As far as I can tell, consumer interchange fees in the US are significantly higher than they are in Europe. The interchange fees for Visa and MC consumer products within the EEU are 0.2–0.3%[0][1], whereas in the US they are from 1–3%[2][3].
I asked ChatGPT about this. It said for interchange portion, sure. I'm not sure if EU payment processors finds a way to make it up in different portions of the fees so that it evens out to the same 1-3%?
Not really, no. It's more than enough for them to operate on. The only downside from the American point of view is that banks very rarely offer cashback, points, etc.
> In Europe, credit card processing fees are generally lower compared to other regions, partly due to regulatory caps on interchange fees. For consumer debit and credit cards issued within the European Economic Area (EEA), the interchange fees are capped at 0.2% and 0.3% of the transaction value, respectively. However, total processing costs for merchants can be higher once all fees are included, often ranging from 1% to 2% per transaction.
You seem to be quoting ChatGPT, and you're not even specifying that it's ChatGPT-4, so I automatically assume ChatGPT-3.5, which hallucinates at an astonishing rate. Regardless, all current LLMs can hallucinate. As ChatGPT's disclaimer says, "ChatGPT can make mistakes. Consider checking important information."
Quoting the relevant statement: "American merchants pay, on average, 1.76% in interchange fees – compared to a 0.96% average in most European nations."
Most of the other sources I'm seeing are quoting even lower numbers. Transactions do seem to have less overhead in Europe than North America.
"If your business wants to accept credit cards, you’ll need to pay a fee. Interchange makes up the bulk of that cost which merchants pay, roughly 75% it."
It makes sense that people are focusing on the interchange fees.
I have not found a single source that indicates European merchants have fees that are comparable in scale to their North American counterparts. If you want to make that argument, you should find an actual source.
> Do North American consumers/merchants pay less in processing fees overall than European/Asian counterparts or is it roughly 1-3% all over the world?
The answer seems to be the opposite. North American merchants pay more.
"Hallucination" is a widely understood and accepted term in the LLM industry. If you want to change that, replying to my comment doesn't seem to be the most effective place to start. I don't know that it's the best term, but it seems better than re-explaining the issue in detail every time.
"Incorrect output" is broader, encompassing other failure modes. If you ask an LLM to respond in JSON with a list of common foods, and it instead writes a paragraph of text that contains a list of common foods, then that would not qualify as a "hallucination" by my understanding of the accepted definition, but it is still "incorrect output".
"Incorrect output" is still correct to describe the cited behavior. "Hallucination" isn't. If a human behaves the same way when asked a question, we do not say he's hallucinating.
One way to devalue incorrect terminology is to call it out when you see it, and use something accurate instead. That's how people learn.
In addition to the interchange fee, the payment processors and the banks involved in the transaction charge their own fees. When I last checked it in Finland a few years ago, the list price from a traditional payment processor with a monthly fee was a little under 1%, assuming that the card was a European consumer credit card. Business cards and foreign cards could have higher fees, up to around 1.5%. Non-traditional payment processors without a monthly fee charged a bit under 2% for every transaction, regardless of the card.
Also, regulatory caps are not the real reason for lower fees. In some European countries, banks were traditionally focused on efficiency. Because merchants were used to cheap payment methods, credit cards didn't become widely accepted until the fees got low enough. Then the EU and the common market happened. The efficient banks with low fees realized they could gain market share in other countries by offering cheaper payment services. Visa and MasterCard didn't like that and tried to ban the practice. Then the EU didn't like that and eventually ended up imposing a cap on interchange fees.
Trump got more votes in 2020 than he did in 2016, IIRC. While some people most likely did flip to Biden in 2020, there were also many, many people who voted 3rd-party in 2016 who didn't in 2020, and I think there was also higher voter turnout.
The danger, as usual for Democrats, isn't people flipping to Trump, it's people not bothering to vote (or giving it to another party like the Greens) because they don't like the Dems' candidate. For the most part, Hillary didn't lose in 2016 because people voted for Trump instead of her; she lost because voters who normally would have voted (D) either stayed at home or voted for a protest party. Biden didn't have so much of a problem this way, for various reasons (voters liked him better to begin with, and they had just lived through the horrors of 4 years of a Trump presidency).
The current (democrat) president was a Senator from Delaware whose nickname was "Credit Card Joe" because he was so friendly to the credit card companies which are big powers in his state. Partisan politics aside, Joe Biden's been known since the 80s as an extremely pro bank and credit card politician.
It’s unfortunate for business planning but probably fortunate for consumers that the FTC and DOJ change leadership with presidential terms —- Biden’s FTC is a much different entity than Trump’s was when Sprint and T Mobile merged.
I mean, Spirit wasn't sold to JetBlue, and Adobe/Figma called off their courtship (likely due to fear of regulator disapproval) with in the past few months.
But before T-mobile bought Sprint, ATT was blocked from acquiring T-mobile.
Meanwhile, TicketMaster/LiveNation/(scalping thing) has demonstrated a textbook consumer-harming monopoly for DECADES with impunity. DECADES.
And politicians and agencies wave hands over "inflation" while the four U.S. meat producers report 90% profit increases (after whining about a "labor shortage"). NINETY PERCENT increases.
Corporate toadies in Congress sit back and pretend that the Fed's feckless interest-rate hikes are all we can do. Disgusting.
Sprint wouldn't have survived as an independent company. They made a fatal mistake by betting the company on WiMax and then the rest of the industry decided to go with 4G LTE instead. This left Sprint without enough capital to build out a competitive nationwide 5G network. Allowing T-Mobile to buy Sprint was a better outcome for consumers than allowing Sprint to slowly go bankrupt as there will now be three viable nationwide networks.
This is completely different. If T-Mobile hadn’t bought Sprint, Sprint would have gone out of business. It had bedn losing money for years.
Then the spectrum they had licenses to - the main reason T-Mobile wanted sprint, would have been auctioned off and probably still would have had t-mobile buy it since they needed it the most.
Besides At&T was already dealing with a ton of debt and if Verizon had bought it, the landscape would have been less competitive
There’s absolutely no fucking chance this deal goes through in the current climate. It’s not clear why they are even trying.
It’s not just the Biden antitrust contingency it’s going to be Visa/MC and the other big banks lining up against it too. And there’s a non-trivial coalition of Republicans also against this kind of thing.
I've always heard Discover was a good company to work for and they had the best customer support. Capital One is the opposite of both of those things so I hope the government steps in here.
+1 for Amex since 2007
A $60k limit, they never mess me around if I dispute a charge, a neat looking clear plastic card and a cute looking black card for my wife …
2-4% cash back (depending what you buy with it) .. we got a $1900 cash back credit last year
Only downside was their built in travel insurance didn’t cover me rebooking a flight because the first airline gave me a refund when they cancelled at 3am with me and my family staying in a hotel room across the street from the airport for a 6am airport arrival
Yes we got refunded but buying 4 tickets with a new airline the morning of our travel date cost me an additional $1800 over my refund. I guess there is no built in credit card insurance for that circumstance . (Screw you for leaving me stranded JetBlue!)
Oh yeah, AmEx, the company that detects fraud on your account, cancels it, and then DOESN'T NOTIFY YOU.
So you start getting notifications from vendors that they canceled your orders right before Christmas, because of trouble with your card. When you call AmEx and ask why the fuck you weren't notified of fraud on your account, they say (and I quote): "Oh we don't do that. We wait for the customer to get in touch with us."
The monumental stupidity and irresponsibility of this "policy" should be evident and disqualifying.
I’m sorry you had that experience, it seems like it really affected your holiday.
I have been proactively notified about fraud by Amex, Discover, as well as other banks. Amex seems to be the loosest with allowing questionable but valid purchases, and my Visa cards the strictest.
Here's another one that relegated my AmEx card to a drawer: To redeem airline-ticket benefits, AmEx forced you to use their own Web portal to book your flights. This inept portal considered LaGuardia and Newark a connection. As in... you can walk from a terminal in one to a terminal in the other to catch the next leg of your flight.
I know someone who wasted two years trying to use a capital one secured credit card to help rebuild their credit history. The initial card offer was a $300 secured card and they figured it was the best they could do, ho hum, and just patiently plugged away
For two years, they used the card routinely, paid if off religiously...sometimes having a monthly spend three times the limit.
They would periodically request either a security deposit refund or to have their credit limit raised - more security deposit or not. Constantly denied, automatically, even when trying to escalate it with customer service agents. I forget the term, but when you essentially trade in one type of card for another from the same company - tried that too. Denied.
Finally, on a whim they tried another company, and got instant approval for an unsecured $3,000 limit card.
They stopped using the Capital One card except for a service or two that totaled $10, maybe $20/month.
2-3 months later, Capital One did a soft pull where the new card showed up and within days of the pull, refunds the security balance and moves them to an unsecured card with $3k credit limit.
That certainly sucks, but also kind of makes sense?
Once they had the additional data that another company evaluated them as trustworthy, their trustworthiness to Capital One seems to have gone up. They didn’t want to be the only one bearing risk.
Meanwhile Discover’s secured card offering becomes unsecured in six months and they give you periodic updates on how much time is left and how you’re doing.
My experience with the Capital One secured card is the same as their story.
And the difference between the two companies here is the difference between them in every way.
Even little stuff like when I give my info to Discover’s customer support robot before I talk to a human, the human has all the info. Meanwhile when I do the same with Capital One customer support, I usually need to give the same info to the human again.
They didn't have good credit, so the Capital One card helped them establish it.
Then they got a better card with another company based on that credit.
Now having two cards improves your credit further, as well as using a lesser proportion of your overall credit. So Capital One upgraded their card.
Literally all of this is working as intended and it's just credit score algorithms. Your friend didn't waste two years on the Capital One card -- they built credit history with it.
This story parallels the stories here of people staying at their employer hoping to get raises, but then ultimately switching to another one who values their experience more than their former employer.
> For two years, they used the card routinely, paid if off religiously...sometimes having a monthly spend three times the limit.
While I don't know exactly what's going on in your friend's case, this makes for an unprofitable customer from the credit card company's point of view.
Now, obviously they want to get paid, but for them the ideal customer is one who maxes out the card and then makes the minimum payment every month, thus incurring an interest charge, or better still, makes the minimum payment, but late, thus incurring a late fee on top of the interest.
Customers who pay off the card every month don't provide any interest to the credit card company.
This is the strategy… someone else always wants you more than the company that’s already got you.. seems to work for telecommunications contracts as well
To add more anecdata: C1 has all of my accounts from savings, checking, and two CC's. I've never had a problem. Their customer support has always helped.
That being said, all my eggs in one basket is terrible (though instant transfers + 4.35% savings is great - I keep about $30 in my checking and transfer over whenever a charge will go through, and thus maximize my interest gained!)
A bit off-topic but this seems a bit risky to me. I always keep two completely separate banks with a balance to sustain me 30 days. (I know this is a luxury).
I fear a bank locking my account(s) and unable to pay bills.
I completely agree - I will slowly begin transferring a part of my usage to Amex's savings + checking offerings now that I'm a customer of theirs. The instant transfer is very convenient but it's not worth the risk.
> I've always heard Discover was a good company to work for and they had the best customer support. Capital One is the opposite of both of those things so I hope the government steps in here.
You want the government to step in because you don’t like what you’ve heard about capital one’s customer service and work culture?
That's what he said. There's nothing wrong with it, either.
And don't bother pretending to think that he wants the government to use his opinion as justification. That's obviously where you're going, so don't insult the rest of us by continuing.
> “Capital One is the opposite of both those things”
I am biased, I worked for Capital One out of college for 4 years as a software engineer and had a wonderful experience. It was the best place for me to learn industry and professional engineering, and I felt the company culture / company itself was a fantastic place to work. So respectfully I disagree.
C1 has a huge base in NoVa, and everyone I've known to work there seem to enjoy it.
As a customer though you're right, Discover is leaps and bounds better than Capital One. Walmart of all people is suing them for their terrible customer service, and that speaks volumes. I will cancel my Discover cards if this goes through.
Is Capital one just really bad customer service or do they other questionable things like add charges and fees that are not legitimate? I was interested in them since the seem to be the only provider offers virtual credit cards for security but if they are that bad I will consider them.
Visa and Mastercard and their highly anticompetitive tactics early in the network landgrab for the payment card space foretold what would happen in the tech space (that is to say do whatever you can to win the landgrab which is exactly what Google/FB did). DFS never caught on. Now the landscape has changed and this deal sort of serves as a bookend. People in fintech should go after the Visa/MC monopoly. There is no “network” and people are paying legacy fees just because it’s what they know.
I actually think it’s worse because it’s not as natural of a monopoly as it was for the payment network space. Google and Meta actively created a duopoly in the ad space and at a global scale too.
No. For many of us it irrelevant if there is duopoly in the ad space because we don't use Facebook and we use ad-blockers. But in the payment space VISA/MC charge high fees which are passed onto all consumers.
Well in the ad space, we are talking about ad buyers not so much consumers. I think a good analogy would be if ABC and NBC purchased all other broadcasters and cable channels in the 80s. And then they go and purchased all INTERNATIONAL broadcasters.
> For many of us it irrelevant if there is duopoly in the ad space because we don't use Facebook and we use ad-blockers. But in the payment space VISA/MC charge high fees which are passed onto all consumers.
Products that you buy have their marketing priced in. Even if you don't see the adds you are still paying for them.
Visa and MC only take .1% of the 2.9% you are thinking of. The rest goes to the banks on either side of the transaction (one for the merchant, one for the purchaser).
They are however building more “solutions” to try and capture more of the transaction fees, but most people’s disdain for the payment rails would be better redirected at the banks in this case.
Networks (credit card rails) are dead long term. Capital One is buying a less than prime customer base instead of organic growth (plus the deposits). The profit is in the revolving interest on a customer base that carries a balance, not the interchange and network.
Tangentially, it’s questionable how sustainable this is. This customer base is under material financial stress, and no one knows what’s going to happen next.
I find a lot of these kinds of critiques of subprime lending to be disturbingly patronizing. The notion that some third party (the government, presumably) ought to be decreeing that people whose credit is (in this article’s words) so bad that they can’t qualify for a $300 limit at 27% interest, should just not be allowed to access legal credit at all. Terms get worse as you prove you’re an unwise risk. That’s just math. If you ask the people who are opening these credit cards, they’ll tell you that yes they do want the credit. They would rather have that than not have it. And they’re adults. And suspiciously, it’s only years after voluntarily taking this money that some of them turn around and complain about “predatory lending.”
If we ban all forms of subprime (or make it impossible with interest rate caps, etc) the most desperate bad-with-credit people, whom we’re supposedly trying to protect, will still find a way to borrow money anyway, at far worse terms—this is what loan sharks do. You can’t fix humans with regulation.
I've railed on this topic in the past on HN. We've built a society where debt (credit, loans, etc) in some form is essential to virtually anyone's participation in the economy. Blocking poor people out of this system doesn't do anything to help them, nor does it meaningfully move the needle in terms of the total risk existing in our economy. Nobody is better off without Discover or Capital One.
Colorado’s HB1229 became law, and several other states have pending consumer lending legislation capping rates at 25%. You can’t fix humans (especially when they’re forced to exist in this dystopian economic system), but you can reduce the exploitation with legislation. Even adults need protection, depending on circumstances, and their status as an adult isn’t a free pass to harm.
But heh, that’s just the law. We can change the definition of legal credit with the stroke of a pen (see above).
> Even adults need protection, depending on circumstances
I think the argument is that it's not protection. If someone won't lend to you at 25% (but they would at 27%), then you can't borrow. Is it protection to just prevent those people from borrowing at all?
At least in the case of auto loans, usury limits do not limit subprime credit access. If you want to refer specifically to deep subprime unsecured model profitability, if it’s profitable, clearly there is room for margin compression through interest rate limits.
> Yes. Usury law serves this purpose, to draw a line.
I do not understand what you're trying to say here. We're talking about
- putting an upper limit on the interest rate for loans (which is what said usary limits _are_), and
- if that means some people cannot get loans, and
- if that inability to get a loan is really helping that person
The fact that usary law exists and puts a limit on the interest rate for loans doesn't answer the question, since it's only the starting point from which the question is asked.
That being said, what you linked seems to say something along the lines of
1. For dealer + bank loan setups, the usary limits do indeed reduce the ability of the dealer setup a loan (with the bank) for a buyer. This is the case we were originally talking about, for which we have an unanswered question.
2. For BHPH (the car dealer is the one doing the loan), the limit is worked around by increasing the amount of the loan. This _seems_ to be similar to buying points on a loan. This seems like a better tradeoff than "a loan isn't possible", since the buyer still has an option (where they wind up paying more by the end, but with less risk; to both parties). My thought would be that this is actually helpful for the buyer, but it's debateable.
The logic is, our ancestors and our current laws are there for a reason. And to push aside ursary laws, and their logic without reading in depth the logic as to why, is throwing away valuable, empirically derived, real world research.
And sometime the corporate body needs externally deroved guardrails.
That said, secured credit cards exist. No one need be given credit, to have a credit card. And secured can lead to unsecured in time.
Companies have this as a patch already. And they want to lend, so market forces work here.
And there already is a limit under ursary laws, and yet magically, we still have sub prime credit. So to both sides of this discussion I say, ursary doesn't solve having subprime, because there is always a subprime.
Remove existing subprime clients, and the next tier becomes the new subprime. It's merely a label for the "riskiest people we lend to".
Chase that label, and eventually no one will be lent to. At all.
What I'm saying is that it's hard to tell if the usary limits actually provide a benefit to the borrowers. And I'm discussing the topics related to figuring out if they do or don't.
And what you appear to be saying is that we need those limits because we've always had those limits, and because limits are good. And that the limits don't limit people because secured credit cards exist. Which doesn't really speak to the question I was trying to raise... of whether or not those usary limits provide the benefits they are supposed to.
Well I'm also saying that those limits exist because of historical reasons, and those reasons were derived from issues in the past, and we should examine that context, and logic for those laws, before questioning if we need usury laws.
Why? Because they've done a lot of research, and there was lead up, there were issues, that caused those laws to exist. Study that, before we ponder is what I say.
> Well I'm also saying that those limits exist because of historical reasons, and those reasons were derived from issues in the past, and we should examine that context, and logic for those laws, before questioning if we need usury laws.
Yes, I understand and agree with the concept of Chesterton's Fence. And examining that context and the logic for those laws is precisely what I'm trying to do here.
I think I'm on your side because it's possible for anyone to understand how interest works and make these judgements themselves.
But a lot of people just straight up don't understand interest (despite it being within their capabilities) and e.g. make minimum payments on their loans and complain when the balance goes up. A particularly egregious case (because the people in question are educated) is when people make minimum payments on student loans and don't seem to understand why the balance is increasing.
The same companies that argue against rate limits also oppose rules that require the terms to be explained in writing in a way a high school dropout would understand (eg how much would you pay in total if you take 3/6/9/12 months to repay). And in a normal font size.
Not to mention that retailers are getting screwed harder all the time. I thought that the major cards had set fees across their brands, but NO: retailers are screwed at all different levels by different ISSUERS. Apparently Capital One is one of (if not THE) worst, coming in at something obscene like 4.5%.
That's the entire profit margin of some businesses. At least some places like L.A. are taking tiny steps to prevent a total takeover by these assholes by outlawing "cashless" businesses.
The Obama administration did! That's why these have returned.
I was disappointed by many of the "reforms" passed under Obama, but this one in particular and some other banking-related ones stand out as truly helpful.
I hope the government regulations don’t just end at stopping the merger, but also disallowing these financial institutes from banning users for speech they deem harmful. Actual illegal use, sure, but im not sure how or why it’s legal for them to ban and remove banking abilities from someone for their political views no matter how “abhorrent”.
It's legal because the 1st Amendment is narrowly drafted to the point of uselessness. Censorship is only the result of actions by the sovereign - i.e. the local legitimate violence monopoly. Any other kind of monopoly? Sorry, that's actually just their freedom of association. And, ironically, their own freedom of speech: Comcast argued in front of courts that any sort of common carrier regulation on Internet traffic would be censoring Comcast.
As for "abhorrent views", I'm of two minds. Many of those "abhorrent views" are themselves calls to commit censorship. I don't think political speech calling for censorship should be protected by the 1st Amendment, because of the chilling effects that speech causes, even if the law itself would be immediately invalidated by SCOTUS. On the other hand, having private actors make the final call on what speech is permissible is also wrong, because we have no judicial recourse should they make a mistake. But there's also a lot of very impermissible conduct - i.e. doxing, spam, etc - that should be illegal, isn't illegal, but is only held at bay because of intermediaries having unlimited censorship power over their own platforms. From the perspective of a court, bringing these platforms into the scope of the 1st Amendment would be a net negative.
Well because these banks can only function from the money they borrow from the government, it’s insane they’re allowed to censor 1st amendment protected speech.
I don't think banks borrow any money from the government, unless you're thinking of really convoluted things like the department of agriculture partially insuring equipment loans to farmers against default.
That's not borrowing from the gov. and it's not even most banks though.
As a foreigner without a credit score, Discover was the easiest credit card to get started with. They made things easy and predictable and I love that you get cash back and not some points that you need to convert back to dollars.
I hope they keep that spirit of being straightforward.
Antitrust help is badly needed here. I recently tried to open a new Capital One card despite having two very old high spend accounts that are always paid off and got denied twice. I have zero debt and millions in assets. The first time I was denied it was some TransUnion thing. The second time it was basically random. There is no person to call and reopen your case, you just have to start over from scratch and hope you mysteriously float through.
This is a generally unsurprising event to industry, but exciting nevertheless.
Cap One and Discover both focus on the nearprime / subprime / thin credit / credit invisible segments (think people who have bad credit, expats, students, etc.). Cap One is excellent in their analytics on understanding people, and likely sees Discover as an opportunity to acquire new customers + improve on Discover's operations.
The network side of Discover's business is intriguing. Its nowhere near as sophisticated as Visa/Mastercard, but it is something! The idea may be to turn into an Amex focused on everything but prime consumers, and use the improved economics (from owning both sides of the transaction) to give rewards (at least something) to cardholders who don't normally see them. I doubt their intention is to build a serious competitor to the card networks.
I live in DC and friends who work for Capitol One call it "the Google of the east" because of putative tech savvy and innovation. Can anyone verify this claim?
It's not Google (Google isn't Google anymore), but if you search around for the winners of the intern competitions they hold every year, you'll find a surprising amount of intensely competent people who have done very interesting things in the years since.
I worked there for 1.5 years. There's lots of smart people. There's lots of people hiding in the bureaucracy of a large bank that get away with very little action. I haven't worked at Google so I can't comment on that. Overall it was a good experience but things moved very slow.
You can also walk into a brand new project there that has business logic crammed into a towering, nested for/if spaghetti monster living forevermore in a spring controller method. True story. It just went into production.
They’re a bank that likes to pretend they’re a tech company. In some ways, they’re right: they embrace a lot of “hard tech”, are all-in on things like cloud, and definitely value engineering skills which shows through their well-regarded program for new engineers. However at the end of the day, they’re also still a bank and suffer from the same bureaucracy and politics that every other bank does.
I can't think of a similarly large company HQed out east with as large a tech presence. Lots of internal tools and projects have been OSSed or productionized like at Google as well
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[ 4.9 ms ] story [ 192 ms ] threadSo... it is highly possible/more than likely it will not go through?
[0] https://www.visa.co.uk/dam/VCOM/regional/ve/unitedkingdom/PD...
[1] https://www.mastercard.co.uk/content/dam/public/mastercardco...
[2] https://usa.visa.com/content/dam/VCOM/download/merchants/vis...
[3] https://www.mastercard.us/content/dam/public/mastercardcom/n...
A non-GPT source: https://www.lendingtree.com/credit-cards/articles/na-vs-eu-i...
Quoting the relevant statement: "American merchants pay, on average, 1.76% in interchange fees – compared to a 0.96% average in most European nations."
Most of the other sources I'm seeing are quoting even lower numbers. Transactions do seem to have less overhead in Europe than North America.
You keep talking about interchange fees
That’s one part of the equation
"If your business wants to accept credit cards, you’ll need to pay a fee. Interchange makes up the bulk of that cost which merchants pay, roughly 75% it."
It makes sense that people are focusing on the interchange fees.
I have not found a single source that indicates European merchants have fees that are comparable in scale to their North American counterparts. If you want to make that argument, you should find an actual source.
> Do North American consumers/merchants pay less in processing fees overall than European/Asian counterparts or is it roughly 1-3% all over the world?
The answer seems to be the opposite. North American merchants pay more.
"Incorrect output" is broader, encompassing other failure modes. If you ask an LLM to respond in JSON with a list of common foods, and it instead writes a paragraph of text that contains a list of common foods, then that would not qualify as a "hallucination" by my understanding of the accepted definition, but it is still "incorrect output".
One way to devalue incorrect terminology is to call it out when you see it, and use something accurate instead. That's how people learn.
Also, regulatory caps are not the real reason for lower fees. In some European countries, banks were traditionally focused on efficiency. Because merchants were used to cheap payment methods, credit cards didn't become widely accepted until the fees got low enough. Then the EU and the common market happened. The efficient banks with low fees realized they could gain market share in other countries by offering cheaper payment services. Visa and MasterCard didn't like that and tried to ban the practice. Then the EU didn't like that and eventually ended up imposing a cap on interchange fees.
"how much are payment processing fees in north america compared to europe/asia"?
All of the people who didn't vote for Trump in 2020, why would they flip from Democrat to Republican and vote for him in 2024?
The danger, as usual for Democrats, isn't people flipping to Trump, it's people not bothering to vote (or giving it to another party like the Greens) because they don't like the Dems' candidate. For the most part, Hillary didn't lose in 2016 because people voted for Trump instead of her; she lost because voters who normally would have voted (D) either stayed at home or voted for a protest party. Biden didn't have so much of a problem this way, for various reasons (voters liked him better to begin with, and they had just lived through the horrors of 4 years of a Trump presidency).
Here are some Left leaning articles on the matter: https://www.motherjones.com/politics/2019/11/biden-bankruptc... https://www.propublica.org/article/bidens-cozy-relations-wit...
But before T-mobile bought Sprint, ATT was blocked from acquiring T-mobile.
Meanwhile, TicketMaster/LiveNation/(scalping thing) has demonstrated a textbook consumer-harming monopoly for DECADES with impunity. DECADES.
And politicians and agencies wave hands over "inflation" while the four U.S. meat producers report 90% profit increases (after whining about a "labor shortage"). NINETY PERCENT increases.
Corporate toadies in Congress sit back and pretend that the Fed's feckless interest-rate hikes are all we can do. Disgusting.
Then the spectrum they had licenses to - the main reason T-Mobile wanted sprint, would have been auctioned off and probably still would have had t-mobile buy it since they needed it the most.
Besides At&T was already dealing with a ton of debt and if Verizon had bought it, the landscape would have been less competitive
It’s not just the Biden antitrust contingency it’s going to be Visa/MC and the other big banks lining up against it too. And there’s a non-trivial coalition of Republicans also against this kind of thing.
Only downside was their built in travel insurance didn’t cover me rebooking a flight because the first airline gave me a refund when they cancelled at 3am with me and my family staying in a hotel room across the street from the airport for a 6am airport arrival
Yes we got refunded but buying 4 tickets with a new airline the morning of our travel date cost me an additional $1800 over my refund. I guess there is no built in credit card insurance for that circumstance . (Screw you for leaving me stranded JetBlue!)
So you start getting notifications from vendors that they canceled your orders right before Christmas, because of trouble with your card. When you call AmEx and ask why the fuck you weren't notified of fraud on your account, they say (and I quote): "Oh we don't do that. We wait for the customer to get in touch with us."
The monumental stupidity and irresponsibility of this "policy" should be evident and disqualifying.
At least Bank of America sends me a text and a popup.
I have been proactively notified about fraud by Amex, Discover, as well as other banks. Amex seems to be the loosest with allowing questionable but valid purchases, and my Visa cards the strictest.
Here's another one that relegated my AmEx card to a drawer: To redeem airline-ticket benefits, AmEx forced you to use their own Web portal to book your flights. This inept portal considered LaGuardia and Newark a connection. As in... you can walk from a terminal in one to a terminal in the other to catch the next leg of your flight.
WTF.
For two years, they used the card routinely, paid if off religiously...sometimes having a monthly spend three times the limit.
They would periodically request either a security deposit refund or to have their credit limit raised - more security deposit or not. Constantly denied, automatically, even when trying to escalate it with customer service agents. I forget the term, but when you essentially trade in one type of card for another from the same company - tried that too. Denied.
Finally, on a whim they tried another company, and got instant approval for an unsecured $3,000 limit card.
They stopped using the Capital One card except for a service or two that totaled $10, maybe $20/month.
2-3 months later, Capital One did a soft pull where the new card showed up and within days of the pull, refunds the security balance and moves them to an unsecured card with $3k credit limit.
Once they had the additional data that another company evaluated them as trustworthy, their trustworthiness to Capital One seems to have gone up. They didn’t want to be the only one bearing risk.
My experience with the Capital One secured card is the same as their story.
And the difference between the two companies here is the difference between them in every way.
Even little stuff like when I give my info to Discover’s customer support robot before I talk to a human, the human has all the info. Meanwhile when I do the same with Capital One customer support, I usually need to give the same info to the human again.
They get the interest on the deposit and lower costs (fewer transfers per month paying off the balance of the card.) They didn't care.
They didn't have good credit, so the Capital One card helped them establish it.
Then they got a better card with another company based on that credit.
Now having two cards improves your credit further, as well as using a lesser proportion of your overall credit. So Capital One upgraded their card.
Literally all of this is working as intended and it's just credit score algorithms. Your friend didn't waste two years on the Capital One card -- they built credit history with it.
While I don't know exactly what's going on in your friend's case, this makes for an unprofitable customer from the credit card company's point of view.
Now, obviously they want to get paid, but for them the ideal customer is one who maxes out the card and then makes the minimum payment every month, thus incurring an interest charge, or better still, makes the minimum payment, but late, thus incurring a late fee on top of the interest.
Customers who pay off the card every month don't provide any interest to the credit card company.
That being said, all my eggs in one basket is terrible (though instant transfers + 4.35% savings is great - I keep about $30 in my checking and transfer over whenever a charge will go through, and thus maximize my interest gained!)
https://www.viobank.com/cornerstone-money-market-savings
I remember when people used to be excited about 1% gains...
I fear a bank locking my account(s) and unable to pay bills.
You want the government to step in because you don’t like what you’ve heard about capital one’s customer service and work culture?
And don't bother pretending to think that he wants the government to use his opinion as justification. That's obviously where you're going, so don't insult the rest of us by continuing.
The FTC should evaluate this deal just like any others and possibly slow/stop it if it finds major anti-trust issues.
1) It's hearsay
2) It's completely subjective
3) Even if everyone agrees its true including the companies, it doesn't constitute a legal basis for government intervention
I am biased, I worked for Capital One out of college for 4 years as a software engineer and had a wonderful experience. It was the best place for me to learn industry and professional engineering, and I felt the company culture / company itself was a fantastic place to work. So respectfully I disagree.
As a customer though you're right, Discover is leaps and bounds better than Capital One. Walmart of all people is suing them for their terrible customer service, and that speaks volumes. I will cancel my Discover cards if this goes through.
quota to pip 15% of the workforce, stack ranking, Amazon managers, downleveling by default, etc
Products that you buy have their marketing priced in. Even if you don't see the adds you are still paying for them.
Marketing costs are not included in Gross Profit Margin calculations, and don't have an impact on COGS.
Marketing spend is primarily used to grow your TAM and channel customers to your product, but is very marginal spend wise.
They are however building more “solutions” to try and capture more of the transaction fees, but most people’s disdain for the payment rails would be better redirected at the banks in this case.
Networks (credit card rails) are dead long term. Capital One is buying a less than prime customer base instead of organic growth (plus the deposits). The profit is in the revolving interest on a customer base that carries a balance, not the interchange and network.
https://investorrelations.discover.com/newsroom/press-releas...
This should come as no surprise, as subprime is what Capital One does.
https://newrepublic.com/article/155212/worked-capital-one-fi...
Tangentially, it’s questionable how sustainable this is. This customer base is under material financial stress, and no one knows what’s going to happen next.
https://fred.stlouisfed.org/series/CCLACBW027SBOG
https://fred.stlouisfed.org/series/DRCCLACBS
https://www.cnbc.com/2024/02/06/credit-card-delinquencies-su...
I find a lot of these kinds of critiques of subprime lending to be disturbingly patronizing. The notion that some third party (the government, presumably) ought to be decreeing that people whose credit is (in this article’s words) so bad that they can’t qualify for a $300 limit at 27% interest, should just not be allowed to access legal credit at all. Terms get worse as you prove you’re an unwise risk. That’s just math. If you ask the people who are opening these credit cards, they’ll tell you that yes they do want the credit. They would rather have that than not have it. And they’re adults. And suspiciously, it’s only years after voluntarily taking this money that some of them turn around and complain about “predatory lending.”
If we ban all forms of subprime (or make it impossible with interest rate caps, etc) the most desperate bad-with-credit people, whom we’re supposedly trying to protect, will still find a way to borrow money anyway, at far worse terms—this is what loan sharks do. You can’t fix humans with regulation.
But heh, that’s just the law. We can change the definition of legal credit with the stroke of a pen (see above).
I think the argument is that it's not protection. If someone won't lend to you at 25% (but they would at 27%), then you can't borrow. Is it protection to just prevent those people from borrowing at all?
https://www.law.cornell.edu/wex/usury
At least in the case of auto loans, usury limits do not limit subprime credit access. If you want to refer specifically to deep subprime unsecured model profitability, if it’s profitable, clearly there is room for margin compression through interest rate limits.
https://www.fdic.gov/analysis/cfr/consumer/2015/presentation...
I do not understand what you're trying to say here. We're talking about
- putting an upper limit on the interest rate for loans (which is what said usary limits _are_), and
- if that means some people cannot get loans, and
- if that inability to get a loan is really helping that person
The fact that usary law exists and puts a limit on the interest rate for loans doesn't answer the question, since it's only the starting point from which the question is asked.
That being said, what you linked seems to say something along the lines of
1. For dealer + bank loan setups, the usary limits do indeed reduce the ability of the dealer setup a loan (with the bank) for a buyer. This is the case we were originally talking about, for which we have an unanswered question.
2. For BHPH (the car dealer is the one doing the loan), the limit is worked around by increasing the amount of the loan. This _seems_ to be similar to buying points on a loan. This seems like a better tradeoff than "a loan isn't possible", since the buyer still has an option (where they wind up paying more by the end, but with less risk; to both parties). My thought would be that this is actually helpful for the buyer, but it's debateable.
And sometime the corporate body needs externally deroved guardrails.
That said, secured credit cards exist. No one need be given credit, to have a credit card. And secured can lead to unsecured in time.
Companies have this as a patch already. And they want to lend, so market forces work here.
And there already is a limit under ursary laws, and yet magically, we still have sub prime credit. So to both sides of this discussion I say, ursary doesn't solve having subprime, because there is always a subprime.
Remove existing subprime clients, and the next tier becomes the new subprime. It's merely a label for the "riskiest people we lend to".
Chase that label, and eventually no one will be lent to. At all.
What I'm saying is that it's hard to tell if the usary limits actually provide a benefit to the borrowers. And I'm discussing the topics related to figuring out if they do or don't.
And what you appear to be saying is that we need those limits because we've always had those limits, and because limits are good. And that the limits don't limit people because secured credit cards exist. Which doesn't really speak to the question I was trying to raise... of whether or not those usary limits provide the benefits they are supposed to.
Why? Because they've done a lot of research, and there was lead up, there were issues, that caused those laws to exist. Study that, before we ponder is what I say.
Yes, I understand and agree with the concept of Chesterton's Fence. And examining that context and the logic for those laws is precisely what I'm trying to do here.
But a lot of people just straight up don't understand interest (despite it being within their capabilities) and e.g. make minimum payments on their loans and complain when the balance goes up. A particularly egregious case (because the people in question are educated) is when people make minimum payments on student loans and don't seem to understand why the balance is increasing.
That's the entire profit margin of some businesses. At least some places like L.A. are taking tiny steps to prevent a total takeover by these assholes by outlawing "cashless" businesses.
I was disappointed by many of the "reforms" passed under Obama, but this one in particular and some other banking-related ones stand out as truly helpful.
More discussion over here: https://news.ycombinator.com/item?id=39433109
As for "abhorrent views", I'm of two minds. Many of those "abhorrent views" are themselves calls to commit censorship. I don't think political speech calling for censorship should be protected by the 1st Amendment, because of the chilling effects that speech causes, even if the law itself would be immediately invalidated by SCOTUS. On the other hand, having private actors make the final call on what speech is permissible is also wrong, because we have no judicial recourse should they make a mistake. But there's also a lot of very impermissible conduct - i.e. doxing, spam, etc - that should be illegal, isn't illegal, but is only held at bay because of intermediaries having unlimited censorship power over their own platforms. From the perspective of a court, bringing these platforms into the scope of the 1st Amendment would be a net negative.
That's not borrowing from the gov. and it's not even most banks though.
I hope they keep that spirit of being straightforward.
Cap One and Discover both focus on the nearprime / subprime / thin credit / credit invisible segments (think people who have bad credit, expats, students, etc.). Cap One is excellent in their analytics on understanding people, and likely sees Discover as an opportunity to acquire new customers + improve on Discover's operations.
The network side of Discover's business is intriguing. Its nowhere near as sophisticated as Visa/Mastercard, but it is something! The idea may be to turn into an Amex focused on everything but prime consumers, and use the improved economics (from owning both sides of the transaction) to give rewards (at least something) to cardholders who don't normally see them. I doubt their intention is to build a serious competitor to the card networks.
I can't think of a similarly large company HQed out east with as large a tech presence. Lots of internal tools and projects have been OSSed or productionized like at Google as well
Either way, funny.