Artificially Intelligent with Sam Maule and Maia Bittner

Navigating the Storm: The $30 Billion Interchange Fee Upheaval and the Future of Fintech Transactions

• Sam Maule, Maia Bittner, Rachel Morrissey

Share episode

Send us a text

Dive headfirst into the complex world of interchange fees and understand how a mammoth $30 billion antitrust settlement is poised to reshape the financial tech landscape. Your pockets and the broader US market are on the cusp of experiencing the rippling effects of this legal juggernaut. We're peeling back the layers of this financial onion, examining the pivotal roles of banks, the enigmatic interchange fees, and the resilience of Visa and MasterCard's business models amidst industry upheaval. We're also discussing how risk and fraud prevention play into fee determination and why, despite the settlement, your favorite plastic providers might emerge relatively unscathed.

Ever wonder how Visa and MasterCard's ironclad rules impact the retail battleground? Our latest conversation illuminates the 'honor all cards' rule that's been ruffling feathers among retailers, and we dissect the chess game that major merchants play to avoid hefty fees. As we navigate the potential consequences of landmark lawsuits and legislative changes, we're contemplating the future of digital wallets and the payment ecosystem. Smaller retailers might find themselves in choppy waters, but for the behemoth merchants, it's an opportunity to sail smoothly through the tempestuous seas of financial change.

We wrap up with a keen analysis of how businesses like Starbucks and ride-sharing giants are innovating to sidestep interchange fees with their own ingenious payment systems. Celebrating the strategic prowess of companies that sidestep these costs, we reflect on the broader implications for the fintech and payment industries. Join us as we forecast the ethical and financial waves that may arise from the evolving credit card reward structures and the innovative responses from banks and issuers to market dynamics. This isn't just a financial deep-dive — it's a mirror to the future of how we'll all spend and save.

Hosts: Sam Maule & Maia Bittner


Sam Maule:

This is Essential Audio. Hey everybody, welcome to yet another episode of Artificially Intelligent. I'm one of your co-hosts, Sam Maul.

Maia Bittner:

And I'm your other co-host, Maia Bittner. Today we are talking about one of my absolute favorite topics in fintech interchange fees, and this is sparked by the recent proposed settlement between merchants and Visa and MasterCard, and we're going to dig into all the details and all the impact with you guys today.

Sam Maule:

And you talk about drama, right, I mean this lawsuit, I believe, has been going on 19 years, 19 years. I wasn't even in my 40s when this lawsuit started. That's saying a lot 2005.

Maia Bittner:

Merchants have been battling this and it's resulted- So about $30 billion is the estimated fee savings on merchants, which is one of the largest antitrust settlements in US history.

Sam Maule:

Yeah, I mean, the highlights of this are fascinating, right? So you've got MasterCard and Visa. They're going to reduce their credit card processing fees for US-issued consumer credit cards. Let's make sure we say that Every merchant by at least four basis points over the next three years and the cap is reduced rates for five years. The reduced rates must be at least seven basis points below the current average and that will be reviewed by an independent auditor. Can't wait to see who that ends up being so again this one's pretty interesting.

Sam Maule:

I think the funniest part about all this Maya is. Right before this show I looked up MasterCard and Visa stock and not even a blip Nothing.

Maia Bittner:

No one cares.

Sam Maule:

No steady state. Well done Visa and MasterCard.

Maia Bittner:

Well, I want to. You know, I think it's probably not going to affect their business that much, but, Sam, I want to kind of dig into the details of interchange a little bit. Now I have an hour long talk that I give on interchange fees and how they work. We're not going to go that level of detail, but I do. You know, I see people chatting on Twitter and I think that there is a lot of confusion and that it'd be helpful to cover some background before we dig into the details and how things understand. So when people talk about interchange fees right, so interchange fees, which are the fees that merchants pay to visa and MasterCard, that's what everyone talks about and they're like oh yeah, it's like 3% or like 2.7% plus 30 cents or something like that, right. The thing is, when people say that they're wrong on two different ways, and well, they're wrong on everything they've said.

Maia Bittner:

And that really matters the details really matter when we start getting into stuff like that. So, first of all, the merchants are not paying the fees to Visa and MasterCard, not quite like that. So, very technically, from a very technical perspective, the acquiring bank is paying that fee to the issuing bank. Now, acquiring and issuing right, this is jargon, but if you want people to think you know what you're talking about in the payment space, I recommend you use this jargon. But the acquiring bank, right, so that is the merchant's bank account, it's their processing account. The issuing bank is the one that issues the credit card, and so the reason why it matters is Visa. And then it's sort of mediated by Visa and Visa's at the middle of setting these fees.

Maia Bittner:

But they're part of this tri-party negotiation, right? And so the way the fees are set is that Visa goes to merchants and they say, hey, we are gonna charge you the lowest interchange fees if you route your cards over Visa and there's all these details in that. And the MasterCard says, no, no, we're going to be lower, and everyone is competing for the merchants. Because the merchants choose, yeah, the cards they accept. Sorry, I got a little bit distracted on routing Not exactly routing, but basically they're negotiating with merchants to accept their cards and they want to give them as low of fees as possible.

Maia Bittner:

Then Visa and MasterCard turn around and they go to the issuers and they say hey guys, you should choose to issue your cards on the MasterCard network or the Visa network or whatever, because we're going to pay you the highest interchange, we have the highest interchange rates across all the merchants for your spend mix, your spend portfolio, and we're going to pay you the highest. And so they're trying to kind of play both sides there and they're the intermediary and they are facilitating the negotiation, but they're just making some fees on top. So I think that's part of the reason why it doesn't affect their business that much. Right, their business is in volume. They want to control the network, they want the highest volume of payments going over them, but the interchange fees themselves are not that important volume of payments going over them.

Sam Maule:

But the interchange fees themselves are not that important. And to put that just again, so we can talk about duopoly oh my God, my mouth. I think I got the word out correctly. It's not a monopoly, it's duopoly. Fees on MasterCard account for more than 80% of the US credit card network. So you got that well north of 80%. It's roughly about 576 million cards. That came out of a study done back in 2023. But they are the networks, just bottom line. They are the networks.

Maia Bittner:

And so they have a lot of control here and they're trying to close all the customers. The other thing is when people say something like 2.7 percent um, it really obfuscates all the nuance there. So interchange rates depend on a ton of different variables. So they depend on it's called your card entry method, that's, if you swipe your card versus chip authenticated, um versus EMV or contactless right, emv is chip. It depends on how you authenticate the transaction. So if it's pin authenticated versus signature authenticated, it depends if the card is present or not present.

Sam Maule:

Basically risk scores, if you're looking at that.

Maia Bittner:

So Sam, you're nailing it Like it's all about risk and fraud, and actually Visa calls it the interchange reimbursement fee. And the reason they call it reimbursement is the whole premise of interchange is that issuers cover fraud costs, all that stuff. You know how. You see, you're never liable for any unauthorized transaction on your MasterCard or on your Visa. It's because your issuer pays for it, right? So? So if you have a Chase credit card, chase is paying for any of that. They are getting reimbursed for those costs. That they're covering from the merchants is sort of the premise. And so riskier transactions generally have higher interchange fees. Credit is higher than debit because it's riskier, somebody might not pay back their thing, et cetera. Signature is higher interchange than PIN. Card not present is higher interchange than card present.

Sam Maule:

And, professor Bittner, one other term, if you don't mind giving a definition to, is around MDR. If you could do that, the beautiful merchant discount.

Maia Bittner:

No, you've got to take that.

Sam Maule:

Yeah, well, I mean, that's where you get even a bigger fee. Right, I mean reality is because the issuers are setting that.

Maia Bittner:

That's what?

Sam Maule:

when we got back to Durbin and trying to put caps and all this it gets back to oh my God, now I'm getting old 2010, durbin. I should know that date.

Maia Bittner:

I think, 2010,.

Sam Maule:

yeah, because it was kind of the line in the sand right Because it's Dodd-Frank yeah 2010. Right, because it's dodd frank.

Maia Bittner:

Yeah, 2010 or 2011, yeah, yeah, don't, don't hold us to that. Everybody around that time frame. Well, and what I want to bring in about durban right, and durban, I mean in our world in fintech, we know about durban because it's really created this landscape where neobanks can flourish um, they are charging unlimited interchange, while the big banks are limited to really small interchange rates on debit card transactions. But I think the more interesting thing about Durban for this particular lawsuit is the whole point of Durban was it was supposed to reduce prices to consumers and increase debit card acceptance rates in the United States, and I think that we now have the conclusions that it did neither of those things.

Sam Maule:

So it did not achieve its goals At all. I mean none at all.

Maia Bittner:

Well, and I think with this settlement, antitrust I mean the whole point of antitrust is consumer protection, right, how do we protect consumers against these big corporations? My guess is that with that, the judges I mean this doesn't yet have judge like have a court approval, um, but my guess is that the intention was probably to lower prices, maybe create some more transparency and, just like durbin, I don't think that this is going to do it.

Sam Maule:

Yeah, toward the end of the show, I want to do like a running scorecard for Maya and get your feedback on, like, who the major stakeholders are. When we're talking about payment flow, right, when we're talking about this on merchants and consumers and everything else, and we call this foreshadowing in movies. When we talk about what was the effect and we're going to talk about consumers, um, in a little bit, um, this also, um, if I've read everything right about this, um, this is going to kind of kill out that honor all cards yes uh take, which is another fascinating thing to take a take a look at so what do we?

Maia Bittner:

mean by honor all cards my yeah, well, honor all cards is really so. Visa and MasterCard have these rules and basically what they say is you know so Visa will say so. Visa credit cards are the most common card in the world. And what Visa says is they say if you, as a merchant, decide to accept Visa credit cards, any Visa credit card, you must accept all Visa cards. And so that's. Let them do some sneaky things. Including people think that Amex has the highest interchange rates. Well, no, no. Visa has a new card. It's called the Visa Infinite. It's a product. It generally has higher interchange rates than Amex. It's extremely high.

Maia Bittner:

If merchants had their way, they would not accept Visa Infinite cards. It's cards like your Chase Sapphire Reserve. It's really fancy. It's cards that give you great rewards. But they can't reject those cards because of the honor all cards. If you want to take any Visa credit cards, you have to take all Visa credit cards. Now some merchants have sort of wiggled around that because what they've done like Kroger is an example here it doesn't apply. So if you take Visa debit cards, you're not required to take all credit cards. And so Kroger has done some big experiments as part of their lawsuits with Visa, around only accepting Visa debit cards, which have much lower interchange fees, and not accepting any credit cards, because you can do it that way. But if you accept any Visa credit card, you would have to accept all debit cards, which of course merchants don't mind as well as all the credit cards, and that's so if the scale of a Kroger can pull that off right.

Maia Bittner:

Well, exactly, we talked about this with Walmart.

Sam Maule:

When you are a beast like that, you can get away with it. When you're a bodega or a smaller merchant, yeah, good luck.

Maia Bittner:

Well, in this lawsuit it is probably going to benefit those big merchants, and for a couple of different reasons, I also think, small merchants. So they're much more likely to be paying a blended price to their acquiring bank, to their issuing processor, right. The merchant discount rate bundles all these different things into their banking relationship. The big merchants, particularly really cost-conscious, really savvy merchants like Kroger and like Walmart, understand every single line of their COGS and are very good at negotiating that. They have negotiated special deals with the card networks, um, already, and they're the ones that are going to benefit. I think they're trying to deflect um that. I think I saw 90 of the merchants in the recent case against visa and mastercard are small merchants. Well, of course, if you count by merchants, most of them are going to be small merchants. Counting by merchants is a stupid way to count. You should be counting by transaction volume in which case it's mostly going to be really.

Maia Bittner:

I mean at Walmart. I know that Home Depot has also been cranky about the fees that they're paying. There's like a couple sort of like flagship big merchants that have been leading this case.

Sam Maule:

This makes me laugh. I did a back when I was at the Levin FS. I did this whiteboard session when I was talking about banks in the US, right, because it's always fascinating when you're in Europe and they're like wait a minute, there's how many banks in the US in credit unions.

Maia Bittner:

There's so many banks.

Sam Maule:

We got like 10, and I said but please understand, almost all of the deposits are held by like 20 banks and even though those 20, about four, it's really the four.

Maia Bittner:

And then even right, we're talking about the merchant side. It's like dude, like Chase, chase is on both sides. They're a bit like they're one of the top credit card issuers. They're also one of the top provider of merchant bank accounts, like they do it all you know.

Sam Maule:

Yeah, it's fascinating when you actually dig. Don't just get caught up in numbers, focus in on what really matters and, like you said, let's get back to transaction volumes. Right, what's flowing through the pipes and from where and who's doing it. That's when you can see, all right, so who's going to benefit from this and who isn't. I mean, how do you think this is going to affect? This has always fascinated me in the US, because outside of the US, especially like in Asia, we get to these super apps and wallets and everything else. And in the US, I mean Apple Pay has seen some growth, some growth, google not so much. But I mean, how do you think it's going to affect the wallets?

Maia Bittner:

Well. So one of the points of this legislation is that merchants can now discriminate amongst wallets. So they could say we accept Samsung Pay, but we don't accept Apple Pay, and they can have all these. Now it's just you've got NFC or not. If anybody's got that little contactless symbol, you can use your card in a contactless way, or you can use your phone to pay with whatever wallet you use.

Maia Bittner:

If this goes forward, if it's court approved, then it's going to be mayhem and the merchants are going to choose. And here's the other reason why that benefits big merchants. Only big merchants are going to choose. And here's the other reason why that benefits big merchants. Only big merchants are going to bother to understand the impact of accepting one wallet versus another. The bodega is still going to accept everything. They don't even know. They're probably paying the same regardless. Any benefits in terms of interchange discounts are going to be gobbled up by their payment processor and they're not going to see it anyway. But the big merchants are going to do they could do really annoying stuff with the wallets. Now I'm not sure if they'll want to. So there's something.

Maia Bittner:

So Apple Pay, specifically, is an interesting one. Apple Pay actually charges the issuers, not the merchant a surcharge for using cards with Apple Pay. So Apple Pay charges a half a penny for every single debit card transaction to the issuer, and they charge 0.15% for every single credit card transaction to the issuer. So it's actually quite expensive for issuers if you're using Apple Pay instead of using your card, and so that's an impact. I think the other wallets charge the merchants, and so we might see that Apple Pay actually gets more popular if merchants can kick out the other guys and charge more fees to the issuers.

Maia Bittner:

But I don't know, I'm curious, like how are they going to implement this? Like what is a point of sale system going to look like?

Sam Maule:

Exactly, it's the devil's in the detail. Right, you get this ruling, but again, how do you you implement? This right off that one thing that made me smile when I when I saw this break is I got back to like starbucks and uh target with a red card, with these red card that's an interesting card, yeah brilliant brilliant talk about future proofing yourself, right?

Sam Maule:

um, both of them, just yeah, I'm applauding them. Y'all can't see me doing a golf clap because I don't want to blow up my producer's ears, but, um, we always brag about how brilliant starbucks is and again I'll say target the red card. But they come out so well yet again because this has zero impact to them and a lot has been talked about the starbucks.

Maia Bittner:

You know how starbucks is really a bank and the starbucks card. I will say like one little nuance about why the details of interchange fees matter. So, interchange fees, they do have both a fixed and a variable component, right? So I'm actually looking at the Visa USA consumer credit interchange reimbursement fee schedule right now. This is audio so you guys can't see this table, but I'm looking at, okay, for education, right, visa Infinite, the fee is 2.15% plus 10 cents and for Visa Signature it's 1.43% plus 5 cents. But the important part is there's a fixed component and there's a variable component. Okay, da-da-da-da Okay, words, math.

Maia Bittner:

What does that really mean? What that really means is that interchange fees are disproportionately really expensive for small dollar transactions, right, merchants who have small dollar transactions are dying. So who is that? That's companies like Starbucks, where their average transaction size is going to be like five bucks, right? Because that fixed component is a higher percentage of the overall thing and is really killing their margins. And so Starbucks. There's many reasons why they want the Starbucks card. There's many advantages, but one of them is that if they can increase their average transaction size, say, you reload your Starbucks card with $20 at a time instead of buying lattes for $5 at a time From a percentage basis. Starbucks is going to be paying much lower interchange fees because of the higher ticket size, and so that reduces their costs.

Sam Maule:

Which also explains why if you go on your Starbucks app and you go to reload, the default is $25, everybody.

Maia Bittner:

Exactly.

Sam Maule:

It's good design, Nothing wrong with that. But there you go. There's a lot of reasons why they want the more money as possible.

Maia Bittner:

But the interchange fees is definitely part of that and you'll see it like. Uber right is another company that has like a pretty small average transaction size. They do a couple of different things. You might notice if you take a lot of Ubers they'll roll up all of the transactions, all the rides you take, in one day and to be one transaction on your credit card. Boom, interchange fees at work. They also have Uber Cash. They're like load up your Uber Cash and you can pay for your cars If you're like. Why would I do that? It's pretty great and easy to have it straight through to my credit card. Again, interchange fees is the explanation there.

Sam Maule:

I was smiling, I think right before we started recording. We kind of talked about this, remember, in those just early days of fintech, right? So 2010, 2011,. You talk to any fintech and they're all payments. By the way, back then Everybody was in payments or lending and it was like so talk to me about your business model, and it was interchange fees, interchange fees, interchange fees. Talk to him today.

Maia Bittner:

Well, I have a lot of explanations for that. I still love interchange fees. It's actually my favorite business model. I think it's a really unique business model because it allows you to create a product a credit card or a debit card that can be essentially free for consumers. I mean, it's free asterisk I'll get into the details there, which I think the antitrust regulators care a lot about but it's free for consumers. And then the business model your revenue comes from merchants, but because it's negotiated by MasterCard and Visa, the merchants don't have a say, right? So when we think about Facebook, it's like Facebook creates a product for end users. Their real customers are advertisers. They're always having to meet their advertisers' needs. Do you know what I mean? The advertisers are calling them up.

Maia Bittner:

It's a huge demand for issuing banks, right? Like you know, I've got my Apple card on my desk Goldman Sachs is an issuing bank. I have this other card from a startup called Forma. Blue Ridge Bank is an issuing bank. So for issuing banks, they get all this revenue from the acquiring bank, but they never get a phone call from Costco. They never get a phone call from Home Depot that's trying to negotiate down. It all gets kind of mediated away. So I think it's actually like quite elegant and I think there's. Yeah, you got to. You just got to worry about you, got to worry about your margins and the other parts of your business.

Maia Bittner:

We're not even talking about the Robinhood gold card now.

Sam Maule:

Oh yeah, oh God, that's a show we should there's another one, we should definitely dive into. See, we're coming up with our own ideas everybody.

Sam Maule:

This is called rabbit holes in man Alive, fintech and payments. There's just so many of them, it's a bit ridiculous, all right. So a friend of ours, ben Brown, shout out to Ben Brown, who's now with Flagship they actually put together a wonderful one-page cheat sheet and we'll work with the producer and get this out there. On the whole ruling and what came through with this settlement. We're still waiting on that ruling, but they went through and listed out the stakeholders when you talk about payments and they rated their impact. So red, green, yellow, maya. So we're going to do the professor maya quiz and get your opinion on these. I'm going to name the stakeholder and you give me an opinion on how big of an impact this actual settlement was and kind of your one or two bullet points. Ok.

Maia Bittner:

All right.

Sam Maule:

Card issuers Red green Right.

Maia Bittner:

So for for card issuers, I'm going to go it's, it's, it's, oh, it's fine, like it is. Technically it's, I think it's fine. I'm gonna go neutral. It's bad because, um, this has a slight, it has a very small reduction in interchange revenue. It's putting in some limits there, um, and then the limits are limited to just a couple years and then they come back. So like maybe I mean the big issuers will see a tiny hit, but to be honest it's not that big of a deal. I would say like there's some questions. So the bigger deal is if payment shift really does flow away from those high interchange cards or this would be devastating but to non-card payment methods like cash or check, then that's going to have a bigger deal, a bigger impact on the issuers.

Maia Bittner:

But people love their credit cards. I actually don't think the margins. I think the margins for credit cards are about the same. So for those really high rewards credit cards, they make really high interchange but they pay it all out in rewards. I don't know that their margin is that much bigger than for the lower credit cards, where they have lower interchange fees and minimal rewards. It all kind of reaches a steady state. So my guess is that fees get cut a little bit, they cut corresponding rewards a little bit, and we end up in the same place from an issuer perspective.

Sam Maule:

Yeah, and it's time boxed and it's one of those. You know we'll be able to watch this unfold, so we'll kind of and I think, like anything else, there'll be some levers we can probably tweak right. I mean, because at the end of the day, we're the US consumers. We love us a credit card I don't I don't remember what. The average? What is the average number of credit cards now? Is it six, seven? I don't even know. It's ridiculous. I know that much we love my wallet's full of them.

Sam Maule:

So and a lot I could say. All right, I think we both agree on this one, but I'll say it the networks, these in mastercard and amex. We should throw amex and discover into the look. What do you think impacts there? I?

Maia Bittner:

I think again neutral. I think it's going to be fine. Like I said, they're making most of their revenue is fixed fees per transaction, not this interchange percentage-based fee. So they're fine. I don't know that they're going to lose any issuers as customers because of it. I think maybe the reason we're not talking about Amex and Discover is because, right of their closed-loop structure and the banks that are part of the open-loop structure are really important in this deal. It lets merchants right. They can.

Maia Bittner:

They can actually I have to look at my notes so they can discount surcharges yeah, they can discount by issuer so they can say like, hey, chase cards are going to be cheaper, um, and so I think that this it's like why the banking part is really important and this really kind of is mostly a Visa and MasterCard issue and it's going to affect Discover and Amex less.

Sam Maule:

All right, you alluded to this, but let's get the official ruling on this one Enterprise merchants. So the big ones, the big ones.

Maia Bittner:

This is huge. I mean, this is their case. They pretend I feel like they looped in all of these.

Sam Maule:

They're on the golf course, high five at each other, 100, 100 they.

Maia Bittner:

I feel like they strong-armed a bunch of smaller merchants in because they were like, hey, aren't you guys sick of paying interchange fees? And the optics are good and the antitrust angle is good because it's like, oh, visa and mastercard are beating up all these small merchants, but really it's like this is funded by kroger and walmart and it's behemoths against behemoths. It's Visa and MasterCard. It's like some of the biggest businesses in the United States are cranking at each other and I do think those big businesses one. They're the ones that we should keep an eye out for doing interesting things at the point of sale.

Maia Bittner:

Are they going to start banning Samsung Pay? Are they going to start surcharging Visa Infinite cards? Is it going to be weird if it says look, you get a 50% discount for all Chase cards, but then Visa Infinite, which is your Chase Sapphire Reserve, costs 3% more, but your Southwest Airlines credit card, which is also a Chase card, but only Visa signature, unless you have the non-business card and then it's just Visa normal, is going to be right Like that's terrible. Nobody wants that. But the bodegas won't do that, it's only going to be the big merchants. So I can't wait to see what Walmart and Kroger and Home Depot are going to do after this comes out.

Sam Maule:

But this reminds me of some of the early days, like going back a little over a decade ago, in the early days of money 2020, when walmart and and that group had mcx remember mcx? They were all going to get together and they were basically going to beat the living tar out of visa and mastercard and everyone else and they would go on stage in front of, and those rooms would be packed five, six thousand people.

Sam Maule:

And I remember them saying if we, if we went back and designed a card network program, it would not be at all what y'all are doing and that's what we're doing. It never came to fruition, everybody, but you know, it's just fascinating. I remember that sitting there and you just watch visa mastercard sitting at the end of the panel and the walmart people in the middle and it felt like ali frazier is you know, just this massive fight going on the stage. And that's when twitter was exploding too, and I was one of those geeks in the crowd going, oh and I couldn't, I couldn't post fast enough. I'm being set on stage and then paypal over in the corner, just you know, slamming everybody else, which was funny too. All those fun days of those packed rooms at money 2020 for those keynotes, but that's this has a feel of that like 10 years later you know, and now you go, all right.

Sam Maule:

So by default we said the enterprise merchants. We know they won. The small businesses is rather obvious, right? I mean they're the ones probably going to take a hit? We don't know though we don't know what, to what level this hit's going to be neutral, is it?

Maia Bittner:

honestly I don't think they're going to notice. I think it's going to be just like durbin, where their payment processors pick up any any extra margin from reduced interchange costs. They just keep paying the same amount they've always paid. They're not going to do anything finicky about where accepting, you know, visa signature, but not Visa infinite. I think they're just going to keep cruising.

Sam Maule:

All right, and then consumers, and for once I'm going to say the one I think is going to be impacted are the savvy credit card holders that understand points that understand. You know you talked about Sapphire, for example, and some of these other cards with Chase. You know these. To me, I think those are the ones where I don't know if they're going to hire consultants, but there's going to be a lot of interesting meetings going on in Chicago and New York to talk about, okay, how do we rejigger these programs?

Maia Bittner:

You know, I bet you're right and it might be those consumers that feel the impact. Part of me says, like maybe that's not a bad thing. I mean really like the way that it works now is people with shitty credit cards, which are the ones have low interchange fees and tends to be low income people are subsidizing the rewards for high-income people. Do you know what I mean? Like that's kind of how it's like merchants pay for all credit card processing, and the way that they subsidize it is from paying higher prices at the grocery store. And I think, yeah, you know, like if people who are getting 2% cash back on every transaction have to pay a subsidy for that, I don't think prices are going to go down, which I'm sure is what the antitrust people want. I don't think they're going to go down. But maybe maybe people with really rich credit card rewards start carrying their weight a little bit more and they're not as subsidized by low-income people.

Sam Maule:

I think that's an excellent take, and it's one when we started this conversation I hadn't considered to be honest, so I like how we've come full circle on this. I think it's a nice pivotal point in the credit card space where we can get inventive again, and I'm looking forward to see what the banks and the issuers do around it. I'm really actually excited to see what comes out in the next year or so because of this and it it takes events like this to sometimes get things going well and it'll be funny.

Maia Bittner:

I mean, you say like, oh, there's going to be consultants and meetings and and maybe the weird thing is right. If so, let's say that kroger comes out and the Visa Infinite card is surcharged an extra 2%. It kind of makes Kroger look like the bad guy from your perspective. You're like going there and you're like, why are you charging me more to use my preferred credit card? And it's really interesting. So then what would Chase do in that situation? Because their customers aren't going to be using their cards as much because they don't want to pay the surcharge. It's kind of their fault, but it's kind of not under their control because kroger is making the rules based on their economics and so it puts everyone I mean this whole tri-party negotiation thing well, plus you've got the consumers, we've got four parties, and it makes things, I think, slower moving and more opaque, more confusing.

Sam Maule:

So, folks, usually when we close the show out, I'm like where can people learn more about? If you ever wanted to know why you should follow Maya, the past 30 minutes have been what you normally go to school for like I don't know two semesters to understand this and you'll read a million blogs on how payment flows work and everything else. Here's the bottom line the devil's in the detail, and not enough people understand those details. So with that, let's wrap up the show for today. One thing we'd love you to do always give us a review, talk to your friends about this and reach out to us. And again, just like I said, follow Maya. I don't know what else to tell you. Maya, best place, where do you want them to reach out to you and go? For the love of God, come, speak to us and teach us about interchange fees.

Maia Bittner:

On Twitter. I'm talking about interchange on Twitter all the time. Yeah, happy to jam into the details of this stuff, there's really smart, highly paid professionals who understand this better than I do and are making the decisions. That affects all of us at the end of the day. So I think, yeah, it's important for us players to understand the basics at least. Follow me on Twitter. It's at Maya B M-A-I-A-B. You can DM me if you want. Follow me on Twitter. It's at Maya B M-A-I-A-B. You can DM me if you want to jam more on Interchange.

Sam Maule:

And if you want to reach out to me to figure out how you can reach out to Maya Sam on LinkedIn, I'd be glad to make that introduction. Folks, thanks for listening and thanks for being excited about the FinTech space, because it is still, after all these years, a lot of fun. Thanks for listening.