Chase freedom unlimited and citi double cash swipe fees

[Curious_George2]

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@longtimelurker wrote:

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@Anonymous wrote:

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@rgd51 wrote:

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@FinStar wrote:

Well, it really depends on a variety of factors including the tier levels.  Chase Freedom Unlimited is issued as Visa Platinum and Visa Signature. Double Cash exists in Platinum MC, WMC and WEMC.  You would also need to know how each portfolio is leveraged rewards-wise, how many customers carry any of those cards, what percentage are active vs dormant, and of those who actively use the cards, what percentage revolve vs PIF, APR spreads, FTFs, other fees, etc.

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What are the usual swipe fees for visa platinum and visa signature?

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Depends on what the card is used for. Starts on page 7. 

https://usa.visa.com/dam/VCOM/download/merchants/visa-usa-interchange-reimbursement-fees.pdf

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Note at the beginning:

Visa uses interchange reimbursement fees as transfer fees between financial institutions to balance and
grow the payment system for the benefit of all participants. Merchants do not pay interchange
reimbursement fees; merchants pay "merchant discount" to their financial institution. This is an
important distinction, because merchants buy a variety of processing services from financial institutions;
all these services may be included in their merchant discount rate, which is typically a percentage rate
per transaction.

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Interesting distinction. I'll admit to being a little confused by the terminology. Does this mean my local, family-owned sushi restaurant pays the same fee regardless of whether I use a Visa Platinum, Visa Signature or Visa Infinite card?

But they would pay a different fee if I used a Mastercard, Amex or Discover, right?

[rgd51]

What I really don't understand is that the cards with the best rewards are only for people with good credit and those with good credit are more likely to PIF than those with subprime scores. So the most lucrative cards are paying high rewards to the least profitable customers.

[Otto77]

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@rgd51 wrote:

What I really don't understand is that the cards with the best rewards are only for people with good credit and those with good credit are more likely to PIF than those with subprime scores. So the most lucrative cards are paying high rewards to the least profitable customers.

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Your perception may be skewed when you browse enthusiast forums like this. The vast majority of "normal" customers use random credit cards from the stores they frequent or the bank they do their other banking with. The banks don't like subprime credit scores because they are more likely to completely default and not pay at all. I know of several people deep in credit card debt. It is kind of a taboo topic, so you may not hear about it other than with close friends/family. They keep up with payments but do not completely dig out of the hole and pay lots of interest every month. It just takes one of these customers to subsidize rewards for multiple PIF customers and still turn a profit.