undefined | Better HN

0 pointscrazygringo6y ago0 comments

I'm wondering if it has something to do with the increasing prevalence of rewards, which is driven by competition between issuers?

I mean, I get somewhere between 2% and 5% back on virtually everything I buy. On top of signup bonuses.

Whereas when I think back to 10 or 15 years ago, it seems like I usually got 1% back, and I still had cards that didn't offer any rewards back at all -- which is unthinkable to me today.

Just my anecdote, and I don't know if it's the main driver, but it certianly seems like rewards have become a much bigger thing.

0 comments

jariel6y ago

" I get somewhere between 2% and 5% back on virtually everything I buy."

This is more a function of the extreme power that VISA etc. have over the transactions. They are locked into their fees and make it impossible to do things like 'pay this other way and save 2% etc.' i.e. trying to do anything to obfuscate to the consumer that they are in fact responsible for 3% of every purchase you make.

So various entities find ways around those controls by giving you money back in another direction.

Basically, there's immense 'market pressure' on those 3% fees, but the oligarchy has control over it, so those fees will nature be eaten away by any and all other angles.

If there was no oligarchy, those '2% back' programs would be less likely to happen and what we would see is material margin erosion for such fees.

j / k navigate · click thread line to collapse