[Scirra_Tom]

1-2% cashback is highly appealing from here in the UK but shame to see is US only.

Anyone shed any light on why getting cashback cards in the UK is rare compared to elswehre? Personally I found Tandem which gives 0.5% cashback which is nice but not much.

Business wise we decided to use Amex as the rewards are OKish (comes out to like ~0.5% again I think?) and being able to pay for US services on our USD card is nice and does save money. Benefits overall not great though, probably save ~£1k per year compared to just using a bank issued debit/credit card.

[collision]

[Stripe co-founder]

As multiple commenters note, UK and EU interchange is significantly lower than that in the US. So the rewards market tends to be different as a result.

That said, launching this in the UK would still be attractive to us. We don't think rewards are the primary thing businesses are looking for.

As we talked to founders, it seems like they all want a corporate card early on for their business spending (to get it off personal cards). As the business adds employees, they need a sensible way to keep tabs on spending without the expensing process being really painful. I think that's just as relevant in the UK, with the added detail of multi-currency spending being more relevant.

[Scirra_Tom]

Thanks for reply!

From our point of view, a card where we could use our USD and EUR balance to make USD/EUR payments would be one of the biggest pulls if possible. I think recurring USD charges for UK based businesses are probably quite prevalent.

I don't think many UK startups realise how much they lose out on being charged in GBP on these transactions (especially with debit cards). There's likely an opportunity here to educate UK businesses and use that to promote this sort of card.

> all want a corporate card early on for their business spending (to get it off personal cards)

I'm surprised by this, been a while since we were an early business but didn't have any issue getting a corporate debit card which is more than adequate early on.

[porker]

> From our point of view, a card where we could use our USD and EUR balance to make USD/EUR payments would be one of the biggest pulls if possible. I think recurring USD charges for UK based businesses are probably quite prevalent.

> I don't think many UK startups realise how much they lose out on being charged in GBP on these transactions (especially with debit cards). There's likely an opportunity here to educate UK businesses and use that to promote this sort of card.

That's what we use Transferwise and their Borderless Account for.

The challenger banks have similar offerings, with multi-currency accounts behind them. We don't have enough in other currencies to need that (yet, it's on my TODO list) . Not being stung for foreign currency transaction fees is why we put all non-GBP expenditure through Transferwise

[_kyran]

Right now in order to charge USD (not the local currency), we have to give up 2% of total revenues to Stripe (or your local issuing bank) every month.

Is any progress underway to allow merchants to deposit funds to a USD account outside of the US?

[fudged71]

When will this be available in Canada?

[jackweirdy]

European interchange fees are capped at 0.3%, so unless you are making money hand over fist from other means, giving back more than 0.5% cashback rarely makes financial sense.

Amex own-branded cards are excluded from this as they avoid the three-party relationship that falls under these rules, but some (e.g. airline amex cards) are capped at 0.3% interchange fees. See this article for more info https://www.headforpoints.com/2018/02/08/american-express-eu...

[gringoDan]

Credit card transaction fees are way higher in the US than in the UK. This allows the companies budget for much higher cashback earning, mileage programs, etc.

Here is a great post that explains the economics of credit card rewards: https://www.reddit.com/r/churning/comments/5oucdq/the_econom...

[snaily]

Interchange fees are capped to 0.2-0.3% in the EU by regulation. Merchants pay less (to the issuer, ultimately) for the benefit of accepting credit cards, so there is less fees to hand out as cash back (from the issuer to the card owner).

[tialaramex]

As I understand it usual US de-regulation means card issuers get to charge the merchant more or less whatever they want. So if they charge your grocery store $4 for the transaction when a rival does it for $1 then giving you $2 "cash back" is very affordable for them.

[ceejayoz]

The end result is a regressive wealth transfer from lower income people who can't qualify for rewards cards to high credit score, high income folks.

[mikepurvis]

This is obviously horrible for merchants, but what's really gross is how regressive it is when it comes to poor people and small businesses. Unlike national chains, local outfits don't have the ability to negotiate favourable fee arrangements, so accepting CC payment puts them at another built-in disadvantage relative to well-heeled competitors. And of course, those fees end up baked into the price of everything, and are then carried by anyone who doesn't have a big-spender cashback/rewards card, but especially by people paying cash (whether by choice or because they are unbanked).

Hilarious to have this state of affairs going on while there's simultaneously a right wing panic about how carbon pricing will make everything a few percentage points more expensive. But I guess making everything a few percentage points more expensive so that executive credit card holders can get thousands per year in cashback and travel rewards is no biggie.

[Scirra_Tom]

"The Payment Card Interchange Fee and Merchant Discount Antitrust Litigation is a United States class-action lawsuit filed in 2005 by merchants and trade associations against Visa, MasterCard, and numerous financial institutions that issue payment cards. The suit was filed due to price fixing and other allegedly anti-competitive trade practices in the credit card industry."

Another area where giving freedom to these businesses ends up screwing the average person. This is why I like the EU, they are strong on consumer rights. The naive would assume these businesses would naturally want to compete on these fees.

[Silhouette]

Sometimes the EU can be a bit too strong on consumer rights. For example, while charging excessive "processing fees" for accepting payment by card was a common scam, cards often do cost more to process than various other forms of payment here, and under the EU's latest PSD rules all surcharges for card use have been banned, even those that really did only cover the additional cost of the transaction.

[mikepurvis]

I'd rather they err on the pro-consumer side, to be honest. I doubt those big banks and credit card companies will struggle to fight this and make their case for the appropriate exemptions if their scenarios warrant them.

[neilparikh]

Banning processing fees is anti-consumer, because it means that consumers who pay by a cheaper method have to subsidize the consumers who pay by the more expensive method (since companies will have to raise the prices for everyone).

Credit card companies won't fight bans on processing fees, because it actually helps them (the extra cost of the credit card is now hidden, and reduced, which means more people will use credit cards).

Additionally, this is a regressive policy, since it's easier to access financial products like credit cards when you're richer.

[Silhouette]

It's not the big businesses I'm worried about. It's all the small ones, who are now obliged to take a hit of potentially 5% or more of a small transaction, because they have neither the power to negotiate the much lower fees that big companies have nor any longer the right to pass on the actual cost to their own customers to incentivize paying by a more cost-effective method.

[wiggles_md]

Depending on the industry sector, cash can effectively be several times more expensive to handle than the US market interchange fees. I don’t think it’s obviously horrible for merchants.

[mikepurvis]

There are definitely lots of merchants who don't take (or strongly discourage) cash— think Apple Store, IKEA, the self-serve tills at the grocery store, anything online. But the common element in all of those is that they're big companies who can negotiate better rates.

Independent retailers, restaurants, etc are put in an awkward position where not accepting credit cards can cost them business, but accepting them forces raising prices which can also cost them business.

Canada has an interesting option in the form of our Interac system for debit, which has more favourable fees especially for small purchases. Since every Canadian with a bank account has an Interac card, one common option for indies is to accept only cash and debit.

[Scoundreller]

> Since every Canadian with a bank account has an Interac card, one common option for indies is to accept only cash and debit.

Except I hate using my Interac card for... well, anything... because if it gets compromised, it's my own chequing account that gets locked with the missing money.

[ceejayoz]

Visa interchange fees for the higher end rewards cards top 2.5% of the transaction. That's cost that the merchant has to pass on to the consumer in the form of higher prices.

The EU caps it at 0.3%, and the banks still manage to stay in business.

[r00fus]

Can you explain what makes handling cash is so expensive? honest question.

[wiggles_md]

Till theft, the physical act of counting it and securely storing it, screening counterfeits, securely transporting it to the bank, etc. I don’t have direct links handy, but there have been some good insightful comments on the topic on this site previously. Hopefully they will turn up without much difficulty with a search. Sorry to have to pass the buck on a more detailed answer.

[astura]

Handling cash is very labor intensive, you're paying your highest paid employees (managers) to count cash multiple times before/after shifts, bank runs to deposit, making change, rolling coins, etc. Plus the cost of physical security for that cash.

https://www.businesswire.com/news/home/20180130005244/en/New...

>New Research from IHL Group Shows Retailers’ Cash-handling Costs Range from 4.7% to 15.3%, Depending on Retail Segment

Loss from theft is a huge deal as well, there was a coffee shop in Baltimore that went cash-free because they were getting robbed so much.

https://baltimore.cbslocal.com/2017/02/02/cashless-coffee-sh...

[ceejayoz]

If you handle enough of it, you probably wind up contracting with an armored car company to come collect it. Some gets lost or stolen, coins have to be rolled up for deposit, etc.