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Email this5:34 pm
October 21, 2013
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I am told by people in Europe and UK that credit card perqs are much less significant there, so, to that extent, it makes sense that interchange fees would be significantly less as well.
We pay for all those points and insurance etc., just not directly.
5:47 pm
October 27, 2013
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Loonie said
I am told by people in Europe and UK that credit card perqs are much less significant there, so, to that extent, it makes sense that interchange fees would be significantly less as well.We pay for all those points and insurance etc., just not directly.
We do and the reason credit card perqs are considerably less in other jurisdictions is that the governments limit how high the interchange fees can be, e.g. 0.5% instead of as much as 2% for some premium cards. We need government intervention here
6:07 pm
September 11, 2013
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Credit cards are a discretionary thing for adults, charge what they want and we can decide for ourselves, don't need gov't intervention is my opinion.
6:58 pm
October 21, 2013
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I didn't know other governments were more vigilant, thus reducing the interchange fees. Credit cards are pretty much a necessity these days - just try getting a decent hotel room or car rental without one - so we need regulators to keep them in check.
11:22 am
April 6, 2013
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I suspect the Canadian card issuers realized the kinds of games they could play with the merchants under the merchant agreements.
Bank of Montreal, for example. upgraded my plain MasterCard to one that earned rewards towards a BMO mortgage. No extra fees for the reward program. I didn't know at the time that turned my card into a "premium" MasterCard and entitle Bank of Montreal to collect a higher interchange from merchants.
The merchants were forced to accept these so-called "premium" cards because the agreements they signed required them to accept all MasterCard branded cards or none of them.
Canadian banks later tried to use the same condition to displace Interac debit with MasterCard debit and Visa debit, both requiring payment of higher interchange.
Some government intervention is needed. Maybe not as far as regulating the maximum interchange. But, definitely needs some legislation to override some of the terms of the merchant agreements so that merchants can continue to accept other Visa cards but not a new no-fee Visa Plutonium card that gives a 3% cash back on all purchases but hits merchants with a 5% interchange.
4:06 am
November 18, 2017
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5%? Holy chicken balls! These goons know no limits.
We'd all be much better off, in my opinion, with a 1% limit on fees and NO loyalty programs. Cheaper prices and no attempt to limit our competitive choices are the better deal all around. And less parasitism of our purchasing from both ends - consumer and merchant.
I'm old enough to remember when consumer pressure led major retailers to quit the "trading stamp" programs and supermarket prices fell. I was happy about that, too.
RetirEd
RetirEd
6:12 am
April 6, 2013
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Loonie said
I am told by people in Europe and UK that credit card perqs are much less significant there, so, to that extent, it makes sense that interchange fees would be significantly less as well.…
It is the other way around: Interchange fees are significantly less there. Consequently, the credit card perqs are much lower.
According to CMS Law: EU cap on interchange fees for card-based payment, the maximum interchange on credit cards in the EU was capped around December 2015 at just 0.3%.
It is quite a challenge for an EU credit card issuer to give a 1% cashback while collecting only 0.3% in interchange.
In Canada, the current interchange for a MasterCard credit card on a tap charge is 0.87% for a core card, 1.16% for a World card, and 1.48% for a World Elite card. For card-not-present online, it is 1.67%, 1.90%, and 2.13%.
8:11 am
April 6, 2013
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RetirEd said
5%? Holy chicken balls! These goons know no limits.We'd all be much better off, in my opinion, with a 1% limit on fees and NO loyalty programs. …
I think the issue is that those reward programs are not really loyalty programs.
Rewarding my spending at merchants that accept one's World Elite MasterCard isn't really creating much loyalty.
Manufacturers have long had loyalty programs in the form of volume discounts. If one orders TV's by the tractor trailer full every month, then one got a lower price per TV than another seller who only orders five a month.
Those volume discounts weren't inflationary. The manufacturer didn't have to pay a markup to some third party for the discounts.
I don't know how much AIR MILES charges merchants exactly for each Mile issued. But, a collector is charged 30¢ per Mile. So, 95 AIR MILES, that are worth $10, will be in the $28.50 ballpark.
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