Any idea how much of that 1.8% that issuing banks charge goes back to cardholders in the form of rewards and cash back?
a good portion of it
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I think there’s going to be some reckoning in the payments industry in general, though, in the next 5-10 years.
Covid has forced more businesses to go cashless and pay the 3% payment transaction toll, which is a hidden tax we all pay.
Could easily see post-recovery legislation scrutinizing payment players who’ve all seen their stock skyrocket this year, similar to what happened after the GFC with the Durbin Amendment (however flawed that legislation is).
DOJ blocking Visa’s acquisition of Plaid feels like a hint of things to come.
However impressive Stripe has become the core issue for me is that it’s made it really easy to work with a legacy entrenched card processing system, and it’s incentivized to maintain that system rather than replace it with something better.
Roughly 1.8% of a credit transaction fee goes to the bank that issued the card. About 15-30 bps go to the card networks, much higher for cross-border. Acquirer and PSP fees are minimal in comparison. Legislation would be more effective in lowering overall merchant cost by targeting banks and networks.