“ known as an ‘interchange fee,’ from the merchant, roughly 1.5-3.5% of every transaction”
This jumps out because it is such a wide margin. In reality the average interchange fee is 1.8%. Amex at their _highest_ rate, which is the highest of all the networks is 3.5.
So “roughly” is doing a lot of heavy lifting in that sentence which gets further amplified later in the article when they use it to multiply by the total credit volume.
I don’t know that it fully discredits the argument but it is certainly a weak rhetorical tactic.
In the payments space margins are measured in basis points, 2% seems small to laymen. 200 bips seems crazy big to anyone in the industry.
Many credit cards give 2% cash back, so they'd be operating at a loss. I'm quite sure credit card companies will never operate at a loss, so that can't be.
> That 2% attracts plenty of balance-carrying people paying 29%.
Do you have data on that to share?
It feels like that should not be the case, because the higher cash-back cards usually require a higher credit score. And people with a higher credit score are unlikely to fall into the trap of carrying a balance.
The 2% cards aren’t that hard to get, and with something like half of Americans carrying balances some of them are gonna be 2% cardholders who ran up more than they realized on a 0% APR intro rate.
You only need a few of those to make up the difference.
> The Regulation on Interchange Fees for Card-based payment transactions entered into force in June 2015.
> Therefore, the Regulation caps interchange fees for consumer debit cards to 0.2 % and consumer credit cards to 0.3 % of the value of the transaction.
This jumps out because it is such a wide margin. In reality the average interchange fee is 1.8%. Amex at their _highest_ rate, which is the highest of all the networks is 3.5.
So “roughly” is doing a lot of heavy lifting in that sentence which gets further amplified later in the article when they use it to multiply by the total credit volume.
I don’t know that it fully discredits the argument but it is certainly a weak rhetorical tactic.
In the payments space margins are measured in basis points, 2% seems small to laymen. 200 bips seems crazy big to anyone in the industry.