> It’s obviously a win for all involved or they wouldn’t be so popular.
Definitely not a win for consumers, who in aggregate lose out. The margins to make the system work are built into the prices you pay at the checkout.
Other markets like Europe and Australia capped interchange and made it cheaper for retailers and consumers.
This forced banks to redesign their products/rewards/pricing to give consumers a real choice of whether to play or not.
Some consumers decide to fund more of the rewards cost themselves (via cards with annual fees). Some keep high rewards by using new bank-issued Amex (but pay surcharges at the checkout). Some keep much of the gains for themselves (via no rewards/low cost cards, with lower costs for the retailer).
So now, consumers who don't want to pay the overhead of interchange-funded rewards for everyone else don't have to.
(Disclosure: I ran portfolio management/cross sell/profitability/customer retention for an Australian credit card issuer during the period that interchange there was capped and progressively forced down. Later, I was the Netherlands representative on one of the card schemes' European advisory committee.)
> Definitely not a win for consumers, who in aggregate lose out. The margins to make the system work are built into the prices you pay at the checkout.
While not wrong don't forget that cash also has costs that are built into the system - there are a number of theft ways to lose money with cash that don't apply to cards. Even when everyone is honest there is the time cost to count all that cash. Somewhere between the two is mistakes in counting.
Definitely not a win for consumers, who in aggregate lose out. The margins to make the system work are built into the prices you pay at the checkout.
Prices are a function of supply and demand. Higher interchange fees hit supply (costs more to produce and sell the same quantity of goods) but they also spur demand, or no merchant would accept the cards with these fees. And indeed some large merchants have (for example) excluded American Express or Discover from their available payment methods for just this reason.
Definitely not a win for consumers, who in aggregate lose out. The margins to make the system work are built into the prices you pay at the checkout.
Other markets like Europe and Australia capped interchange and made it cheaper for retailers and consumers.
This forced banks to redesign their products/rewards/pricing to give consumers a real choice of whether to play or not.
Some consumers decide to fund more of the rewards cost themselves (via cards with annual fees). Some keep high rewards by using new bank-issued Amex (but pay surcharges at the checkout). Some keep much of the gains for themselves (via no rewards/low cost cards, with lower costs for the retailer).
So now, consumers who don't want to pay the overhead of interchange-funded rewards for everyone else don't have to.
(Disclosure: I ran portfolio management/cross sell/profitability/customer retention for an Australian credit card issuer during the period that interchange there was capped and progressively forced down. Later, I was the Netherlands representative on one of the card schemes' European advisory committee.)