Comments on: Credit Card Issuer v. Payment Processor http://www.everyjoe.com/articles/credit-card-issuer-v-payment-processor/ Sports News - Tech Reviews - Entertainment - Life Tips for EveryJoe Thu, 10 Dec 2009 23:52:16 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Jay http://www.everyjoe.com/articles/credit-card-issuer-v-payment-processor/comment-page-1/#comment-339017 Jay Sun, 03 May 2009 08:42:30 +0000 http://www.bizzia.com/?p=16376#comment-339017 This article is flat-out wrong. In actuality, most (almost 90%) of the revenue from what the author refers to as "payment processing fees" goes to the banks issuing the cards. It's Visa and MasterCard that gets the small slice of the pie at less than a tenth of 1% of the transaction amount. Think about it; if the banks aren't making any money off of transactions, why would they offer incentives like rewards and cashback that are based on spending (versus say, interest paid)? Banks make money hand over fist everytime you use your card, and these interchange fees, as they're technically called, are actually one of the biggest controversies surrounding credit cards, as it's the banks that are setting the percentages on these fees! For more info, just google "interchange fees". This article is flat-out wrong. In actuality, most (almost 90%) of the revenue from what the author refers to as “payment processing fees” goes to the banks issuing the cards. It’s Visa and MasterCard that gets the small slice of the pie at less than a tenth of 1% of the transaction amount.

Think about it; if the banks aren’t making any money off of transactions, why would they offer incentives like rewards and cashback that are based on spending (versus say, interest paid)? Banks make money hand over fist everytime you use your card, and these interchange fees, as they’re technically called, are actually one of the biggest controversies surrounding credit cards, as it’s the banks that are setting the percentages on these fees!

For more info, just google “interchange fees”.

]]> By: Jim http://www.everyjoe.com/articles/credit-card-issuer-v-payment-processor/comment-page-1/#comment-339016 Jim Thu, 26 Mar 2009 22:20:05 +0000 http://www.bizzia.com/?p=16376#comment-339016 Visa and Mastercard are toll booths with no credit risk. Amex, Discover collect all the toll plus assume the credit risk of the purchaser; right now they are writing off 7-8% of their loan balances as people overextend themselves and can't pay. Banks collect a small part of the toll from Visa or Mastercard and assume all the credit risk. Visa and Mastercard are toll booths with no credit risk. Amex, Discover collect all the toll plus assume the credit risk of the purchaser; right now they are writing off 7-8% of their loan balances as people overextend themselves and can’t pay. Banks collect a small part of the toll from Visa or Mastercard and assume all the credit risk.

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