MasterCard stings PayPal with payment fee hike PayPal, Google Wallet and other online payment systems face higher transaction fees from MasterCard in retaliation for their refusal to share data on what people are spending. Visa is likely to follow suit. The amount that PayPal has to pay MasterCard for every transaction will go up as the latter introduces new charges for …
But how would that work? you'd have to get the money from the users somehow, you wouldn't just give them infinite credit.
And if they're going to give the PayPal credit card access to their bank account details, then they can already give PayPal as it is access to their bank account so completely avoid any credit card processing charges anyway.
Also, a company can't just issue credit cards, can it? Aside from American Express, aren't all other credit cards linked to either Visa or to Mastercard in one way or another?
Yep, which is why Paypal + Google together would be big enough to create a third CC co.
It is Friday though, I'm likely confused somehow
Mind you PP and Goog do have the advantage of controlling their own quite large payment channels, almost being their own banks effectively in a sense, meaning they can actually prevent any money touching VISA or MC if they choose, for a vast number of transactions.
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"Also, a company can't just issue credit cards, can it?"
Yes, of course it can. For some years when I lived in the US, I had a Sears credit card. Upside, it was easy to get, and Sears sells a lot of useful stuff. Downsides (1) it only worked in Sears, (2) it was subject to per-state credit rules based on which state the cardholder lived in, so moving to certain states induced eyewatering interest rates.
It was a real credit card with all the usual minimum-payment claptrap, not an Amex-style "charge card" where you have to clear the balance every month.
The main restriction on a company that wishes to issue such a card is that it must usually have some sort of banking / credit-issuer license, so it's not something you do lightly.
"That's a "store card". Loads of places do them.
Basically it's an in-house HP agreement, but you only have to do the paperwork once up front."
It passes the "duck" test for a credit card. It's a sliver of plastic that I can hand over in a shop (ok, only one brand of shop, which is why you think it's only a store card) to make payments on "instant" pre-approved credit. And I get monthly bills with the option of paying any amount between an arbitrarily-calculated[*] minimum and the full owing balance. That sounds like a credit card to me, even if it can only be used in one brand of shop. Sure, it isn't a general-purpose credit card, usable at almost any outlet anywhere, but it is still a credit card.
Another point to bear in mind is that some store cards are charge cards, like the classic green/gold/platinum Amex cards, where you have to clear the balance every month. The Sears card I had wasn't like that.
[*] Yes, the calculation of the minimum payment is arbitrary, in the sense that there is no particular virtue in the percentage-of-full being any specific value so the card issuer selects an interesting value, subject to any consumer credit rules and/or Visa/MC network rules. Making the value higher tends to decrease the utility of the card - the largest balance limit I can possibly afford is determined by the minimum-payment fraction and my ability to afford a monthly payment. (In reality, a sane person would say he could only afford X amount less than that, in order to have some level of margin, but we all know that sanity is a bit scarce when we are talking about consumer credit.) Making the value lower attracts more of the more reckless spenders that we, in an ideal world, would not want our bank giving credit to, and if the value is low enough, the cardholder can get stuck with an unreasonably long repayment time if he stops buying with the card but doesn't pay more than the minimum...
Quote: "The main restriction on a company that wishes to issue such a card is that it must usually have some sort of banking / credit-issuer license, so it's not something you do lightly"
Right... So what was the capitalization of a 3rd rate regional bank headquartered, let's say in Six Mile Bottom, Cambridgeshire vs the Google daily spend on fruit and veg for the umpah-lumpahs... Right...
If Google would want to process money end to end it can do so tomorrow. Same for PayPal which already has bank registration in Eu anyway. IMHO both Mastercard and Visa are having a death wish here. Do not trouble the trouble or the trouble will trouble you.
Why do you think that the big CC card companies are set up in Delaware or North Dakota (and other places).
The state laws are extremely friendly towards companies over consumers. .. I think AMEX moved to UTAH at least for their IT although some of it is in FLorida. UT and other states are notoriously anti consumer. That is why you would never want to move there. About 30 years ago AMEX moved their IT to Utah and there was a flood in market place of IT pros who knew better than to move there.
If it were PP+Google+Amazon that would do it. And the CC doesn't have to be accepted everywhere. Just on-line.
This would appear to be disgraceful coercion by Mastercard. Mastercard and Visa have well over 90% market share so a likely consideration by Visa will be whether, by joining the apparent extortion, they will trigger cartel inquiries by the DOJ.
Credit cards get their money from two sources. The user who pays interest, fees, etc. The other half is the merchant. To accept credit cards you need to pay fees for your merchant account. Then you need to pay your monthly fee to your processor (this is why PayPal and Square are popular with craft fair folks as they don't charge you $15-$75 just to say you accept credit cards). Then when you accept a credit card you pay the base charge fee of 28¢ to $1 plus the 1.8% to 4% of the transaction amount.
Paypal/Google could create an immensely popular card by just making the merchants pay just enough to cover the cost the banks will charge them just to get the money to the merchant. Then give users low interest rates and reasonable fees. Of course the regulators will then act at the behest of the big banks and make sure that they have no end of troubles getting this all up and flying.
Actually I should think Google & Paypal could afford to make a new CC company, though whether they'd like to work alongside each other is another matter
That would not be efficient, because that's not where the money is for an organisation like Google. The moment they touch the credit market they will be hit with the requirement to register as a bank, and that they will have to do in any country they operate. At that point the door is wide open for getting hit with charges for every single privacy violation they commit, because the bank obligation to data handling is 100% the opposite of Google's approach.
No, the smart approach is to cut out the rotten core. And Google has the size and the network, just not the right collection of skills. Ironically, so have a lot of other large Internet companies (eBay, Amazon, Facebook) so the race is on for who can acquire the right combination of skills.
Hmm. Must give them a call..
Mastercard and VISA are NOT credit card companies, they are payment processors. It is the issuing bank which provides the credit, not Mastercard or VISA.
Of course, with this over charging to PayPal and Google it could make it financially worthwhile for PayPal and Google setting up their own payment processing company which works directly with the worlds multitude of financial service providers.
Two things:
Visa and Mastercard aren't "Credit card companies" they are payments processors, the cards are with your bank or whoever.
Be very careful what you wish for: Visa and Mastercard are (in the UK at least) properly regulated by the financial services authority, there are required standards and behaviors to which they have to adhere, Paypay certainly and I think Google are actually based off-shore and are not regulated. In the case of Paypal, if you've got a dispute, they deal with it on a whim.
You've hit on part of this. Visa in Europe is a distinct company, licensing the brand. Mastercard is the world-wide monolith, and apparently has a tendency to try to stop merchants from selling certain sorts of lawful goods. The different banking regulations in different countries would have some effect.
Paypal in Europe is also a distinct company, operating under European regulation (Luxembourg's implementation of the relevant Directives, I think). I would think that snooping on purchase details would be regulated. I don't know if Google Wallet is even available in Europe, yet.
It is pretty obvious that Paypal supplies info that identifies the final destination of the payment to the credir card system, because it ends up on the statement, and Paypal tell you what this tag will be, so that you can identify the transaction. How much more info do Mastercard and Visa want? Do they want the itemised list from the supermarket?
Nevertheless, having seen how US merchants seem to lag behind Europe in the security features they use, I feel a little more comfortable going through Paypal in Europe, rather than feeding my account details to another US-based operation.
lag behind?? Like how they still haven't really adopted chip and pin so traveling from the USA to the UK is a PITA as most stores won't accept cards without a chip. Chips are probably just socialism by the back door, they sound socialism, next they'll be wanting to put the chips under our skin. Thats probably what the pin is for.
But yes, way way behind. In 30 odd years in the UK I wrote maybe 6 cheques. I write more than that a month in the US. You seriously have no idea how lucky you are to have direct debits to easy to setup! At least we don't have that silly vilified by visa thing when trying to buy something online, that I do not miss.
1- Forbes did a study and 42% of US cardholders had experienced fraud, 34% in the UK.
2- The awesome US 'old' system uses PIN's for debit transactions although most debits cards can do signed for credit transactions.
3- If you steal someones credit card and go get gas you only need to know their zip code to pay for it. Secure :-)
4- Whilst credit transaction require a signature my experience if pretty much nobody checks the signature (this could vary state to state). I believe we actually have to show ID for transactions over a certain value but again this isn't something I've experienced often.
The chip in chip and pin is supposed to make the cards harder to clone and improve the security as the card doesn't leave your hands at any point and the chips are supposed to be harder to clone than duplicating a mag strip. Statistics show it to be true (that its working) but it isn't a perfect system and no doubt fraud levels will rise over time as crooks adapt. I must admit I thought it odd that you couldn't have it as an option on cards here as it is a royal pita not being able to use your plastic in Europe apart from at a few limited places.
That would be interesting.
If MC is that hard up for cash how about they (and VISA) stop sponsoring events \ football matches and spending on advertising. Do many people actually care if their card is VISA or MC? As long as it isn't diners card what difference does it make? I doubt they get any more customers.
I would welcome the cc's introduction of raised fees in Europe with open arms.
After they have been fined back into the stone age for typical A.B.C.D.E. (American Business Concept Ditches Ethics)) Europe would be several Beeellion better off, just the kind of money needed to start a not for profit credit card, that puts its users interests before the altar of grubby lucre and not on it as a sacrifice.
I despise credit card/debit card companies. They manipulated everything to the point that using cash is difficult then they dictate how you can use your money all the while driving up transaction fees and inconviences for merchants who are forced to pass them onto the consumer then they hold onto the merchants funds for days or even weeks or just snatch funds from the account & force you through expensive hoops to get your money back.
They are all underwritten by the big banks though so I guess I shouldn't be surprised at how they screw their customers.
Credit cards are unsecured loans. If you don't need to borrow it needn't be done with a credit card.
Most of the time, the transaction needs a fee to cover losses, but not debt. The payment protection is just a fee they can hide because of their huge margins.
I've switched local purchases to cash and my regular gas* purchases to the chain's payment card (an unlinked debit card with a small, flat transaction fee because it uses the regular debit clearing system. I get 10c/gal off). Credit cards just suck money to the banks.
* Petrol. I'm in Merka.
Credit cards have some uses - I recently organised a holiday, involving two international flights, three different hotels and various joining train journeys. As soon as all the charges had appeared on the card, I paid it off. Why? Because (in the UK, not sure about elsewhere) if any of those transactions falls through, in any way, the CC company will arrange for services the equivalent of those which weren't delivered, this is very useful and something that I'm prepared to pay a few pence for on each transaction. It's not like a chargeback, which will give you the money you you lost, it's an actual replacement of the service you lost, which when you're on the other side of the world is a rather better than a bit of cash in your bank account. It even goes so far as to put you up in a hotel if your flight was canceled and the next one isn't until tomorrow.
Credit cards have some uses, +1.
My partner works for an airline, which means that we get cheap standby flights. Unfortunately, planes tend to be pretty full these days and with no guarantee of getting on board*, it's prudent to buy a whole lot of tickets to avoid being stuck halfway. Paying for them all on c/c is easier as the money isn't taken until the bill is due, by which time the airlines have usually refunded the unused tickets and it's a wash.
* Air NZ once offloaded me and a 1/2 a dozen other staff in HK in order to fit more mail on the plane. The bastards departed with 15 empty seats.
Air NZ once offloaded me and a 1/2 a dozen other staff in HK in order to fit more mail on the plane. The bastards departed with 15 empty seats.
They may have needed to...
With aircraft, there is a maximum take-off weight which must not be exceeded. Besides that, extra weight means a longer take-off and a longer landing[1]. If there's insufficient runway at either end, the flight is off...
Extra weight will also mean increased fuel burn - and that's not always a nice linear relationship. It might be that the extra weight of "staff" passengers would cost far more in fuel than the tickets were worth.
Vic.
[1] For light aircraft, every 10% extra weight above nominal means a 20% longer take-off roll and a 10% longer landing roll. That's cumulative with other penalties, and they soon add up. See AIC 127/2006 for details[2].
[2] Yes, I'm studying for my Air Law exam...
Hm. I have to pay cash because I'm buying ethanol-free gas under the table (I'm in Florida, where this is mostly illegal) and I use cash for everything else as much as possible. No relation to my last name.
I use my credit card over the internet to get the fraud protection mandated by US law. Appropriately, it's a Linux Foundation card.
If a company's only payment option is Paypal, it's a 90% chance I'll not buy. I've bought things elsewhere that were 40% more expensive just to not have to use Paypal.
Whereas, given the choice between two equally good [whatever-it-is-I-want-to buy], I'll always take the PayPal route because it is easier, I'm not giving my payment details to the seller, and my credit-card company doen't know what I'm buying whilst giving me payment protection. Win all round, I'd say.
As a seller (and buyer) on ebay my paypal account is linked to my bank account and there is no processing fee when taking money from or paying into my account. Surely it would be in the interest of ebay/paypal to offer some sort of discount to people who signed up for such direct transfers? At the very least the number of reduced credit card transactions that would result might make mastercard and visa thing again.
Tried that with HSBC. They blocked the linkage (as this competes with their credit card). Ditto for quite a few other banks.
Same as Visa automatically tries to flag any transaction by interim processors as fraudulent and so on.
It all has one aim - anti-competitive practices. Nothing else @ play there - move along.
Does anyone still use Bitcoin? Last I checked the cost of electricity far outweighed the ability of pools to mine the coins and I have yet to see anyone accepting Bitcoin in commercial space*.
($1500 dedicated mining rigs and Mom and Pop size stores notwithstanding)
Except that Bitcoin lacks the hugely important ability to transfer funds directly to and from your bank account, which is where 99.9999999999999999999999999999999% of the world's online purchasers have their funds for buying things online.
In order for that to be possible it would have to lose the secrecy and start to play nice with the world's central banks.
Hey, Credit Card companies, I have a crazy suggestion for you:
Why don't you guys make it easier to do the sort of transactions that Google Wallet and Paypal facilitate directly through your cards, so that we don't have to have an intermediate (especially one as untrustworthy as Paypal)?
If it were as easy for me to go directly to my Visa/Mastercard/Amex/Discover card for these sorts of transactions as it is to go through Google Wallet or Paypal, then I might very well do so, and you would get all that lovely data rather than Google/Paypal, and you could get all the fees rather than sharing.
After all, you are the ones who frequently laud the "free market" - isn't this just a case of the free market creating a better solution than yours?
Hahaha, no, not really. That effort is to "easy" as what "privacy" is to Google. That effort leaves the problem in the middle neatly in place - the problem that is about to hit its second DECADE of existence.
I must compliment VISA and Mastercard on this, I have yet to see any other setup which can a. hang on to a monopoly that long without any credible challenge and b. bury the problems in their setup under such a mountain of red tape that nobody spots that the only setups that can address the current credit card issues are VISA and Mastercard themselves. Absolute blinder.
Did anyone else here recently get a Barclaycard Paytag sent out to them?
I received mine, unsolicited, in the post last month. In the rather breathless leaflet that accompanied it they suggested that I should stick it to the back of my phone and then I could use it wherever pay-by-bonk facilities existed. Given that the "tag" is thicker than my existing credit card (though it is much smaller in area) I didn't consider the idea for very long at all. It makes the phone uncomfortable to hold, catches on my pocket, looks atrocious, and I can imagine very easily the circumstances in which it would fall off unnoticed to be picked up by some criminal chancer who then abuses my credit limit at the local MaccyDees or wherever.
One pair of heavy duty pliers and a call to an Indian call-centre later I was officially not a BC Paytag user any more.
If Barclaycard et al think that this is the way forward they are surely not thinking straight. It seems to me that the power of the phone as a payment device is rather stronger, and therefore worrisome to the established credit card players, than at first meets the eye. BC just don't have the wherewithal to compete. They need to sign on the dotted line with Google/Samsung/Vodafone/Paypal/Apple/O2 or whoever before it gets to late. Access to the phone's NFC loop is key to the whole proposition.
And given that most smartphone users will find managing their credit card/credit loop by App compellingly convenient I would have thought that the OS and/or device manufacturers are in the driving seat on this one.
aka Russian mafia are VERY reliable, until you decide to take away some of their money, without their permission (see the "Cypriot job" recently). Actually, I bet the Russians will stay reliable when you do take away some of their money. They will go after whoever made the decisions on the that tax (funny how nobody in Europe has claimed responsibility, eh?) - and the Russians will not go for "justice" through the courtrooms, nosir, courtrooms are for pussies.
Proof of what I have been saying: Conspiracy theorists, anti-government nutjobs libertarians and the media have all been telling you to worry about the government, for they are collecting information on you.
All the while you ignorantly, and blissfully, ignore CORPORATIONS, the real concentration of money and power in today's world.
Here is a company that is willing to penalize other companies, and therefore YOU via passed-on higher fees, because they can't grab more information on you than they already have.
But we're supposed to fear the government. Yeah.
I got an unwelcome cold call a week ago from google (india by the sounds of it) trying to push their Adwords credit card. (annoyance was increased since they provide zero support for google merchant center where they advertise the card recently).
The FSA regulated Google entity called 'google checkout' or something has offices in UK that are in same Building as AMEX. They do not have a phone number to call them - do not trust the google jokers.
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Google and PayPal going into the legacy card business? Very very unlikely. The reason you can get cash out of the wall is because VISA and MC integrate tightly with all the providers of ATMs in the world. If they didn't, you'd be limited to your bank's cash machines. I don't think the banks of the world want to spend hundreds of man-years implementing and then paying for a new competing system which would provide them no benefit at all.
There's nothing anti-competitive about VISA and MC, they're simply the incumbents who the banks will only deal with.
I thought WalMart and Sam's club attempted to start their own credit card, or maybe their own credit card processing company a few years back. Trying to crush the fees from visa or mc I thought. They bailed on the idea though, it was probably enough to scare the hell out of them, and got them to lower their fees to WalMart.
Well for one I don't have to have more than the amount of cash for the purchase I want to make in my wallet. Just some change sized bills to pick up small stuff.
Next up, because I'm not carrying that much cash, lost and/or mugged are far less problematic.
And if I see a really good deal on something that won't last until next paycheck, I can choose to buy it now if I think it justifies the savings.
For online purchases I've rarely not been able to make a purchase using one of them. The exception was a photographer who signed a monopoly deal with a venue for their guests and took either cash or paypal. Since I hate paypal even more than Visa and MC he lost out on sales. I wouldn't object to him taking paypal in addition to, but instead of? That's a loser.
On the vendor side there are similar and better benefits.
Mastercard want to charge Google/Paypal more per transaction, therefore charging ME more per transaction, because Google.Paypal aren't giving them access to MY FUCKING PERSONAL INFORMATION. So I'm going to have to pay more because one greedy corporation won't give another greedy corporation purchasing-history data that BELONGS TO ME in the first place.
If this isn't outright criminal fraud, theft and embezzlement I don't know what is. If they try to do this in Australia, I WILL be contacting the police and my local MP and seeking to press fraud, theft and unauthorised access to information charges against both PayPal and Mastercard.
It costs billions to facilitate those transactions you want to make. The money has to come from somewhere.
Personally I'd prefer it in upfront charges. But most users balk at that so the corporations found alternate revenue streams. If people didn't buy stuff from the alternate revenue streams, they would die.
No wonder I refuse to own a credit card and try not to use my debit card when I can use cash. It's nobody's business but my own as to what I bought. The only data that MasterCard needs is who processed the transaction so that they can bill them for it. My purchasing habits are NOT yours, and if you want to know more about it I suggest you sweeten the pot and offer me something in return other than the priv of using your card in the first place.
QUOTE ... "share the purchasing data with the credit-card companies like they're supposed to" so Mastercard slaps a penalty charge on, which is illegal in EU law. They have stated that it is only because Paypal et al won't share data, hence it is a penalty for not doing so. Big boys throwing their weight around again.
Its is not true that everybody wants to use an CC as possibility to shop in web, others have really good alternatives like paysafecard where you can buy without giving your name and datas about your CC, its a decision to be more anonymous and feel more safe. I also think that this is the base of the future - cash will vanish and the direction is prepaid.
That may have been true back in the 1950s, but it hasn't been true for a long time.
I setup two accounts each for processing Mastercard and Visa for a non-profit about 12 years ago. I had no banking experience at the time and it was a fairly easy process to be setup to receive payments. We did it to reduce cash handling at a major event. At the time were were handling more actual cash on a daily basis than most banks do (most of their money is 1s and 0s or dark ink on a line). What did confuse them was we only did it for three days out of the year and were pretty much dead the rest of it.
paypal? I wouldn't go within a million miles of them
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Of the 2996 pages we tested on the site over the past 90 days, 33 page(s) resulted in malicious software being downloaded and installed without user consent. The last time Google visited this site was on 2013-03-27, and the last time suspicious content was found on this site was on 2013-03-23.
Malicious software includes 36 exploit(s), 15 trojan(s).
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