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View Diary: Bankruptcy's Bastard Brother - Time to Take Action (92 comments)

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  •  Question (none)
    Does a credit card company make any money from me even if they don't get any money from me.

    I don't pay an annual fee and I don't carry over any balance.  So, I don't pay them any money.  What I am wondering is, does any of the money that a vendor pays when I use a credit card go to the bank, or does it all go to Visa?

    •  Yes they do (none)
      The merchants pay a transaction fee -- a percentage based on the purchase amount.

      That's why a lot of merchants don't take Discover/Novus and, especially, American Express -- the transaction fees are higher.

      Wake up to find out that you are disguised as a squirrel -- with apologies to R. Hunter

      by Frankenoid on Sun Mar 27, 2005 at 05:30:17 PM PST

      [ Parent ]

      •  Doesn't really answer my question (none)
        I know there is a transaction fee.  My question is, does the transaction fee go to Visa/Mastercard or to the bank, such as Citibank.  Visa and Mastercard are independent companies which handle the transactions, but are different from the banks which issue you the card and lend the money.
        •  I'd just always assumed (none)
          it would be split in some manner.

          Wake up to find out that you are disguised as a squirrel -- with apologies to R. Hunter

          by Frankenoid on Sun Mar 27, 2005 at 05:46:14 PM PST

          [ Parent ]

        •  Visa and Mastercard are non-profit orgs (none)
          Both are not-for-profit business associations set up to administer the nationwide systems of credit cards for their member banks.  The banks make all the profit.  Visa and Mastercard just take out the costs and leave the profit to the banks.  Right now, both take a little over 1% of the transaction, with the bank taking the rest.  The bank makes some money on people who pay their bill every month, but they make most of their money on those who let a month slip and then pay the high interest finance charges too.

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