Feeds

back to article MasterCard stings PayPal with payment fee hike

PayPal, Google Wallet and other online payment systems face higher transaction fees from MasterCard in retaliation for their refusal to share data on what people are spending. Visa is likely to follow suit. The amount that PayPal has to pay MasterCard for every transaction will go up as the latter introduces new charges for …

COMMENTS

This topic is closed for new posts.

Page:

g e
Silver badge
Holmes

Coming to a wallet near you...

The PayPal credit card. Zero fees for paypal-based transactions.

BOOF. Visa, Mastercard cut out. What a shame.

Actually I should think Google & Paypal could afford to make a new CC company, though whether they'd like to work alongside each other is another matter

19
2
jai
Silver badge

Re: Coming to a wallet near you...

But how would that work? you'd have to get the money from the users somehow, you wouldn't just give them infinite credit.

And if they're going to give the PayPal credit card access to their bank account details, then they can already give PayPal as it is access to their bank account so completely avoid any credit card processing charges anyway.

Also, a company can't just issue credit cards, can it? Aside from American Express, aren't all other credit cards linked to either Visa or to Mastercard in one way or another?

4
2
g e
Silver badge

Re: Coming to a wallet near you...

Yep, which is why Paypal + Google together would be big enough to create a third CC co.

It is Friday though, I'm likely confused somehow

Mind you PP and Goog do have the advantage of controlling their own quite large payment channels, almost being their own banks effectively in a sense, meaning they can actually prevent any money touching VISA or MC if they choose, for a vast number of transactions.

5
1
Bronze badge

Re: Coming to a wallet near you...

I think he is suggesting they set up a competitor to Mastercard and Visa.

The GooPal Card perhaps?

4
1
Silver badge

They can

There are other CC processors, they just aren't that known as MasterCard/Visa. JCB is one, and IIRC Discover is also separate, kinda like American Express.

Thing is, Mastercard/Visa is the one you'll usually see as the ones being accepted everywhere.

2
0
g e
Silver badge

Re: Coming to a wallet near you...

Paygle :oD I like that one better!

4
0
Silver badge

Re: Coming to a wallet near you...

They would get the money from users in the same way that all other credit card cos do, by doing credit checks and having direct debit mandates.

0
0
Bronze badge

Re: Coming to a wallet near you...

"Also, a company can't just issue credit cards, can it?"

Yes, of course it can. For some years when I lived in the US, I had a Sears credit card. Upside, it was easy to get, and Sears sells a lot of useful stuff. Downsides (1) it only worked in Sears, (2) it was subject to per-state credit rules based on which state the cardholder lived in, so moving to certain states induced eyewatering interest rates.

It was a real credit card with all the usual minimum-payment claptrap, not an Amex-style "charge card" where you have to clear the balance every month.

The main restriction on a company that wishes to issue such a card is that it must usually have some sort of banking / credit-issuer license, so it's not something you do lightly.

1
2
Bronze badge

Re: Coming to a wallet near you...

Palgo ?

0
0
MJI
Silver badge

Re: Coming to a wallet near you...

I already have a paypal debit card. Very usefull

0
0
MJI
Silver badge

Re: JCB

Is it yellow with black writing?

What else will they get up to next?

2
0
Gold badge
Facepalm

Re: Coming to a wallet near you...

That's a "store card". Loads of places do them.

Basically it's an in-house HP agreement, but you only have to do the paperwork once up front.

2
0
Silver badge
Devil

Re: Coming to a wallet near you...

Quote: "The main restriction on a company that wishes to issue such a card is that it must usually have some sort of banking / credit-issuer license, so it's not something you do lightly"

Right... So what was the capitalization of a 3rd rate regional bank headquartered, let's say in Six Mile Bottom, Cambridgeshire vs the Google daily spend on fruit and veg for the umpah-lumpahs... Right...

If Google would want to process money end to end it can do so tomorrow. Same for PayPal which already has bank registration in Eu anyway. IMHO both Mastercard and Visa are having a death wish here. Do not trouble the trouble or the trouble will trouble you.

8
2
Ru
Paris Hilton

Re: Coming to a wallet near you...

Goopal? Palgo? Paygle? I'm disappointed in you all.

Poopal is clearly going to be the winner.

8
0
Coat

Re: Coming to a wallet near you...

Payggle sounds better!

0
0
Bronze badge
Thumb Up

Re: Coming to a wallet near you...

"Paygle"

With cream cheese?

0
0
Anonymous Coward

Re: Coming to a wallet near you...

Actually I should think Google & Paypal could afford to make a new CC company, though whether they'd like to work alongside each other is another matter

That would not be efficient, because that's not where the money is for an organisation like Google. The moment they touch the credit market they will be hit with the requirement to register as a bank, and that they will have to do in any country they operate. At that point the door is wide open for getting hit with charges for every single privacy violation they commit, because the bank obligation to data handling is 100% the opposite of Google's approach.

No, the smart approach is to cut out the rotten core. And Google has the size and the network, just not the right collection of skills. Ironically, so have a lot of other large Internet companies (eBay, Amazon, Facebook) so the race is on for who can acquire the right combination of skills.

Hmm. Must give them a call..

1
0
Bronze badge
Headmaster

Re: Coming to a wallet near you...

Mastercard and VISA are NOT credit card companies, they are payment processors. It is the issuing bank which provides the credit, not Mastercard or VISA.

Of course, with this over charging to PayPal and Google it could make it financially worthwhile for PayPal and Google setting up their own payment processing company which works directly with the worlds multitude of financial service providers.

8
0
Anonymous Coward

Re: Coming to a wallet near you...

Two things:

Visa and Mastercard aren't "Credit card companies" they are payments processors, the cards are with your bank or whoever.

Be very careful what you wish for: Visa and Mastercard are (in the UK at least) properly regulated by the financial services authority, there are required standards and behaviors to which they have to adhere, Paypay certainly and I think Google are actually based off-shore and are not regulated. In the case of Paypal, if you've got a dispute, they deal with it on a whim.

8
0
Silver badge

Re: Coming to a wallet near you...

That would be interesting.

If MC is that hard up for cash how about they (and VISA) stop sponsoring events \ football matches and spending on advertising. Do many people actually care if their card is VISA or MC? As long as it isn't diners card what difference does it make? I doubt they get any more customers.

1
0
Bronze badge

Re: Coming to a wallet near you...

You've hit on part of this. Visa in Europe is a distinct company, licensing the brand. Mastercard is the world-wide monolith, and apparently has a tendency to try to stop merchants from selling certain sorts of lawful goods. The different banking regulations in different countries would have some effect.

Paypal in Europe is also a distinct company, operating under European regulation (Luxembourg's implementation of the relevant Directives, I think). I would think that snooping on purchase details would be regulated. I don't know if Google Wallet is even available in Europe, yet.

It is pretty obvious that Paypal supplies info that identifies the final destination of the payment to the credir card system, because it ends up on the statement, and Paypal tell you what this tag will be, so that you can identify the transaction. How much more info do Mastercard and Visa want? Do they want the itemised list from the supermarket?

Nevertheless, having seen how US merchants seem to lag behind Europe in the security features they use, I feel a little more comfortable going through Paypal in Europe, rather than feeding my account details to another US-based operation.

1
0
Silver badge

Re: Coming to a wallet near you...

lag behind?? Like how they still haven't really adopted chip and pin so traveling from the USA to the UK is a PITA as most stores won't accept cards without a chip. Chips are probably just socialism by the back door, they sound socialism, next they'll be wanting to put the chips under our skin. Thats probably what the pin is for.

But yes, way way behind. In 30 odd years in the UK I wrote maybe 6 cheques. I write more than that a month in the US. You seriously have no idea how lucky you are to have direct debits to easy to setup! At least we don't have that silly vilified by visa thing when trying to buy something online, that I do not miss.

2
3

Re: Coming to a wallet near you...

I agree. I avoid using Paypal, because, they're pretty shady in my opinion, I certainly wouldn't want to have a Paypal credit card.

4
1
Anonymous Coward

Re: Coming to a wallet near you...

PayPal would have to have a credit licence then and behave like a credit company. It would have to obey the rules. At the moment they're not any of the above.

1
0
Anonymous Coward

Re: Coming to a wallet near you...

PooGal.

0
0
h3
Bronze badge

Re: Coming to a wallet near you...

I trust Visa and Mastercard a hell of a lot more than Google or Paypal.

The chargeback system is great good to hit really bad sellers with it.

(Of which there are more and more on Ebay - Amazon does a better job at keeping their sellers in line).

0
0
h3
Bronze badge

Re: Coming to a wallet near you...

Visa processed 44 trillion last year it is a drop in the ocean what they could do to it (Or Mastercard).

0
0
Bronze badge

Re: Coming to a wallet near you...

Discover card is owned by Sears. As long as you are a bank you can open up credit card

0
0

Re: Coming to a wallet near you...

Poogle?

0
0
Bronze badge
Pirate

Re: Coming to a wallet near you...

Given the previuos behaviour of PayPal, I can easily live with the current three-way competition between Mastercard, Visa and American Express.

0
2
Anonymous Coward

Re: Coming to a wallet near you... @Anonymous

Sorry, you are wrong. Paypal *is* regulated by the FSA. They do not have a choice in this country.

However, because Paypal, like eBay, is based in Luxembourg, the Luxembourgish rules regarding problem resolution apply.

1
0
C-N
Alert

Re: Coming to a wallet near you...

Let's hope it comes from someone other than PayPal. I can't think of a worse replacement for the CC triad.

0
1
Unhappy

Re: Coming to a wallet near you...

Why do you think that the big CC card companies are set up in Delaware or North Dakota (and other places).

The state laws are extremely friendly towards companies over consumers. .. I think AMEX moved to UTAH at least for their IT although some of it is in FLorida. UT and other states are notoriously anti consumer. That is why you would never want to move there. About 30 years ago AMEX moved their IT to Utah and there was a flood in market place of IT pros who knew better than to move there.

0
0

Re: Coming to a wallet near you...

Yes, until someone gains access to your pin and you’re on the hook for the loss. I’ll stick with the US ‘old’ system thank you very much.

0
1
Silver badge

Re: Coming to a wallet near you...

1- Forbes did a study and 42% of US cardholders had experienced fraud, 34% in the UK.

2- The awesome US 'old' system uses PIN's for debit transactions although most debits cards can do signed for credit transactions.

3- If you steal someones credit card and go get gas you only need to know their zip code to pay for it. Secure :-)

4- Whilst credit transaction require a signature my experience if pretty much nobody checks the signature (this could vary state to state). I believe we actually have to show ID for transactions over a certain value but again this isn't something I've experienced often.

The chip in chip and pin is supposed to make the cards harder to clone and improve the security as the card doesn't leave your hands at any point and the chips are supposed to be harder to clone than duplicating a mag strip. Statistics show it to be true (that its working) but it isn't a perfect system and no doubt fraud levels will rise over time as crooks adapt. I must admit I thought it odd that you couldn't have it as an option on cards here as it is a royal pita not being able to use your plastic in Europe apart from at a few limited places.

0
0

Re: Coming to a wallet near you...

If it were PP+Google+Amazon that would do it. And the CC doesn't have to be accepted everywhere. Just on-line.

This would appear to be disgraceful coercion by Mastercard. Mastercard and Visa have well over 90% market share so a likely consideration by Visa will be whether, by joining the apparent extortion, they will trigger cartel inquiries by the DOJ.

1
0
Bronze badge

Re: Coming to a wallet near you...

"That's a "store card". Loads of places do them.

Basically it's an in-house HP agreement, but you only have to do the paperwork once up front."

It passes the "duck" test for a credit card. It's a sliver of plastic that I can hand over in a shop (ok, only one brand of shop, which is why you think it's only a store card) to make payments on "instant" pre-approved credit. And I get monthly bills with the option of paying any amount between an arbitrarily-calculated[*] minimum and the full owing balance. That sounds like a credit card to me, even if it can only be used in one brand of shop. Sure, it isn't a general-purpose credit card, usable at almost any outlet anywhere, but it is still a credit card.

Another point to bear in mind is that some store cards are charge cards, like the classic green/gold/platinum Amex cards, where you have to clear the balance every month. The Sears card I had wasn't like that.

[*] Yes, the calculation of the minimum payment is arbitrary, in the sense that there is no particular virtue in the percentage-of-full being any specific value so the card issuer selects an interesting value, subject to any consumer credit rules and/or Visa/MC network rules. Making the value higher tends to decrease the utility of the card - the largest balance limit I can possibly afford is determined by the minimum-payment fraction and my ability to afford a monthly payment. (In reality, a sane person would say he could only afford X amount less than that, in order to have some level of margin, but we all know that sanity is a bit scarce when we are talking about consumer credit.) Making the value lower attracts more of the more reckless spenders that we, in an ideal world, would not want our bank giving credit to, and if the value is low enough, the cardholder can get stuck with an unreasonably long repayment time if he stops buying with the card but doesn't pay more than the minimum...

0
0
Meh

Re: Coming to a wallet near you...

Credit cards get their money from two sources. The user who pays interest, fees, etc. The other half is the merchant. To accept credit cards you need to pay fees for your merchant account. Then you need to pay your monthly fee to your processor (this is why PayPal and Square are popular with craft fair folks as they don't charge you $15-$75 just to say you accept credit cards). Then when you accept a credit card you pay the base charge fee of 28¢ to $1 plus the 1.8% to 4% of the transaction amount.

Paypal/Google could create an immensely popular card by just making the merchants pay just enough to cover the cost the banks will charge them just to get the money to the merchant. Then give users low interest rates and reasonable fees. Of course the regulators will then act at the behest of the big banks and make sure that they have no end of troubles getting this all up and flying.

0
0
Silver badge

Re: Coming to a wallet near you...

Neither of them wants to do that because issuing real credit cards moves one into the highly, highly regulated banking market. Mind you, I'm not saying it is effective regulation just that it is a significant burden.

0
0

I'm one of the first to defend companies when they're protecting their own interests (And I'm certainly no fan of eBay or Paypal), however surely this is something that would rightfully raise a few eyebrows at the competition commission, and perhaps that's why it's not coming to Europe yet?

13
0
Rol
Bronze badge

I would welcome the cc's introduction of raised fees in Europe with open arms.

After they have been fined back into the stone age for typical A.B.C.D.E. (American Business Concept Ditches Ethics)) Europe would be several Beeellion better off, just the kind of money needed to start a not for profit credit card, that puts its users interests before the altar of grubby lucre and not on it as a sacrifice.

1
1
Rol
Bronze badge

American Business Concept Ditches Ethics For Gratuitous Honours In Junking Kind Likeable Methodology. Now, Overtly Penalising Quaint Rationale, Sodomising The Universe, Verifying Wayward, Xenoculture, Yankee, Zealots.

The A to Z of modern business, me thinks.

9
1
Silver badge
Pint

@RoI

Well done!! Have one on me - you deserve it!

0
0
Silver badge
Thumb Down

Bane

I despise credit card/debit card companies. They manipulated everything to the point that using cash is difficult then they dictate how you can use your money all the while driving up transaction fees and inconviences for merchants who are forced to pass them onto the consumer then they hold onto the merchants funds for days or even weeks or just snatch funds from the account & force you through expensive hoops to get your money back.

They are all underwritten by the big banks though so I guess I shouldn't be surprised at how they screw their customers.

13
1
Anonymous Coward

Unsecured loans

Credit cards are unsecured loans. If you don't need to borrow it needn't be done with a credit card.

Most of the time, the transaction needs a fee to cover losses, but not debt. The payment protection is just a fee they can hide because of their huge margins.

I've switched local purchases to cash and my regular gas* purchases to the chain's payment card (an unlinked debit card with a small, flat transaction fee because it uses the regular debit clearing system. I get 10c/gal off). Credit cards just suck money to the banks.

* Petrol. I'm in Merka.

7
0
Anonymous Coward

Re: Unsecured loans

Credit cards have some uses - I recently organised a holiday, involving two international flights, three different hotels and various joining train journeys. As soon as all the charges had appeared on the card, I paid it off. Why? Because (in the UK, not sure about elsewhere) if any of those transactions falls through, in any way, the CC company will arrange for services the equivalent of those which weren't delivered, this is very useful and something that I'm prepared to pay a few pence for on each transaction. It's not like a chargeback, which will give you the money you you lost, it's an actual replacement of the service you lost, which when you're on the other side of the world is a rather better than a bit of cash in your bank account. It even goes so far as to put you up in a hotel if your flight was canceled and the next one isn't until tomorrow.

2
0
JC_

Re: Unsecured loans

Credit cards have some uses, +1.

My partner works for an airline, which means that we get cheap standby flights. Unfortunately, planes tend to be pretty full these days and with no guarantee of getting on board*, it's prudent to buy a whole lot of tickets to avoid being stuck halfway. Paying for them all on c/c is easier as the money isn't taken until the bill is due, by which time the airlines have usually refunded the unused tickets and it's a wash.

* Air NZ once offloaded me and a 1/2 a dozen other staff in HK in order to fit more mail on the plane. The bastards departed with 15 empty seats.

1
0
Silver badge
Linux

Re: Unsecured loans

Hm. I have to pay cash because I'm buying ethanol-free gas under the table (I'm in Florida, where this is mostly illegal) and I use cash for everything else as much as possible. No relation to my last name.

I use my credit card over the internet to get the fraud protection mandated by US law. Appropriately, it's a Linux Foundation card.

If a company's only payment option is Paypal, it's a 90% chance I'll not buy. I've bought things elsewhere that were 40% more expensive just to not have to use Paypal.

2
1
Silver badge

Re: Unsecured loans

Whereas, given the choice between two equally good [whatever-it-is-I-want-to buy], I'll always take the PayPal route because it is easier, I'm not giving my payment details to the seller, and my credit-card company doen't know what I'm buying whilst giving me payment protection. Win all round, I'd say.

0
0

Re: Unsecured loans

Let me simplify your life.

http://pure-gas.org/index.jsp?stateprov=FL

0
0

Page:

This topic is closed for new posts.