Moneda?的动态

Transcript

Nearly every time you buy something, you're paying an invisible toll. It's not to the worker who made the product or to the business that provided the service. It's to the hidden metal men at the center of our economy. By everything on my platinum cash back everyday credit card. No preset spending limit, less hassle and more convenience. What's in your wallet? Credit cards At this point, they're basically how we pay for everything, but we rarely think about how they actually work. Credit cards are a truly massive transfer of wealth from. Working class and middle class people to the wealthy, credit card companies are some of the most profitable corporations in the world. Why do they really add that much value to our lives? They're getting money from both sides and loving it. It's not so great for the rest of us. In February, Capital One, the massive credit card lender, announced that it's merging with a competitor, Discover. The merger, if it happened, would create the largest credit card company in the US. When I started digging into the details, I was genuinely shocked. Not just by the merger. But by how the credit card industry already operates. The fees that we pay are absolutely exorbitant. It's an industry with cartel like pricing, and the private tax that imposes on all of us adds up to hundreds of billions of dollars a year. To understand how it works, let's start with a simple question. How do credit card companies make money? We can divide that into two categories. First, money they make from buyers from interest and fees on card holders like me and you. Second, money they make from sellers from swipe fees charged to retailers on every sale. Let's look at the buyer side first. This market is dominated by the big credit card lenders like Capital One. I talked to somebody who knows this market from the inside, so I started right out of college as an analyst. Elena Botella worked at Capital 1 from 2013 to 2018. There she saw first hand the strategy that's made it enormously profitable. And it wasn't at all what you expected. So if you look at Capital One compared to other credit card companies, what you see is much more aggressive marketing to people who could probably not pay back their loans instead of targeting the wealthy Capital One. Pushes credit cards on customers likely to miss their monthly payments. Working people, we're talking about underwriting up to a point where one in three people are going to default and then get sued. Capital One mails out so many credit card offers that in some years it's been a #1 customer of the US Postal Service. But what surprised Elena was that the company's top profits came from something else its customers didn't ask for increases to their credit limits. Unsolicited enticements to spend more. Or a huge amount of this stepped right is not coming from people coming forward and saying I want to borrow money. It's coming from people who are working class, who are middle class, who without them taking action suddenly have more credit available to them. And in that context, it's very hard to say no that realization that. A lot of the stuff was basically induced was sort of the first thing that made me realize like, just this whole market doesn't work the way I thought it worked. For credit card lenders, raising a credit limit is so profitable because the more purchases they can get customers to put on the card, the more interest and fees they're likely to rack up. The average American now pays over $1000 a year in credit card interest and fees, and last year credit card debt in the US reached over $1 trillion. The first time. At the same time, credit card interest rates have doubled in the last decade, reaching a record high in 2023, far outpacing the rise in the federal rate. A recent report by the Consumer Financial Protection Bureau showed that the bigger the credit card company, the higher its interest rates and fees. For the millions of Americans with lower credit scores, Capital One is the largest credit card lender. The second largest is Discover. But Discovers interest rates are on average two percentage points less than Capital Ones. So there's little question that combining these companies would raise prices for Discover customers. When Capital One and Discover are allowed to merge, there's fewer competitors, more opportunity to raise prices. We're talking about going from family spending $1100 on interest per year and. Fees to like, I mean, how far up can that be pushed before Americans reach a breaking point? OK, but what about the other way credit card companies make money? The swipe fees on merchants Capital One and Discover argue that their merger would actually increase competition on that side of the market. But competition in that market does not look like what you might expect for companies process credit card transactions. Visa, MasterCard, American Express and Discover. Together, they're known as the payment networks. The payment network has the infrastructure to communicate. The messages from the merchants point of sale over to the bank and back, they're really like a data line. Doug Cantor is a small business advocate who's been working to reform the credit card industry for many years. He explained that networks charge a swipe fee on every purchase, usually 2 to 3% of the sale price. Those fees have more than doubled since 2014, reaching $172 billion last year. So when you use that credit card, if you spent $100. The store, the actual store only gets about $97. My name is Jared Sheeler. I'm the CEO of the Hub Convenience Stores based in Dickinson, ND. When I look at the expense portion of my P&L, the biggest line item there is labor. But after that it swipe these, it's ahead of utilities, it's ahead of rent, it's ahead of health insurance that we pay on behalf of our team members. It's ahead of everything, which is kind of crazy to think about as a business amongst my five stores, our swipe fees last year. Were nearly $630,000. That's an absolutely massive expense and we have to make up for it. We can't just say, Oh yeah, we're going to eat that. No, it's built into the prices of everything that we sell. What could I do with $630,000? What if $630,000? Was cut in half. What if it was cut by 25%? I certainly would have more money to be able to pay our team members because it's such a duopoly, such a controlled marketplace, There's just nothing I can do about it. Just two companies really control this market, Visa and MasterCard. Together, they process 83% of US credit cards. And because they block cards from using any network besides their own, it's not an exaggeration to say that they set the price of the swipe fees that every retailer must pay. Visa and MasterCard both started as associations of the banks. The banks came together and literally as a collective, those banks on their board said, well, what should we all agree to charge? Here it is. We're now fixing, literally fixing the prices across all of these banks. They have set up a system where Visa and MasterCard are the center of cartel pricing among all the banks that issue. Their cards. Let's say you did that with grocery stores. If all of them got together and said we're going to decide the price of milk, we'd all go nuts. But Visa and MasterCard have essentially gotten away with the same thing for decades. With no real competition, these companies have no incentive to lower swipe fees. The result is that Visa and MasterCard have some of the highest profit margins in corporate America, about five times higher than the average company on the stock market. Capital One and Discover argued that their merger will create a stronger competitor to Visa and MasterCard. And it might. But here's the thing. Payment networks don't compete by lowering swipe fees. They compete by raising them. That's because their customers are not the retailers, and they're certainly not us. It's exactly upside down. Their customers are actually the banks that issue credit and debit cards. And what they're selling is, hey, we'll set these prices. High for you overtime, what we've seen is Visa and MasterCard compete to raise the fees higher and higher on merchants. So in that sense they are trying to keep a customer happy. It's just destructive for the rest of us. So if a merger won't help, how can we fix this upside down market and lower these fees? We could cap the fees like they do in Europe at .3%. That's about a tenth of what we pay, and Visa and MasterCard are doing just fine in Europe. Or we could create real competition by requiring each credit card lender to do business with at least two payment networks. That could drive swipe fees down as retailers would get to choose the network with the lowest fee. A bill now being considered in the US Senate. Well, the Credit Card Competition Act would do just that. But in the last two years, Visa, MasterCard and the major credit card lenders have spent over $50 million to oppose that bill. Tellingly, they appear less threatened by the possibility of a Capital One merger with Discover. What's really interesting is Visa, MasterCard, as well as other banks, You would think they would be running around Washington saying we're worried about competing with this new behemoth. Except they're not, and the reason they're not is they're all in this cartel structure together, so there's no reason to complain. The purpose of a payment system ought to be to make it as efficient and inexpensive as possible to buy and sell things, and with today's technology, the cost of moving money should be very close to 0. But whether we like it or not, we're beholding to a warp system that the credit card companies have built. Capital One and Discover are trying to merge simply to exploit that system more fully. Their merger can help us understand the places where the system is broken, but it won't fix any of them. That will only happen if we get organized and limit the power of their. Mystery.