Thoughts on changes in AML, redistribution in credit card rewards, EV sales, a stunning conclusion to the women’s junior world triathlons, and postpartum depression.
Looking at the credit card paper — they don’t seem to take into consideration pass through of the fees. Many vendors explicitly and all vendors implicitly pass on the 2.5-3.5% surcharge. The rewards cards only make nominal sense (as opposed I guess to cash?) if we ignore the extra cost for use. Does anyone talk through that nuance? I’m super curious.
Yes, take a look at the paper on pass-through below. The issues isn't about the interchange fees, though, but the specific and oft-debated question of whether the rewards paid to those who use credit cards as charge cards are compensated by the debt carried by card users. It's a subtly different question.
The one you pose is important, too, but also requires that we look at the benefits that card networks provide for merchants that do not maintain them.
Looking at the credit card paper — they don’t seem to take into consideration pass through of the fees. Many vendors explicitly and all vendors implicitly pass on the 2.5-3.5% surcharge. The rewards cards only make nominal sense (as opposed I guess to cash?) if we ignore the extra cost for use. Does anyone talk through that nuance? I’m super curious.
Yes, take a look at the paper on pass-through below. The issues isn't about the interchange fees, though, but the specific and oft-debated question of whether the rewards paid to those who use credit cards as charge cards are compensated by the debt carried by card users. It's a subtly different question.
The one you pose is important, too, but also requires that we look at the benefits that card networks provide for merchants that do not maintain them.
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3328579