force cc fees to be added to the price instead of hidden.
I agree. Increasing competition by nullifying this part of merchant pgw agreements (standard in most agreements) would definitely be better than the status quo. Another option is to simply impose limits on cc fees and ban non-compliant processors but I believe your method is better. Give the customer the information and power to choose.
Does anyone know if one can add a German USD-bank account to Stripe by now? (Was not possible a year ago)
Does the 1% fee also apply if the company is based in Switzerland? (strictly not the EEA)
Does anyone at which MRR scale one can negotiate fees down with Stripe?
Yes.
Edit: and isn't it quite likely it's easy for companies just to pass this charge straight on to customers, given the climate? Maybe that was Stripe's intention with the timing
If you want a local solution that also can do Twint (Swiss p2p payments) without extra contracts then I would recommend you try Payrexx[1].
Per transaction fees are also less than what Stripe is charging although you have a monthly fixed fee.
We're outside the EEA cap on interchange fees, that's not surprising.
Everything's outrageously expensive in Switzerland, so why shouldn't Stripe be too !
I don't know why Stripe is taking a percentage on top of the normal processing fee, I'm guessing it's to deal with percentage differences for people paying using credit cards. There are many cheaper alternatives out there if Stripe is getting too expensive.
I find the dispute fees to be high already, since a customer can initiate a dispute with near-zero effort, but then I have to run around and gather evidence showing that their claim (for which they have to provide zero evidence) is not true. If someone has a subscription with me and it's renewed for several years, and then they decide they don't want it anymore (but don't tell us), they can initiate a "fraud" claim with their bank, which means that I have to prove it wasn't someone else who used their card — with their email address — to set up the account years ago.
I have usually been able to email the customer, ask if/when they asked to terminate their account, and submit that as evidence that no request was made prior to the fraud allegation.
But there should be a higher standard for the initial claim (some evidence should be required, which would at least ensure that claims are correctly categorized as "third party fraud" versus "I forgot this was a subscription").
And I don't know the rates big players negotiate with Adyen but it's probably similar.
I barely ever heard of Stripe as a European, and now that I live in China, it's almost mandatory to have alipay.
As long as they do not lose customers / don‘t miss out on new customers, it was the right decision.
It's crazy and a lot of gouging is happening (not so much these smaller companies. They do have it tough. The owner does drive an expensive BMW though)
Yes but payment processors generally take fees as a share of transactions. That naturally shields them for inflation.
Raising their percentage fees is just a naked cash grab.
About 85% of payment fees are taken by the bank that issues the credit cards (this portion is called interchange). The remaining 15% is split between the card network and the merchant acquirer (in this case Stripe).
Stripe collects some amount of of money from their merchant customers for each transaction. They could set their take rate to be whatever they’d like it to be, this is and unregulated part of the market and is the reason you hear about crazy 10%+ fees for porn, gambling, etc. websites.
Stripe then sends a subset of that fee (interchange plus a network fee) to Visa. Visa has a public ratebook saying exactly how much Stripe needs to send them for a ton of different kinds of transactions.
Visa keeps their fee and passes the interchange to the issuing bank and the transaction is settled.
Issuing banks feel like they “earn” interchange by acquiring customers and taking on their credit risk.
Now it’s important to remember that until very recently, Visa was wholly owned by the banks. This is because Visa is basically a “don’t shoot the messenger” actor who acts on the behalf of banks while taking a relatively small part of the pie for themselves.
Now, on to premium cards. One of the things banks have started to do recently is say “Hey, we acquire really good customers and we give them airline miles so they use their cards way more than they would otherwise. We should be compensated for that!”
The same thing happens for corporate cards, except worse since most regulations on interchange target consumer cards.
What that looks like in practice is new classes of Visa cards (Google: Visa Infinite) that have higher interchange rates (because the banks do all the hard work of having rich customers). Because Visa is a “neutral party,” they can get away with “if you want to accept any Visa cards, you have to accept them all.”
Therefore, cash/debit consumers continue to subsidize lavish vacations and corporate spend for the wealthy, because of course they do.
For example R̶e̶v̶o̶l̶u̶t̶ ̶M̶e̶t̶a̶l̶ premium cards and corporate cards which offers benefits such as lounge access to pay-to-use lounges, travel insurance, cashback etc.. are mostly designed by the schemes in parternship with the issuing banks.
Also note that mostly in the US and Europe AMEX works in another way than Visa and MasterCard. Where V and MC are in a 4 party model (Issuing Bank that gets interchange, Processor (like Stripe) that processes the payment and gets a cut, Merchant that pays the merchant discount rate (or processing fee) and the customer that got their card from their issuing bank getting some benefits) Amex mostly cuts out the issuing bank and issues the cards to the customers directly.
Hence because they don't have to share the interchange with the banks they offer way better benefits on their cards (airmiles, centurion lounges, travel benefits, extensive insurance) but also at a high cost for the merchant because these are really premium cards.
Some consumer banks do issue AMEX cards so they will get their interchange.
In Asia there's also Amex Debit cards, I think definitely less popular in the rest of the world.
Something to note, also a lot of people in Europe think Visa or MasterCard == a Credit Card, this is not true. A credit card is an actual revolving credit instrument issued to the consumer by a credit institution such as a bank that then uses Visa or MasterCard rails.
A card that you get from Lloyds or HSBC when you open an account in the UK might say Visa or MasterCard but it's on a prepaid or debit programme with the scheme but using Visa and MasterCard payment rails. The interchange on these (pre-brexit) and still in Europe is capped by law.
Furthermore a lot of EU, Latam and Asian countries have their local payment rails which run at way lower costs than Visa and MasterCard to the merchants (Wechat, Alipay, Giropay, Payconiq etc.. to name a few).
One last thing, I do think Open Banking in the UK and Europe, especially when Variable Recurring Payments are coming will be a game changer. The banks have been lobbying to delay most of the UX improvements for the users because they just make too much money as an issuer to get interchange.
To quote Hanlon’s razor “never attribute to malice that which is adequately explained by stupidity."
Having been involved in these conversations, I can tell you with some confidence, that banks are far more worried about being unable to deliver the technical work on time, than they’re worrying about interchange.
There will be fees to pay for OpenBanking Variable Recurring Payments, it’s not going to be free for merchants to use. Which makes sense, contrary to popular opinion, running a bank account, and transacting, costs quite a bit of money. Every Faster Payment you send costs your bank a couple of pennies, not much on an individual level, but it sure adds up.
Revolut Metal (personal) is not one of these cards.
Commercial cards (business banking, business credit etc) are what these cards are and they have less regulation in the EU.
For instance no cap on interchange fees and they can show prices excluding the card fee and add that on at checkout for business card users.
Corporate cards, or cards with more "features" (lounge access, insurance etc.) tend to have yearly fees associated with them, at least in Australia. I was under the impression the customer covers the cost of these extras, not merchants.
Right but that’s not a premium card and neither is Amex, so this doesn’t follow
The company (or cardholder) pays for this - corporate cards and the like aren't free, they come with an annual fee. So it's not all on the merchant.
Commercial interchange isn't regulated in Europe. The card networks have increased their interchange rates for commercial and business cards in many European countries.
> or why a separate category is needed
These fees have been moved into a separate category to contain increases to cards where network costs have increased significantly. (Rather than apply them more broadly.)
https://eur-lex.europa.eu/EN/legal-content/summary/fees-for-...
Your use case isn't large enough to be a priority to American Express.
Absolutely. And for the colloquial English phrase "dead weight" that would correspond to the portion of these fees which go above and beyond the cost of running the (high-utility) transaction network. Reducing the rent-seeking on this network also reduces both the colloquial and technical meanings of "deadweight".
But for the economic term "deadweight", additional deadweight loss can be reduced by anyone who can provide similar functionality to the current interchange network but at lower cost than the current network. This wouldn't reduce the colloquial "deadweight" because in theory 100% of the fees could already be going towards necessarily funding the existing network. But it would still reduce the economic deadweight of 1-4% tax on every transaction.
Of course you can have all your COBOL and your mainframes down below rolling and churning like it's 1975, but the authentication of an app is layers up above in a totally distinct system. Or this or you're crazy.
That's fine if the customer actually asks for a refund in the first place. All the chargebacks I've handled through work (admittedly only in single digits), the customer just started a chargeback with no prior communications.
It's a pretty frustrating process as we've got no issues giving refunds in most cases.
EU actually mandates the opposite. It is illegal to pass the transaction costs to the consumer. The price you see on an item has the be the final price you end up paying.
One influence in the setting of this rule was that payment card processors had been throwing their weight around requiring that merchants not pass on cost, which was fairly clearly an abuse of their position of power. (For most in-person business, which was largely what was being dealt with at the time, cash is essentially costless, and so for some small businesses being forced to swallow payment card fees was genuinely an unreasonable burden.)
Agreed, though the other 3 parties know a lot more about the customer, past disputes, and so on.
Also, the argument applies for any kind of chargeback. Again, the other three parties combined see all transactions and have lots of context. And, if they required things like ip address, shipping address (they only ask for billing), they could really improve fraud detection. But they don't...there is an incentive problem.
* Money. This doesn't matter much too me, but it might for people who make a lot less than me. The comment I replied to was about anything less than $10, not about $1 specifically.
* Preventing future scams. By doing a chargeback against scammers, you're making it more likely they'll get banned. So you're helping to prevent other people from getting scammed in the future. It's a good deed. When I see phishing sites, I report them. Why wouldn't I report a scam?
* Revenge. Some people want to see the bad guys get punished.
It’s an extremely difficult problem to deal with because there is no dispute mechanism in the faster payment flow, and Faster Payments are not interested in adding one. As a consequence, once the payment is authorise, the moneys gone, and getting back is almost impossible.
Fraudsters have been taking huge advantage of this, and regulators are demanding that banks protect customers from these scams, or eat the cost of reimbursement.
Having worked on this specific problem, I can say that calling the customer for authentication is one of the most effective ways to prevent these scams. The call normally forces the customer to hang up on the scammer, which is incredibly powerful because it removes the primary source of pressure on the customer, and gives them space to think. Most customers then realise they’re being scammed, and stop there.
You may say that there’s other ways of warning customers, like in app notifications etc. Well I’ve tired all that, they’re not effective, regardless of how big, scary and red you make them. Even when tuned so the false positive rate is almost zero, so most customers only every see them when they’re actually about to be scammed, they still don’t work. Reason why they’re not effective, customer mentions what they see to the scammer on the phone, scammer explains it away and pressures the customer to continue.
This isn’t to say there isn’t some better balance, or that the banks aren’t being lazy. But the fraud question is serious one, and a very difficult one to answer. Simply ignoring it when discussing Open Banking is either naive, or intellectually dishonest (I’m not claiming that you’re intellectually dishonest, but there are plenty of people who like to gloss over the fraud issues, or just victim blame).
The best of those appears to be 1% on purchases at six specific retailers or 0.1% on purchases in the EU/1% outside of the EU. Many of them don't even give cash back, they give their own cryptocurrency that they made up out of thin air.
> Why then are there so few and apart offers for cashback cards that can be used in Europe?
>
> One explanation I’ve seen is this: they’re not so common in the EU because our debit/credit card fees are regulated and very low.
The cap applies on 4-party schemes, not Amex (nor Diners, Discovery).
I don't see how that is dumb, the EU cannot do anything about issuers outside of it, and PSPs have to reflect the huge difference in interchange fees one way or another.
For credit card, I have tried this with Bank of America, Chase, and AmEx. For debit card, I tried with Schwab. And in all cases, I checked the currency exchange rate, and it was very close to the spot rate.
Where you do get hammered is by international merchants, who ask if you want to pay in local currency or USD (if you are American I guess). You should always choose to pay in local currency (meaning the merchant requests the payment in local currency from your card), because your credit card issuing bank will give you a much better currency conversion rate than the merchant will.
If you say you want to pay in USD, then the merchant will calculate a USD price that is much higher than the local currency price.
Even the people who claim to offer raw spot market rates (ie. Interactive Brokers), in fact do not offer that. I would not be surprised in Visa & Mastercard do the same--although they claim otherwise.
But the US is undergoing some serious banking network updates this year and that likely means some new local networks are being built. This idea will look very different by 2024 and maybe even be feasible.
However, the free market approach seems to work for mobile payments solutions such as the extremely popular ones in nordic countries. They have started to build an interoperable and federated network in Europe and beyond. For instance, there's a real demand from businesses that want to let Chinese or Indian tourists pay with AliPay or UPI.
Don't get me wrong, I think DSP is one of the greatest thing the EU has ever done, but it looks like physical cards just need to die before we can see a true competition.
So the exact manner in which they’re billed to merchants is kinda irrelevant, the cost ends up being spread over all consumers, regardless of their ability to recover the money via cashback or rewards.
Consumers dont care if you can pay for the inputs to your product. They obtain a certain value from your product and have a certain expectation of what the price should be, and if your costs are above that, consumers are happy to watch you go out of business. In fact, inability to increase prices over time while inflation increases the cost of inputs, is one of the ways the economy pushes marginal business out of the market.
If your market is completely elastic, then sure. But only hypothetical markets (and perhaps some fungible goods) are completely elastic. Most markets don’t have a perfect linear correlation between price and demand.
The other things you’ve completely ignored, is the fact that interchange impacts all sellers equally. So as a consumer you can’t avoid the interchange tax by shopping around, which in turn will increase a consumer’s willingness to pay higher prices.
This may come as a surprise to you, but consumers don’t have a perfect way to calculating the value of something. Ironically, the perceived value of a product is highly influenced by both its price, and the price of its competitors (with Veblen goods being the extreme). So if you introduce a flat 2% price increase across all sellers, then it’s reasonable to expect consumers value perception to increase by a similar amount.
There are many companies discriminating on card type; not accepting debit cards, not accepting business cards (which have higher fees for the merchant), not accepting credit cards, not accepting foreign cards, not accepting certain BIN ranges.
Obviously smaller merchants can get away with it, because nobody cares enough. But get big enough, and an issuer is going get upset and start demanding the Visa/Mastercard enforce their rules.
Which kind of reminds me of SaaS products that offer a free tier to sell you on the premium subscriptions
For starters in most European countries, you are probably not going to qualify unless you're rich enough to pay your bills in full every month.
Say I'm Big Bank, and I want to launch a card I'm calling "Bonus Credit". I want to target customers who mostly will pay me, eventually, but aren't so flush that they can pay their full balance every month (e.g. they buy their summer break in January, pay it off over the next 3-4 months). I call Jumbo National Credit and I offer them £25 per sign-up if they give me customers who have no super-negative credit events in the past say, 12 months but are say 75-95% on recent payment history. Jumbo present this as a "Pre-qualified" instant Credit Card option for customers who match the profile, on their free web site. Click now, you are guaranteed to be accepted. Customers don't even realise they're reading an advert.
You may have noticed that although 30 years ago "Credit score" was something you needed to go out of your way to discover, today you can get your score on a web site - sign up today to see it instantly. Why are these companies telling you something that was once an important trade secret ? Because these sites are now effectively marketing for 3rd party credit products. AIUI Experian invented this, I worked with people who were in a small rogue group at Experian which proposed instead of fighting the government to keep it secret they should turn access into a revenue source, they were laughed at internally more or less up until the record profits rolled in and then suddenly it was champagne and bonuses.
Guessing you are in Germany and extrapolating?
It varies quite a bit by country. https://www.spendesk.com/blog/credit-card-statistics/
And now that banks will finally make a bit more money on mortgages and other kinds of loans, I assume they don't mind the increasing cost of their customers' credit balance.
On average, it will also not be a 60 day interest free loan: the "average" transaction will happen in the middle of the billing cycle, so that gives you 15 days until the invoice is sent, and many people I know pay their invoices much earlier than after the 30 days payment term.
They don't. They're rare, only do 30 days, and are often paid (you pay monthly/yearly for the pleasure).
I'm mostly referencing Just Eat Takeaway dot com which have increased their online payment fees to 3% now (at least in CH) which is ridiculous because there's no way such a large player has such high fees with any acquirer.
The rewards are funded by the banks via interest income. 3% cashback cannot be covered by interchange fees, for instance.
VISA/MC do offer the spot rate. But the idea of a spot rate is a little iffy anyway, as it assumes that there’s a counterparty willing to sell/buy at that price, and at the volume you want to transact at. When you’re operating at MC/VISA scale, that isn’t a given, and neither of them are interested in taking on FX risk. So their spot prices will be close, but likely not identical to spot prices you might find at other FX providers. Over the long term though, I would expect any delta to balance out.
A lot of banks do charge a percentage fee on top of Visa/MC's exchange rate, but my bank does not.
The only businesses suffering from the cap are issuing banks.
Some countries smaller than the EU bloc have more complex regulations regarding online payments.
The EU managed to cut fees in half for its population and businesses, if you want to stay outside then why do you care?
Ironically enough that's why a company like Klarna became so big over here, the whole "buy now pay later" concept is completely new to most low-income customers.
That's exactly my point.. You can't change the price without changing the volume.. and that's why you cant pass on costs. The item is already priced at the optimal point in the price-demand curve. Moving the price based on cost increases, only results in lost revenue. The only companies that are able to do that are the ones that haven't priced their goods correctly to being with.
"then it’s reasonable to expect consumers value perception to increase by a similar amount."
You seriously think consumers know when the prices of the inputs for an item change? And then they adjust their perceptions of the item based on their detailed knowledge of how the product is made? The average consumer doesn't know how anything is made or what any of the costs of an item are. Go ask some random people what they think a credit card costs merchants... nearly guaranteed you only get wrong answers.
In an elastic market. This is not true in non-elastic markets. Obvious example is the price of ERs in the US. Pricing doesn’t impact volume in a meaningful way, because people don’t decide get injured based on how much an ER costs.
> The item is already priced at the optimal point in the price-demand curve.
This is a bold claim. You’re gonna have to provide some evidence that every item in world is somehow priced at the optimal optimal point on the price-demand curve.
> The only companies that are able to do that are the ones that haven't priced their goods correctly to being with.
You are correct. But pricing at the optimal points is the rare exception. Most items aren’t priced at the optimal point, because discoing the optimal point is incredibly difficult, and not a requirement for a profitable business.
> You seriously think consumers know when the prices of the inputs for an item change?
No, that’s quite obviously not what I wrote. I think consumers perception of value increases as prices increase.
You seem to have a great deal of difficulty identifying the differences between theoretical perfect behaviour, and reality. Very few things in the real world closely match their theoretically perfect behaviour, so theirs inefficient and market gaps everywhere. Something things like interchange can capitalise on. If you’re gonna come back with another response about how this doesn’t work in a perfect market, then I recommend you don’t waste your time, I’m not interested in debating if reality and theory match.