Visa and Mastercard near deal with merchants that would change rewards landscape(wsj.com)
wsj.com
Visa and Mastercard near deal with merchants that would change rewards landscape
https://www.wsj.com/finance/banking/visa-and-mastercard-near-deal-with-merchants-that-would-change-rewards-landscape-fc6a0c78
https://www.msn.com/en-us/money/companies/visa-and-mastercar...
60 comments
> 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 a tenth of a percentage point over several years, the people said
Meanwhile interchange fees in places like EU and Australia are more like 0.3%
The Visa/Mastercard duopoly really needs to be broken up somehow.
I live in Asia where there is a cambrian explosion of QR-code based payment methods. At many shops you'll see a list of accepted payment methods like this[0], indicating a healthy amount of competition in payments.
[0] https://corporate.fithouse.co.jp/wp/wp-content/uploads/2021/...
Meanwhile interchange fees in places like EU and Australia are more like 0.3%
The Visa/Mastercard duopoly really needs to be broken up somehow.
I live in Asia where there is a cambrian explosion of QR-code based payment methods. At many shops you'll see a list of accepted payment methods like this[0], indicating a healthy amount of competition in payments.
[0] https://corporate.fithouse.co.jp/wp/wp-content/uploads/2021/...
Visa/MasterCard are essentially a network of banks, they only get a small percentage of the interchange rate. Most of it goes to the issuing bank which they use for rewards.
This line of thinking also ignores an important aspect of credit cards that benefit the merchant. 2-2.5% is not that much when it means you can sell to people without worrying about if they can pay for it. When that customer ultimately doesn't pay their CC bill(look at how high CC debt is), the issuing bank still needs to pay the merchant.
This line of thinking also ignores an important aspect of credit cards that benefit the merchant. 2-2.5% is not that much when it means you can sell to people without worrying about if they can pay for it. When that customer ultimately doesn't pay their CC bill(look at how high CC debt is), the issuing bank still needs to pay the merchant.
> 2.5% is not that much when it means you can sell to people without worrying about if they can pay for it.
Is that not how these other payment providers work? Would they let a transaction through that won’t be settled afterward?
Is that not how these other payment providers work? Would they let a transaction through that won’t be settled afterward?
What payment provider is allowing payments without accessing the customers current funds? With a CC, you can charge $1000 with only $100 in your bank account. That is not something you can do with ACH, check, cash, etc. Pay Now Pay Later providers like Affirm would also allow this, but I'm not sure what that looks like from a merchant POV
Oh ok so you can’t pay with money you don’t have. I wish that cost wasn’t socialized.
Is the cost of a dining room socialized if a restaurant does take out? It's a business cost that was from it's inception sold as a way to increase potential customer base and reduce risk, which is still a valid and correct way of looking at it considering bounced checks don't get paid out to merchants and cash gets skimmed.
QR Code base system is slow, have security risk and will not work without smartphone.
Proliferation of hundred of QR Code based payments system is not a good thing, you need one that works across all countries.
Outside Visa and Mastercard, we have Amex, Diner, JCB, even China has UnionPay, but unfortunately they are not as popular as a contender of the duopoly.
Proliferation of hundred of QR Code based payments system is not a good thing, you need one that works across all countries.
Outside Visa and Mastercard, we have Amex, Diner, JCB, even China has UnionPay, but unfortunately they are not as popular as a contender of the duopoly.
QR is not ideal but as long as Apple keeps such a tight leash on NFC payments, it's the only "open" option. It's ironic that by trying to keep NFC payments so secure, they've instead caused the wide proliferation of far less secure alternatives.
Physical card issuance is too high-friction for new entrants. It's much easier to attract new users with "just install our app" than "enter your home address and wait days for a card to arrive then put it in your wallet and remember to use it"
Physical card issuance is too high-friction for new entrants. It's much easier to attract new users with "just install our app" than "enter your home address and wait days for a card to arrive then put it in your wallet and remember to use it"
> QR Code base system is slow, have security risk and will not work without smartphone.
Proliferation of hundred of QR Code based payments system is not a good thing, you need one that works across all countries.
Agree on some security risks. But the cost of creating, printing or sharing a QR code is very low compared to NFC hardware cost and availability. I don’t know what you mean by slow, because it takes about 10 seconds to complete a transaction. QR codes are quite common in cities and towns in India because of this reason (and the other is that Apple, though a tiny player in the market, hasn’t opened up NFC completely for others to use). You can pay another person or a merchant by scanning a QR code on a cheap Android phone. You can pay for a metro or bus ticket by scanning a QR code. You’d likely see restaurants having a QR code for menus instead of paper menus, and many more.
Agree on some security risks. But the cost of creating, printing or sharing a QR code is very low compared to NFC hardware cost and availability. I don’t know what you mean by slow, because it takes about 10 seconds to complete a transaction. QR codes are quite common in cities and towns in India because of this reason (and the other is that Apple, though a tiny player in the market, hasn’t opened up NFC completely for others to use). You can pay another person or a merchant by scanning a QR code on a cheap Android phone. You can pay for a metro or bus ticket by scanning a QR code. You’d likely see restaurants having a QR code for menus instead of paper menus, and many more.
what's the security risk with QR systems? I've recently come to use one and it relies on software for both parties having connectivity.
Presumably if the payer displays and the recipient scans; however that's technically solved by the POS showing the target address, amount, and bill/reference ID; the shopper then scanning, visually confirming the amount, and approving.
A few seconds later the money can have arrived (depending on system): in Europe today with normal banks and their online banking apps: the QR-on-POS-screen concept using the standard SEPA instant push transaction encoding, to prompt a <10 seconds confirmed-or-aborted "Echtzeit-Überweisung" (German phrase; the standard works across some borders already though) that's polled by the recipient (to release the customer out of the store), with the obvious fallback of "guess you have to pay a different way".
If for example the self-checkout terminal would just print a bill that then has to be paid by scanning a code on the bill or bringing it to a manned till or such, before the gate releases you from the area just behind the self-checkout kiosks (in response to you scanning the bill at the gate), this could absorb the online banking app friction/delays and offer a fallback of presenting the bill and a backup credit card at one of those kiosks as soon as one frees up in addition to the mentioned human-till cash payment or whatever else they do if your card suddenly misbehaves.
A few seconds later the money can have arrived (depending on system): in Europe today with normal banks and their online banking apps: the QR-on-POS-screen concept using the standard SEPA instant push transaction encoding, to prompt a <10 seconds confirmed-or-aborted "Echtzeit-Überweisung" (German phrase; the standard works across some borders already though) that's polled by the recipient (to release the customer out of the store), with the obvious fallback of "guess you have to pay a different way".
If for example the self-checkout terminal would just print a bill that then has to be paid by scanning a code on the bill or bringing it to a manned till or such, before the gate releases you from the area just behind the self-checkout kiosks (in response to you scanning the bill at the gate), this could absorb the online banking app friction/delays and offer a fallback of presenting the bill and a backup credit card at one of those kiosks as soon as one frees up in addition to the mentioned human-till cash payment or whatever else they do if your card suddenly misbehaves.
QR Code is too cheap to produce, it is easy for scammer to just print a fake one and take your money.
https://www.straitstimes.com/tech/can-i-trust-this-qr-code-c....
https://www.straitstimes.com/tech/can-i-trust-this-qr-code-c....
Where I am most of the systems have an option to use static printed QR codes that the payer scans. This is easy to use for small businesses like bars since it requires zero hardware or staff training.
There have been reports of people printing their own QR codes and sticking them over the QR codes for businesses.
There have been reports of people printing their own QR codes and sticking them over the QR codes for businesses.
With WeChat and Alipay, the recipients phone confirms receipt with a Kaching and TTS amount transferred.
There are no more than using a plastic banking card. You still need to think what are you doing and what are you paying for and how much.
Meanwhile all of Asia, China, Singapore, Taiwan, Thailand, India, increasingly Japan run just fine on QR.
Meanwhile everywhere you pay with a credit card in Australia you have to pay an additional 1-2% because they can get away with it. It's a terrible example really.
(just as an example: https://www.hilton.com/en/book/reservation/rooms/?ctyhocn=SY...)
"Hotel Message
Credit Card Fee
Credit Card payments relating to Australian hotels incur a merchant service fee of 2% in addition to the total amount payable."
(just as an example: https://www.hilton.com/en/book/reservation/rooms/?ctyhocn=SY...)
"Hotel Message
Credit Card Fee
Credit Card payments relating to Australian hotels incur a merchant service fee of 2% in addition to the total amount payable."
It’s kind of how it should be. Otherwise people not paying by credit card are subsidising people who do. It might encourage the card companies to lower their fees.
Managing cash itself though is other additional costs that aren't present when paying by card, having to bring it to bank periodically if you're doing that, ecc
For a small shop that is work you can do yourself VS work you are forced to pay someone else to do.
Oh yes that's sure, but you still pay in time rather than money (I guess it's OK for a lot of people)
There is debit cards in many countries with marginal fees. As it is now those savings aren’t passed on to me I still do it for local shops.
It's still a form of rent seeking. They charge 2% because nobody else has the capability to create an alternative. It's preferable for a government to reduce rent seeking as it makes the economy more productive, eg by limiting the fee.
It hasn't though and no it's not how it should be. Any kind of payment comes with a fee. Yes even counting cash at a bank isn't free. Paying a security firm to come pick up cash regularly isn't free.
And the hotel has accounted for this in their price. Apparently they find it 1-2% cheaper. It's only unfair if they only accept credit cards, and still add a hidden fee.
They don't. You're assuming a lot of things. Extremely few people pay cash at a hotel (as even deposit would have to be in cash and held in place and refunded in person). Vast majority pay with card.
They're doing this because they can get away with it. Purely and simple. Large part of this 2% is extra profit.
They're doing this because they can get away with it. Purely and simple. Large part of this 2% is extra profit.
I guess you find using your credit card to be worth the price, then. Every transaction has two sides.
[deleted]
>Meanwhile interchange fees in places like EU and Australia are more like 0.3%
Those places don't have the ruthless competition between card issuers and various rewards that occurs in the US. I was paid $1000 by Chase for opening a new card and doing the spend on it that I would have done anyway. I get 5% back on every purchase made at Amazon. I get 3% back for every food-related purchase. I get 2% back for every other purchase. I get rewards for my monthly rent payment. Etc., etc.
>I live in Asia where there is a cambrian explosion of QR-code based payment methods.
No American, used to having his Visa or Mastercard accepted at 99% and Amex accepted at 97% of places, would want to switch to constantly having to scan gigantic charts such as your example to see whether his card/payment method will work.
In other words, the US has the competition you spoke of, without the inconvenience.
Those places don't have the ruthless competition between card issuers and various rewards that occurs in the US. I was paid $1000 by Chase for opening a new card and doing the spend on it that I would have done anyway. I get 5% back on every purchase made at Amazon. I get 3% back for every food-related purchase. I get 2% back for every other purchase. I get rewards for my monthly rent payment. Etc., etc.
>I live in Asia where there is a cambrian explosion of QR-code based payment methods.
No American, used to having his Visa or Mastercard accepted at 99% and Amex accepted at 97% of places, would want to switch to constantly having to scan gigantic charts such as your example to see whether his card/payment method will work.
In other words, the US has the competition you spoke of, without the inconvenience.
In Europe we don't often have recurrent bonus, and they're much smaller, but we still have banks giving you up to ~200€ to open a bank account and use it to deposit your wage, or other banks having cashback. Right now I'm having 10% cashback on everything (up to 70€/month of cashback) + 50€ for opening an account with ing. All I have to do is keeping a balance of at least 100€ for 1 day before 2026.
Other banks are starting to finally adapt to other countries and give interests on the liquidity you have in your account
Other banks are starting to finally adapt to other countries and give interests on the liquidity you have in your account
I would challenge any retail business to beat the 2.5% rate on their cash transactions once the various transit, security and banking fees have been factored in. Those armored trucks don't work for free.
The US payment networks are also incredibly robust with some fantastical operational guarantees. I cannot recall the last time I couldn't get an online authorization at a merchant terminal. There are rooms of people monitoring these things like a hawk 24/7/365. Imagine being called by your ISP proactively when they detect >.01% packet loss on your line. That was my job for an entire year. Calling banks on the phone in the middle of the night because we think there might be an issue before there actually is an issue. Statistically speaking, this is one of the most certain things in the life of a typical American. Visa alone processes a quarter trillion (10^12) transactions per year. We've got a lot of samples that say the system works really well and might be worth the cost.
You can point to regulation and artificial moats for prohibiting competition, but it's genuinely a difficult problem to solve, even if you can do it purely digital. Trust is the most challenging element. I think moving cash, checks and other paper around is easier in a lot of ways.
The US payment networks are also incredibly robust with some fantastical operational guarantees. I cannot recall the last time I couldn't get an online authorization at a merchant terminal. There are rooms of people monitoring these things like a hawk 24/7/365. Imagine being called by your ISP proactively when they detect >.01% packet loss on your line. That was my job for an entire year. Calling banks on the phone in the middle of the night because we think there might be an issue before there actually is an issue. Statistically speaking, this is one of the most certain things in the life of a typical American. Visa alone processes a quarter trillion (10^12) transactions per year. We've got a lot of samples that say the system works really well and might be worth the cost.
You can point to regulation and artificial moats for prohibiting competition, but it's genuinely a difficult problem to solve, even if you can do it purely digital. Trust is the most challenging element. I think moving cash, checks and other paper around is easier in a lot of ways.
Well, it used to be justified but if they are lowering their rates it's in part because they are starting to get replaced by regional wallets.
Personally I think it's fantastic they are losing ground because it really rubs me the wrong way when they force their morals [1] [2].
[1] https://www.theverge.com/2021/8/19/22632797/onlyfans-prohibi...
[2] https://www.theguardian.com/world/2025/jul/29/mastercard-vis...
Personally I think it's fantastic they are losing ground because it really rubs me the wrong way when they force their morals [1] [2].
[1] https://www.theverge.com/2021/8/19/22632797/onlyfans-prohibi...
[2] https://www.theguardian.com/world/2025/jul/29/mastercard-vis...
In the US, they are getting replaced by ACH. The seller gets to receive payment at near zero cost, with no chargeback risk.
A 3% credit card surcharge is enough to make me switch my insurance/mobile network/home internet/utility/property tax transactions to ACH to avoid losing money on a credit card transaction that I am never going to need to chargeback.
A 3% credit card surcharge is enough to make me switch my insurance/mobile network/home internet/utility/property tax transactions to ACH to avoid losing money on a credit card transaction that I am never going to need to chargeback.
Careful with utilities etc there were stories here of people being charged outrageous amounts for their electricity use iirc (Texas?). I’d be hesitant to give them my bank account info, it could take years for that to get settled.
> outrageous amounts
Apologies for the tangent, but variable rates are good. For everyone. For the grid. For the environment. I wish we could stop framing it as consumer extortion and start looking into educational solutions.
$9/kWh was bad but it literally could not get worse due to the market rules. I don't know anyone who was using Griddy who was not aware of this possibility. I had to pay ~$1200 that month for usage and I still came out way ahead of anyone who was using fixed rate plans for the year. This last part is probably the actual reason they made variable rate electricity plans illegal for consumers in Texas.
Apologies for the tangent, but variable rates are good. For everyone. For the grid. For the environment. I wish we could stop framing it as consumer extortion and start looking into educational solutions.
$9/kWh was bad but it literally could not get worse due to the market rules. I don't know anyone who was using Griddy who was not aware of this possibility. I had to pay ~$1200 that month for usage and I still came out way ahead of anyone who was using fixed rate plans for the year. This last part is probably the actual reason they made variable rate electricity plans illegal for consumers in Texas.
In BC I’m on a progressive 2 tier system. After x kWh the price goes up. But that’s based on use. I think that’s fair, otherwise it favors the rich.
Except the networks are not forcing their morals onto anyone, they are not payment processors.
Visa's merchant fee for in-person transactions is only 0.3% in Europe, with the exact same robustness and operational guarantees you describe.
Visa's fee in the US is also only 0.3%. Most of the interchange fee goes to the issuing bank and is used for cardholder rewards/benefits.
> I would challenge any retail business to beat the 2.5% rate on their cash transactions once the various transit, security and banking fees have been factored in. Those armored trucks don't work for free.
Lots of countries are fine with charge card, connecting directly to their bank account instead of going thru intermediaries. It does not offer the flexibility of the US credit card ecosystem, but lower fees for merchants (and so for end user). It might be a matter of culture and habits. But for some the Visa/MC/Amex fees seem too high, even if most is given back to the end user, it artificially increases the prices (that is why the US Gov. charges me more if I insist on paying my US property taxes with as credit card).
Lots of countries are fine with charge card, connecting directly to their bank account instead of going thru intermediaries. It does not offer the flexibility of the US credit card ecosystem, but lower fees for merchants (and so for end user). It might be a matter of culture and habits. But for some the Visa/MC/Amex fees seem too high, even if most is given back to the end user, it artificially increases the prices (that is why the US Gov. charges me more if I insist on paying my US property taxes with as credit card).
That high fee doesn't go into running the network though, it goes into customer rewards schemes that end up being a tax on the poor who don't qualify for them but still have to pay the fees.
I can't wait till Wero* will be fully rolled out in EU. ECB does a good job of managing financial landscape for payments in the consumer friendly way
* https://en.wikipedia.org/wiki/Wero_(payment)
* https://en.wikipedia.org/wiki/Wero_(payment)
Interesting. Wonder if it’ll be available for uk residents. Could be useful for mainland service like hetzner etc
I can see grocery stores and gas stations declining rewards cards. No big deal.
E-commerce or coffee spot denying them? I’ll shop around for another!
E-commerce or coffee spot denying them? I’ll shop around for another!
Man, looking forward to the paying experience also being enshittified.
Actually with my card in Europe it's already happened: any payment purpotedly being done overseas (even if it's in the local currency) has some % surcharge. One time some pop-up store came to my town, and they brought a card machine from their store in France. Charged in my local currency, and my bank charged me more. Luckily I could call them with much annoyance and get it credited back.
From online chatter I've heard that paying for Netflix or some other foreign service induces this charge too.
Actually with my card in Europe it's already happened: any payment purpotedly being done overseas (even if it's in the local currency) has some % surcharge. One time some pop-up store came to my town, and they brought a card machine from their store in France. Charged in my local currency, and my bank charged me more. Luckily I could call them with much annoyance and get it credited back.
From online chatter I've heard that paying for Netflix or some other foreign service induces this charge too.
Use Revolut for no exchange rate fees added while paying in foreign currencies; also with disposable virtual debit card numbers for extra security when payment gateways or websites do get compromised.
*Revolut is not a registered bank in many regions. Other financial institutions (i.e. actual banks) also provide no addition exchange rate fees in foreign currencies, and some have the full feature set described.
You forgot your referral link at the end of that message. /s
Yeah I know Revolut... I've also seen stories of them basically freezing people's accounts. I have it but I only top it up when I need it.
Yeah I know Revolut... I've also seen stories of them basically freezing people's accounts. I have it but I only top it up when I need it.
Good. Reward cards just open a disparate rift between classes.
Middle class people saving 1.5% on retail purchases is not going to ignite a class war. I get like $40-50 a month back, $600 a year isn’t going to change the life of someone that makes a third of what I do.
We’d all be better off without credit card rewards and paying 2-3% less for everything but it is what it is.
We’d all be better off without credit card rewards and paying 2-3% less for everything but it is what it is.
Must be nice, I’m in the class that gets $0 back a month. $600 would definitely help.
But hey, I forgot HN is overindexed on overinflated big tech salaries while field tech workers get shafted on the low side.
But hey, I forgot HN is overindexed on overinflated big tech salaries while field tech workers get shafted on the low side.
You don't need a tech salary to get a rewards card. What's stopping you from getting, e.g., a Wells Fargo Active Cash, Citi Double Cash, or SoFi Unlimited card? They all give 2% cash back on everything. And if you have no or bad credit, there are even debit cards that will give you cash back, e.g., PayPal Debit will give you 5% back on a category of your choice (one of restaurants, apparel, fuel, groceries, or rideshare/transit).
10 years ago I signed up for a 1.5% cashback card with Capital One, I had a 550 credit score and was making $15/hr. I also make less than $100k a year today.
Syndicated at MSN.
Archive sites returned a gripe about js and adblockers.
https://www.msn.com/en-us/money/companies/visa-and-mastercar...
Archive sites returned a gripe about js and adblockers.
https://www.msn.com/en-us/money/companies/visa-and-mastercar...
"Deal under discussion would lower credit-card interchange fees for merchants, but could make it harder for consumers to use rewards cards at the register"
Surprise! The consumer loses again! It's always somehow benefiting everyone but the consumer. Too much control, not enough regulation. People shouldn't be bilked out of funds by paying to use their own money. We are shouldn't be _forced_ to use these service companies for making payments.
Surprise! The consumer loses again! It's always somehow benefiting everyone but the consumer. Too much control, not enough regulation. People shouldn't be bilked out of funds by paying to use their own money. We are shouldn't be _forced_ to use these service companies for making payments.
Credit card rewards are not good for consumers. Low fees are good for consumers.
Is there a meaningful difference between what the us has and what the eu has? Is everything 3% cheaper in the eu? What's the actual benefit consumers see
> Is everything 3% cheaper in the eu?
No, because in Europe sales tax is higher and included in the displayed price, so stuff is generally more expensive. But obviously everything is 3% cheaper than it would be if businesses still had to pay 3% fees. (credit card fees used to be really high before EU regulation came in -- the minimum fee was so high that merchants sometimes paid more in fees than they made in profit when a customer swiped a credit card instead of a debit card).
But the much bigger advantage is that reward cards aren't a thing, and credit card usage is much less common. Most people just use their debit cards. Credit card debt is much less of a problem because credit cards aren't advertised like they are in the US. People spend less if they don't always have $3000 of credit available.
No, because in Europe sales tax is higher and included in the displayed price, so stuff is generally more expensive. But obviously everything is 3% cheaper than it would be if businesses still had to pay 3% fees. (credit card fees used to be really high before EU regulation came in -- the minimum fee was so high that merchants sometimes paid more in fees than they made in profit when a customer swiped a credit card instead of a debit card).
But the much bigger advantage is that reward cards aren't a thing, and credit card usage is much less common. Most people just use their debit cards. Credit card debt is much less of a problem because credit cards aren't advertised like they are in the US. People spend less if they don't always have $3000 of credit available.