Visa and Mastercard are American companies, and they essentially tax everybody by taking a percentage of purchase prices for themselves. Not exactly a small percentage either, 1.2% to 2.65%. Ever wonder why so many merchants say they don’t accept American Express? That’s because they charge quite a bit more to merchantes, 50% more than Visa or Mastercard. Anyway, we’re letting American companies tax us and we love them because we get rewards when we use cards. But it’s just a shell game because we pay more up front because businesses need to charge more to make up for payment processing charges. They get to sit in the middle and rake in the money.
Now the alternative in Canada is Interac. Interac charges a set amount per transcation. How much? 2 to 5.5 cents. Unless you’re going through Apple or Google Pay, and then it’s a percentage again.
Interac is also Canadian.
Want to stick it to Trump? Stop using credit cards (and Google Pay or Apple Pay) and switch to Interac. Want to make Canada better? Stop using credit cards and switch to Interac. Is it going to be inconvenient? Yes. Online shopping will be much harder but I have seen online Interac payments before and we can ask our favourite Canadian merchants to accept Interac online.
Ahh, so as an American my only option is cash. 😔
Cash is better for privacy too. Don’t be paying for that abortion, gun, or donation to environmental cause in this climate with Visa.
Not denying that. Most card purchases my family has is for groceries or clothing anyways.
A book here and there.
Ah yes, groceries. Link up a 100% accurate list of all the specific items you buy with your name. I thought some American stores did this for a while but am not sure.
I don’t have much experience with American cards. I know debit cards are more common down there. Do they have the same merchant fees?
They’re usually also managed by visa and such. I can’t remember the exact numbers, but they have a higher initial fee and a lower percentage for a purchase.
This is a brilliant strategy. Thank you for sharing that.
Just like tipping, a percentage system makes no sense. It’s the exact same work to bring me a $50 meal vs a $500 one. And for payment processing, a flat fee makes much more sense because there’s no difference in processing a $100 transaction vs a $10,000 one.
So why does a percentage-based system persist? Because workers want higher wages (understandable when restaurants refuse to pay them more and expect the customer to pay part of their income). And for giant corporations like Visa and MasterCard, it’s literally never enough for them. They can make more money, so that’s the only reason. It’s so dumb…
Ah, but it’s a credit card, emphasis on credit. The bank issuing the card is making a short term loan that will either get paid off by the card holder at the next billing cycle, or will automatically turn into an indefinite length loan at what is usually an exorbitant interest rate.
The bank is always taking a risk that they won’t get paid. That’s why the amount they get paid for this risk needs to scale with the size of the transaction.
Debit card doesn’t have this specific risk; the money is either immediately transferred from the cardholder’s account or the transaction is declined.
There is hope. Here in Norway, we have a parallel system called BankAxept handling card and online payments within the country. Most/all debit cards are dual, and Visa is only used as a fallback. I believe lobbying for a similar system in other countries, or better yet for the EU as a whole, would be a good way to get started.
I work for an American credit card company, and my advice is to ditch credit and debit cards entirely. Use cash.
Credit cards (when used correctly) is one of the few pro consumer products we have left.
Most cards come with fraud protection, something you cannot get with cash, checks, or gift cards.
Similarly, most cards come with purchase protections like extended warranties. I have a credit card that gives me free damage protection on my cell phone so long as I pay the monthly bill with it.
I’m not saying cash isn’t great but there are good reasons to use a credit card. At least for now.
Right, but that shit should be required by law, not bequeathed by US tech monopolists at a ridiculous fee.
As another American who works in the industry, it’s a wedding cake of frighteningly bad software piled on top of well-intentioned but poorly implemented mandates piled on top of willful ignorance frosted with solving problems people don’t actually have. And the little couple on top are both the capitalist pigman from a 1930s Soviet poster that we all recognize thanks to Hexbear :`(
I prefer cash too.
Good info from the inside, thanks. I had some money in a Digital Payments ETF but I recently dumped it and moved the money to a European fund instead. This makes me feel a bit better about that decision.
I would love to hear your side of things. Cash is better for curbing impulse spending and it is of course anonymous but it is inconvenient. I feel like there’s a target on my back when I walk around with more than a couple hundred dollars.
Checkbooks exist for a reason.
Ok now, let’s not go bringing back that nonsense. Cash is fine. You’re no more likely to be robbed than usual because you’re carrying a lot, and you can do what I do. If you need to carry a lot of money in cash, put $49 in your wallet and the rest in your sock.
My personal opinion is that the convenience isn’t worth the unspoken costs, much less the overt ones. Credit card processors already charge merchant fees on top of the interest charged by the banks that issue those cards, but they also get all your personal data associated with that card. It’s more than enough to be worth selling to advertisers, so anyone who cares to spend a few bucks can buy your purchase history and build a profile. Name, address, contact info, the coffee shop you visit regularly and when you can be found there, the daycare you send your kids to, etc. It’s very not-safe, especially when the government decides your type of person is now unpersoned.
More fundamentally though, I think the problem comes down to money itself. The use of any form of currency as both a store of value and a medium of exchange creates a multitude of perverse incentives to the detriment of society. Families work best when money isn’t coming between them, and I think that principle is generalizable to our species as a whole.
The Guardian published a story today about how Sweden’s move to a cashless society is backfiring on them.
For this to work, Interac needs to incentivize using it like credit cards do.
All types of loans require a credit score of some kind, and credit cards are one of the best ways to build this. Additionally, credit cards usually offer some kind of return.
Also because of poverty, a lot of people have a dependency on credit or payment plans.
Interac needs to make a Canadian answer to the credit card.
You can get a line of credit from your local bank, tranfser the available funds into your checking account on demand, then use your Interac card. The amount and rates are variable, so you can start with a small amount with a high rate (like starter credit cards), and as you build a reputation, you can be loaned larger amounts at a better rate. No third party credit card company required.
Mileage may vary, but in my experience in attempting to get a line of credit, theres a lot more information that needs to be not only shared (for the banks and credit unions I’ve tried applying to, both and credit card statements for the last 3 months needed to be shared, along with a written explanation on what I’d need a line of credit for).
The barrier to approval is rather high as well, especially if you don’t have any assets to provide as collateral (for a secured line of credit at least.)
It’s doubly a challenge if you don’t have a “good enough” net worth as well which if you’re out of school and had to take out student loans, then you’re already starting out with negative net worth.
In comparison, I was blanketly approved for multiple credit cards and all I had to provide was the necessary identifying information and a salary.
It sounds like I’m shooting down the option of getting a line of credit, but it can be a very difficult process to obtain one unless you can get a guarantor to co-sign, or you happen to be in a financially secured position to begin with, which isn’t the case for a lot of people, but still a very good option to attempt at getting.
This is definitely one of the biggest hurdles with getting rid of credit cards, the lack of easy credit history.
Going the line of credit route is ok, but there’s no grace period before interest is charged, unlike most credit cards. So it’s something to be aware of.
There’s absolutely a way, for sure, I just mean it’s gonna be difficult to get most people on board until there is an option just as or more convenient than the current one.
I’m European. We don’t get credit card benefits.
Oh wow no cash back at all??
What is it? You always pay the exact amount, why any cash (change) back?
On a lot of credit cards you get rewards for using them, like interest income. Basically the more you use it, the more interest you get, and you’ll get a credit in your account annually.
Some cards have different rewards like 2% back on all grocery spending for example.
Oh, we don’t have that. Nor air miles. Nor easy refunds.
I suppose the “richer” Europeans do though, I heard it referenced in an English movie of the same name.
Also, we never used checks, pretty much. Probably contributed to the explosion of CC use in the 90s despite the lack of benefits.
I think this is due to credit card companies screwing over retailers in the US, and overall driving up all prices. The EU has a lower set % they can take per transaction, so there’s less impact on prices but also less fake incentives to use credit cards that ultimately just drive up all prices.
Pretty sure it’s this video that I learned it from: PolyMatter about credit cards
What happens if your card is Interac and Visa debit?
Good question! I suppose the merchant can use either system with your card.
That is true. The vendor will process through the system of choice.
They will choose the cheapest option which should generally be Interac.
Fuck banks. If you’re ditching Visa, let’s talk about creating like an open source bank or something similar… The world central open bank. Anyone from anywhere can deposit any valuable into it etc etc including bitcoins. Then maybe no charge if you use the world card!!!
Please understand that there are also many third party card processors. That is the company that takes the transaction from the merchant to the payment system. The payment system then takes the transaction to the bank.
Don’t be discouraged, but someone may need to become card processors to vendors.
Pressure on Visa and MasterCard may work, but the boycott will need to overcome license fees.
I’ve given up taking visa / Amex / Mastercard. My business now only accepts Interac e-transfer and cash.
Interac is hands down the most secure way to pay for something. I never have to take a card from a customer, the customer never has to take on additional debt, the money is automatically deposited into my account within seconds, and it costs me absolutely no money to do this and I have to pay no money to a merchant to make it happen.
I wish I could do this at more places.
I have the same question as sloppychops. If my interac debit card is also Visa, how would I know whether the payment terminal is routing through Visa or Interac?
I am one who offers to pay in cash sometimes to small businesses, treating it like an additional tip. But more and more businesses in the Vancouver area use Clover (A Canadian subsidiary owned by Wells Fargo) and Square (American fintech), and either take card only (which they get their cut with Interac debit too), or the staff get a little impatient when I rummage around for cash in my wallet.
It’s not all or nothing as you have options folks:
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If you still want to use credit cards to increase your credit rating and to receive the cashback you can just Interac/cash/direct deposit for small businesses and charities then use the credit cards for the big guys.
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You can also just boycott Visa, Mastercard, American Express and Discover for the duration of the trade war or the Trump presidency.
Sometimes incremental change is the way to go.
Additional information from Goodsuniteus on the political contributions of the credit processors:
Visa: 51% democrat / 49% republican / very high contribution level.
Mastercard: 56% democrat / 44% republican / very high contribution level.
American Express: 56% democrat / 44% republican / very high contribution level.
Discover: 72% democrat / 28% republican / very high contribution level. (May be acquired by Capital One)
Capitol One: 48% democrat / 52% republican / contribution level very high.
PayPal: 66% democrat / 34% republican / contribution level high.
Apple Pay: 85% democrat / 15% republican / contribution level very high.
Google Pay: 85% democrat / 15% republican / contribution level very high.
Samsung Pay: 63% democrat / 37% republican / contribution level medium. (At least South Korean)
Just FYI, you don’t need credit cards to increase your rating. Just keep up on your loans. Although hence, it does require a loan or two
Why do companies put money on both parties? If I’m a candidate and they give money to my enemy it’s like not giving me money at all right? Right?
It may be beneficial for a company to donate to specific senators/representatives which are likely to win races. One notable example is DisneyWorld donates primarily to democrats but always ensure some $$ (bribe?) goes to the republicans who win in Florida.
There’s a couple websites out there, but I use this one when finding companies/products to buy from.
https://www.goodsuniteus.com/
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I dont see how you can do that without launching your own national credit card companies. And good look trying to do any grass roots organizing for that.
I nearly asked “What about American Express?”. Sometimes I wonder how I graduated kindergarten.
It’s okay, there are 35(?) countries I believe in America. 1 that gets talked about a lot. Being that they are discussing this from Canada in America, I’d say it’s safe to consider maybe American Express could have been from Canada. Mexico, Argentina, Brasil, and most other large countries in America aren’t English primary, so it would be harder to pass them off.
Discover though, who knows what they are doing
From my experience, all countries in North and South America (except the U.S.) refrain from referring to anything they do as American because they would 100% be assumed to be U.S.
Indeed, it took me a while to realize the other person meant “The Americas,” aka North and South America and not the US, aka “America.”
So in regards to payment cards etc… the CC’s basically have three primary benefits to them: 1. They can do ‘quick’ settlements for in person POS services. 2. They are generally accepted for online payments far more than other methods. 3. They provide access to credit / funds that the customer/user may not normally have access to, in exchange for a high interest rate on amounts owing each month. This also allows people to make larger purchases periodically, and pay off the purchase price over a slightly longer period.
For item 1, the physical cards are not that different than the regular debit cards that get used. There’s nothing ‘technically’ stopping a debit card from being mapped to a line of credit account on a banking system – such a card would be able to get used anywhere debit cards can get used, so pretty good market penetration off the bat. Only thing potentially stopping the tech side would be ‘paper’ agreements with interac etc… but those are ‘easy’ to change with enough demand. So you’d potentially need some adjustments from industry to accommodate this, across the payment switch providers and back end orgs.
For item 3, the availability of credit on those cards / accounts is entirely do-able through a small FI – historically, they offered lines of credit based on ‘signatures’ / ‘a promise to pay’ and good general payment standing at a credit bureau. Canada’s regulators changed much of that, forcing industry to heavily preference real estate backed loans – debt servicing risks for cc ‘personal’ locs are generally offloaded onto the credit card company directly. So the govt would likely need to relax their regulations on this front, otherwise its untenable for a small FI to provide credit based on signatures. In some ways this would likely be better for the end user, in terms of rates and limits, as a smaller FI, especially one that’s cooperative in nature, is less likely to push exploitative rates/conditions.
To clarify how that’s controlled by regulators: in BC as an example, the BC FSA regulates Credit Unions, and it also oversees the Credit Union Deposit Insurance Corporation – the thing that insures the CU’s deposits. Credit Unions pay premiums to CUDIC based on the “risk assessment” of the FSA. The FSA rates you very risky if you do signature loans / stuff not backed by RE or other ‘fully funded’ types of securities (eg. a $5k line of credit, ‘secured’ by a $5k term deposit). The annual cost difference can eat up like 30% of the small FI’s profit, if they’re deemed risky. Unless there was some way to ‘make up’ that loss via the ‘risky loans’, it’s not a viable business decision for CUs to take – especially when you add in the need for slightly increased monitoring for more ‘fluid’ payment accounts. Best to keep the regulators happy, to keep your insurance costs as low as possible. So you’d need govt to change its approach.
For item 2, there are lots of viable options for online payments already – the issue is mostly user adoption and business standardization / app availability. For purchases that aren’t ‘in person’, having a slightly longer settlement time isn’t a big issue – if you’re buying a thing online, in general, who cares if the payment is ‘instant’, or if it takes 15 mins to clear. Things like the interac e-transfers are able to route payments to people in this fashion, and are heavily used in some areas currently – paying trades, paying rent, paying kids extracurricular, and anything where ‘cheques’ use to be a norm. AFTs are also still used for many ‘bigger’ bills/companies, but they’re decreasing in popularity – there are fewer millenials/genZ who are using AFTs for payments, and fewer businesses that go through the process of getting it setup on their end to allow for it. That last parts a similar impediment to adoption of etransfers more broadly – you see CC payment options for most online purchases, but you almost never see e-transfer options… even though they’re functional for regular person to person payments. Having a business email setup with an auto deposit isn’t too difficult – as noted, many small contractors go this route – but its not common at larger businesses… for no particular reason.
All that on item 2, is basically to say you need to get most businesses to adopt a ‘standard’ method for online payments. If every shop you went to had a different ‘payment app’ you had to download, create an account, transfer money to the account, to use the account… it wouldn’t have general end user appeal due to its burden. Credit cards have a simple, ubiquitous standard that’s got a ton of apps and plugins to accommodate – we’d need similar embracing of a, general industry/economy/nation wide approach.
All of these things are do-able, if there’s political will. But only if there’s political will. If you look at the financial industry, they’re generally in bed with US/foreign tech companies these days. Even our govt is run on Microsoft. Getting people to move away from American options would require clear messaging from regulators of “critical infrastructure” industries (like banking), and potentially options for government support as part of those tech migrations (tax breaks to hire specialists/retrain people/develop different apps). Like a positive step would be seeing the BC FSA charge huge “insurance” premiums for Credit Unions which are almost entirely in Microsoft’s cloud / US controlled infrastructure. We don’t see any of that currently – instead, we see regulators like the BC FSA shrugging as the industry debates whether online banking portals should be outsourced to a company in Portugal, one in India, or one in the USA (the Canadian CU Trade association, central1, recently walked away from this service area – with their CEO even getting a bloody business in vancouver award for abandoning it). We likely won’t see anything ‘material’ on this front until after the next election at the very earliest, is my guess. But even then, I doubt they’ll put the kind of urgency on it to avoid this sort of thing becoming a potential issue in trade talks.
