How credit cards make money

Re:How credit cards make money by jiqiren on Friday November 05, 2021 @02:29PM (#29123052)

Is it true top tier customer reward cards (black/platinum/amex business/etc) have interchange fees that push into 3% territory? If so, how do companies like Square make money when they only charge the merchant 2.6% for a POS transaction?

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Re:How credit cards make money by amance on Friday November 05, 2021 @03:00PM (#29123418)

No. Aggregate interchange for top-tier Visa and Mastercard personal cards maxes out at ~2.3%.

Corporate cards actually earn significantly higher interchange, but even those don't aggregate out above 3%. Actually, the networks spend a lot of time policing banks from trying to arbitrage the difference by issuing corporate cards to individuals.

Payment processors like Square just know that their margins will vary by the type of card used by consumers, but aim to have an aggregate positive margin across all cards. Once you get into enterprise contract negotiations with them though, they'll look at your card mix to make a pricing offer.

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Re:How credit cards make money by fragmede on Friday November 05, 2021 @03:08PM (#29123526)

Square, by virtue of their business model, get lower interchange fee because charges where the credit card is present, has lower fees. Online-only merchants get no such discount.

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