@GZG wrote:
@Anonymous wrote:
@GZG wrote:
It was my understanding they like to issue these upgrades because they can charge more merchant fees for this type of MC as opposed to the platinum version.
Basically this, a higher swipe for a higher-tier card and very little use of the benefts, so really all upside for the issuer (this is how $500 WEMC became a thing). And if a benefit such as cell phone protection starts costing them too much, no problem, they can just opt-out of that benefit, while still keeping the enhanced swipe fee.
I assume there must be SOME restraining force somewhere fraud maybe? perhaps they have some way to exploit those benefits so they only want to give them to accounts they think are legitimate?, otherwise all issuers would make all cards premium, although it sounds like that is almost happening with some.
The justification behind the higher swipe fee is that premium cards belong to premium customers who are going to spend more. I find this weird, because it's not like merchant agreements allow them to discriminate between the types of MC/Visas they are allowed to accept right? Merchants can't say "i'll accept Visa, but only debit visa and visa sig, not Visa Infinite" right? With the complete breaking of this model, I would think merchants would try to rebel. "Why I am paying top fees for a group of cards with often $500 CL and almost no MC benefits??" Of course, most merchants who aren't on credit card forums might not realize that standards have changed so drastically.
personally, the fact that they didn't go out of their way to send out new cards is just a giant 'we're doing this for our benefit, not yours, you're not even worth shipping out a card it took us 50 cents to produce and 50 cents to ship'
In an attempt to clarify some things regarding merchant fees (being I process quite a bit of credit card transactions every month):
There are basically 6 major groupings in regards to processing fees, the only differentiation is whether they are Debit, or credit and then there are commercial cards, but I wont delve into the commercial items here. Those major processor groupings are:
Mastercard (all MC regardless of type)
Mastercard Debit
Amex
Visa (all Visa regardless of type)
Visa Debit
Discover
Generally the base fees to process any card regardless of type (debit or credit, Visa, MC, Amex Discover) are the same, at say a rate of .00250, but where they start to differ from one another is when it comes to processing network, and type (but only debit vs credit) At that point there are other fees on top of the base rate based on the processor, but, for example, all MC Credit Cards are processed the same regardless of type of card (standard vs World Elite, platinum, gold, signature etc), same goes for Visa and so on. Those fees could be listed as Datawire fee, AVS POS fee, interchange fee, network fee, Dues and Assess fees, File Transfer fee....Some processors have different tiers within some of those fees if for example it's over $1,000.... it goes on and on depending on the processor, etc.... Debit cards are cheaper to process than credit cards due to the fact that there are more fees associated with processing credit cards. In order of lowest fees to highest as far as processing costs goes they are generally MC Debit, Visa debit, Discover, Mastercard, Visa, Amex (this is why many merchants don't want to accept Amex).
