How the Cut in Debit Card Swipe Fees Will Affect You

How Do Credit Card Companies Make Money? For people who pay their credit card bills on time, it can be hard to imagine how credit card companies ever make money. However, they have a system down that ensures they'll always get a cut. Here's a look at how "retail network managers" like Visa and Mastercard stay in business. CUSTOMER MERCHANT MERCHANT BANK ISSUER NETWORKS How does it work? T VISA (You) (Wells Farge) (Citibank) A customer visits a store and spends $10 in merchandise. The customer swipes his credit card to pay for it. The card reader recognizes who the customer is and contacts the bank (Citibank, for example) STORE VISA that issued the credit card. лищ $10 Citibank sends $10 to the merchant's bank (Wells Fargo). Then Wells Fargo deposits $9.80 to the merchant's bank account. That 204, a 2% fee, is taken from the $10 and given to Citibank, which then splits it with the credit card company. BANK O Depending on company, country, and merchant this can range from 1% to 6%. The amount the bank gets and the amount Visa gets is a negotiated deal. Also, Visa and Mastercard charge the banks an annual fee, to simply be a part of their network. $10 STORE $9.80 BAN Credit card companies make money in a number of ways Fees (annual fee, overlimit, past due, etc) NETWORKS Interest on the revolving loan if a credit card balance is not paid in full each month. ¢.20 ¢.10 VISA The card Issuer [the bank that issued the card and/or the issuer network ie: Visa, MS, American Express, JCB etc] makes a percentage of each item you purchase from the merchant who accepts your credit card. These rates range from 1% to 4% of each purchase. ISSUER ¢.10 IV The cardholder can make additional money through other means, such as selling your name to a mailing list or sending advertisements in your monthly bill. (Due to regulation, this is becoming less frequent). The most popular credit cards Capital One" VentureOne Discover" More" Card Chase Freedom" Visa Capital One" No Hassle Cash" Citi" Platinum Select MasterCard" REWARDE ****★ Rate ***** ***** ***** **** * APR: 11.99-19.99% APR. 11.99- 2o.99% APR: 13.90% APR 1299-22.9% APR 14% Ced Credi Seare Ced Seere Credit Score Needed Geed Needed Needed Excellent Excellent Needed Excellent Excellent