JPMorgan, BofA and Others Explore Buying Card Network to Raise Debit-Card Fees

wsj.com37 pointsby JumpCrisscross17 comments

Discussion summary

Major banks like JPMorgan and BofA are exploring acquiring card networks to increase debit-card fees. Discussions include concerns over greed, regulation, and the impact on consumers and market competition.

What the discussion says

Some see the move as a way for banks to boost profits amid fee increases.
Critics argue this could lead to higher costs for consumers.
Others believe regulation should prevent excessive fee hikes.
There is concern about market dominance and reduced competition.

“Imagine being so greedy you might upset your cash cow and market dominance for a 20% gain.”
— toomuchtodo

“Their articles of incorporation demand maximization, so they will do anything to grow profits.”
— altairprime

Comments

Hacker News

cancer gonna cancer, amiright

by cyanydeez

Back when I was shopping (2022) for a good secured credit card, I consulted NerdWallet among other sites. I found that Discover Card offered good deals for newbies, as well as some sweet cash-back bonuses.

Then I found out why the deals were so so good: Discover Card has low acceptance, especially internationally, and this is often because Discover charges relatively high transaction fees. I also learned that Discover, despite its reputation and age, had only one physical branch, in Delaware or something, and so my inner masochist immediately recognized my true financial love.

I also picked up a Discover Bank checking account, which has even lower acceptance rates, but also offers 1% cash-back if I feel like an adventure.

Since then, Discover eliminated their sole physical branch location, and their credit card division was also acquired by Capital One, https://m.xkcd.com/2206/

But I feel like the proliferation now of Apple/Google/Samsung Pay, Zelle, PayPal, Venmo, et al., will stave off any large-scale gouging of consumers through transaction fees.

by ButlerianJihad

Discover is widely accepted in South Korea thanks to a nationwide partnership with BC Card and Woori Card networks. That was kinda nice when I visited.

I liked Discover. They were one of the few issuers that supported seeing transaction history in the Apple Wallet app. Now with the Capital One acquisition they are dropping that.

by lambda_lord

Apple/Google/Samsung Pay are primarily used to link to credit cards, and the transaction still run through the card. Zelle is owned by a group of banks. PayPal and Venmo are the same company and in some areas, like Australia, they directly handle in-person payments, but in the US those payments are run through a debit card network, for regulatory reasons.

by dlcarrier

Maybe in US, there are countries where these fees are regulated.

Nonetheless late stage capitalism is nothing but awful.

by pjmlp

Anything but offering pay by bank on cheap FedNow instant payment rails.

by toomuchtodo

Imagine being so greedy you might upset your cash cow and market dominance for a 20% gain. Unreal levels of hubris here.

by 4d4m

If they don’t grow their growth in profits, their stocks will crater. What else could they do? Their articles of incorporation demand maximization.

by altairprime

Sounds like the law needs to be amended to prevent this. Not just for these "what if" scenarios, but for Capital One who's already in this position.

If anything, interchange fees should be brought down for credit cards to match those for debit cards. Europe has them capped at rates far lower than the US. With so many people paying with credit cards, retailers have adjusted prices to compensate, which is effectively a consumption tax paid to Visa, Mastercard, and AmEx... even if you don't use a credit card those added fees are still baked into the price. It's only on big ticket items where it's possible to ask for a cash discount, which is usually discounted by whatever interchange fee the store is paying for credit purchases.

by al_borland

People have happily made their worlds more expensive for "points". In what cases are these points actually more valuable than the 1% more the consumer pays for them? Or is just the case that card users are pitted against cash and cash users are the losers?

by quantified

The whole law and its precursors are poorly written. It's all reactionary and heavily lobbied, with no thought put into likely side effects.

Because of how banking transactions are regulated in the US, our cards have much worse security than any other country and force vendors to directly take the fraud losses, while charging them higher transaction fees. The more we try to fix it, the worse it gets.

Even if you want to use a debit card to get the added security of a PIN, if the card number is exposed in a data breach it can still be run as a credit card.

There is some hope that newer payment processors like PayPal and CashApp can get a foothold, but chances are if Visa and MasterCard start seeing some real competition, we'll get another act ensuring that Visa and MasterCard are the only viable options.

by dlcarrier

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Hacker News
cancer gonna cancer, amiright
by cyanydeez
Back when I was shopping (2022) for a good secured credit card, I consulted NerdWallet among other sites. I found that Discover Card offered good deals for newbies, as well as some sweet cash-back bonuses.
Then I found out why the deals were so so good: Discover Card has low acceptance, especially internationally, and this is often because Discover charges relatively high transaction fees. I also learned that Discover, despite its reputation and age, had only one physical branch, in Delaware or something, and so my inner masochist immediately recognized my true financial love.
I also picked up a Discover Bank checking account, which has even lower acceptance rates, but also offers 1% cash-back if I feel like an adventure.
Since then, Discover eliminated their sole physical branch location, and their credit card division was also acquired by Capital One, https://m.xkcd.com/2206/
But I feel like the proliferation now of Apple/Google/Samsung Pay, Zelle, PayPal, Venmo, et al., will stave off any large-scale gouging of consumers through transaction fees.
by ButlerianJihad
Discover is widely accepted in South Korea thanks to a nationwide partnership with BC Card and Woori Card networks. That was kinda nice when I visited.
I liked Discover. They were one of the few issuers that supported seeing transaction history in the Apple Wallet app. Now with the Capital One acquisition they are dropping that.
by lambda_lord
Apple/Google/Samsung Pay are primarily used to link to credit cards, and the transaction still run through the card. Zelle is owned by a group of banks. PayPal and Venmo are the same company and in some areas, like Australia, they directly handle in-person payments, but in the US those payments are run through a debit card network, for regulatory reasons.
by dlcarrier
Maybe in US, there are countries where these fees are regulated.
Nonetheless late stage capitalism is nothing but awful.
by pjmlp
Anything but offering pay by bank on cheap FedNow instant payment rails.
by toomuchtodo
Imagine being so greedy you might upset your cash cow and market dominance for a 20% gain. Unreal levels of hubris here.
by 4d4m
If they don’t grow their growth in profits, their stocks will crater. What else could they do? Their articles of incorporation demand maximization.
by altairprime
Sounds like the law needs to be amended to prevent this. Not just for these "what if" scenarios, but for Capital One who's already in this position.
If anything, interchange fees should be brought down for credit cards to match those for debit cards. Europe has them capped at rates far lower than the US. With so many people paying with credit cards, retailers have adjusted prices to compensate, which is effectively a consumption tax paid to Visa, Mastercard, and AmEx... even if you don't use a credit card those added fees are still baked into the price. It's only on big ticket items where it's possible to ask for a cash discount, which is usually discounted by whatever interchange fee the store is paying for credit purchases.
by al_borland
People have happily made their worlds more expensive for "points". In what cases are these points actually more valuable than the 1% more the consumer pays for them? Or is just the case that card users are pitted against cash and cash users are the losers?
by quantified
The whole law and its precursors are poorly written. It's all reactionary and heavily lobbied, with no thought put into likely side effects.
Because of how banking transactions are regulated in the US, our cards have much worse security than any other country and force vendors to directly take the fraud losses, while charging them higher transaction fees. The more we try to fix it, the worse it gets.
Even if you want to use a debit card to get the added security of a PIN, if the card number is exposed in a data breach it can still be run as a credit card.
There is some hope that newer payment processors like PayPal and CashApp can get a foothold, but chances are if Visa and MasterCard start seeing some real competition, we'll get another act ensuring that Visa and MasterCard are the only viable options.
by dlcarrier