2018년 4월 8일 일요일

탐색: 신용카드// processing fees, rebate or refund


※ 발췌 (excerpts):

출처 1: Beware Credit Card Processing Fees, Especially Refunds (Practical Ecommerce, Jul 2013)

Merchants periodically send me their credit card processing agreements afterthey have negotiated new pricing with their existing provider or when changing providers. ( ... ... )

How Does the Provider Handle Customer Refunds?

You must know how the provider handles a credit refund transaction. This is esp important for ecommerce merchants since they typicallly initiate more refunds than brick-and-mortar businesses. When you credit your customer, the interchange fee--the largest part of the processing fee--is refunded back to the provider.

Some providers return the refunded interchange to the merchant and only charge a small fee to route the refund. Some providers keep the interchange and charge a transaction ee. And some not only keep the interchange but also charge the merchant an additional processing fee and transaction fee on the refund. The difference in these three ways of handling refunds can have a large impact on your cost. Say you had $10,000 in credit card refunds and each refund was for $100. The first refund method shouldn't cost you more than $20. The second method would cost you around $250. The third method would cost you around $500. This cost is even more significant when you consider that you made $0 in actual sales.

( ... ... )


출처 2: Who Pays for Credit Card Rewards and Rebates? (The Finance Buff, Apr 2007)

There is debate about whether one should charge everything on credit cards for reaping the rewards (cash rebate or miles) or pay everything by cash (and by debit card and checks). In this post I examine the source of the credit card rewards. ^Who pays for them?^

I see four potential candidates:

 1. The credit card companies;
 2. The establishments which accept credit cards, i.e., stores, restaurants, etc. ("merchants");
 3. Other credit card holders who pay interest charges to the credit card companies;
 4. Myself.

Let's take a look at each one.

1. The credit card companies. The credit card companies pay for the rewards directly to me, but they are unlikely the source. For each charge I make, the credit card companies levy a fee on the "merchant" which accepts my charge. The fee they charge to the merchants is larger than the rebate they pay to me. The fee is also larger if I use a reward card than if I use a non-reward card. So the cost of rebate is build into the credit card companies' pricing structure.

2. The merchants. The merchants pay a fee to the credit card companies for each charge. If 80% of their sales are charged on credit cards which cost them 2.5% of the gross sales, that means credit card fees are 2% of their sales. That number has to be factored into how they price their products and services. Naturally prices are 2% higher than what they would've been without credit cards.

3. Other card holders. Credit card holders who carry a balance and pay interest charges to credit card companies are called ^Rovolvers^ because they carry a revolving balance. Credit card holders who pay off their balances in full every month are called ^Transactors^ because the are in for the transactions. Revolvers are more profitable to the credit card companies than Transactors, but that doesn't mean the Transactors are not profitable to them. According to [this DOJ document](http://www.usdoj.gov/atr/cases/f11700/11793.htm),

"... indeed, MasterCard's own documents confirm that its issuers earn at least a 15% return on equity with some "pure transactors"--those transacting sufficient volume. "

( ... ... )

4. Myself. Now it comes to myself. I paid for the rewards and rebates through higher prices for the products and services I buy. In pursuit of a 1% rebate, I helped push the prices higher by 2%. The credit card industry made a clever rule that disallows different prices for cash and credit. Without this rule, it makes no sense to pay a 2% surcharge in order to get 1% back in rebate. By enticing its customers with rewards and rebates, the credit card industry carved out a nice 1% from almost every retail sale for itself. Very smart!

^The rewards and rebates from credit cards are not free lunch.^ There is no free lunch. ^I paid for every reward and rebate I received and then some.^ What should I do about it? Well, because I already paid for it through higher prices, I might as well grab the rewards and rebates. However, I would prefer that the credit card industry's no-surcharge rule be declared illegal. Then I will happily pay cash in exchange for a discounted price.


출처 3: Santiago Carbó Valverde, Sujit Chakravorti, Francisco Rodríguez Fernández, "The role of interchange fees in two-sided markets: An empirical investigation on payment cards", Review of Economics and Statistics, ....

ABSTRACT: We study the impact of reductions in interchange gees on payment card services. We find that consumer and merchant acceptance and transaction volumes increased when interchange fees were reduced. Our result suggest that a 10% reduction in the rate of decline per quarter in the average interchange fee by an acquirer resulted in a rate of increase in merchant acceptance per quarter of up to 1.4%. Additionally, a 10% increase in the rate of interaction of merchant acceptance and the total number of cards increased the rate of quarterly issuer transaction volumes up to 1.7%.

1. Introduction

( ... ... ) Payment cards are generally characterized as a two-sided market. Rochet and Tirole (2006b) define a two-sided market when the price structure, or the share that each type of end-user pays the platform, affects the total volume of transaction.[주]1  The key aspect of these markets is the presence of indirect network externalities and how fee structures are able to internalize these externalities. Often platforms will subsidize the participant of one type of end-user by extracting surplus from another type of end-user to internalize this externality.

[주]1. For a broader description of two-sided markets, see Armstrong (2006), Rochet and Tirole (2006b), Rysman (2009), and Weyl (2010).

Payment card networks are comprised of [:]
- consumers (one type of end-user),
- their financial institutions (known as issuers),
- merchants (the other type of end-users),
- their financial institutions (known as acquirers), and
- a network operator or platform.

Generally, the merchant charges the same price regardless of the type of payment instrument used to make the purchase. Consumers often pay annual membership fees to their financial institutions for credit cards and may pay service charges for a bundle of services associated with transactions accounts including debit card services. Merchants pay fees known as merchant discounts. Acquirers pay interchange fees to issuers.


출처 4: Jean Charles Rochet & Jean Tirole (2006). "Two-sided markets: A progress report", Rand Journal of Economics, 37 (3), 645-667. [링크 1, 링크 2 ]

ABSTRACT: We provide a road map to the burgeoning literature on two-sided markets and present new results. We identify two-sided markets with markets in which the structure, and not only the level of prices charged by platforms, matters. The failure of the Coase theorem is necessary but not sufficient for two-sidedness. We build a model integrating usage and membership externalities that unifies two hitherto disparate strands of the literature emphasizing either form of externality, and obtain new results on the mix of membership and usage charges when price setting or bargaining determine payments between end-users.

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